Colleges’ Efforts Target Financial Literacy Rise

by Nate Dougherty 

Nazareth College wants students to graduate with more than just a degree.

The College has undertaken an effort to increase financial literacy among students and recent graduates, teaching students to address their finances at a time when college costs nationwide have been rising.

Last year, Nazareth began offering students an online money management tool that helped them learn how to manage and pay loans, as well as understand things such as credit and budgeting.

Nazareth is not alone in this venture. Other colleges have started addressing college costs and private companies have also moved in, offering assistance in understanding loan costs and even negotiating tuition prices.

“Reports and data show that our current population of four-year students may not have the skill knowledge in areas like building a budget and managing their student loans,” said Janice Scheutzow, associate director of financial aid at Nazareth College. “We saw this need firsthand as students came in to us with information and letters from their loan services saying they were paying in September and asking [questions] about their loans.

“That was our initial realization that we needed to be proactive and inform them as they go through their education.”

SALT Financial Literacy Program

The college has teamed up with SALT, a membership program run by the non-profit American Student Alliance that helps students and recent alumni manage their money and student loans.

SALT is an interactive money management tool students can use to take control of their finances; it includes a personal dashboard that tracks all federal student loans in one location.

The program also allows students to seek guidance from SALT counselors and take a course called My Money 101, which teaches them practical money management skills for budgeting, credit management and banking.

The college has been pushing students and recent alumni to join through events aimed at raising awareness.

“We just held a big ‘Know Your Money’ day to get them informed that this tool is available and to have them activate their accounts,” Scheutzow said. “We’ve also hosted workshops and labs where we work with students to show them when their monthly calculations begin.”

Nazareth topped its goal of reaching a 20 percent activation rate in the first year, ending up with roughly 21.5 percent. The college also is slightly ahead of this year’s goal to enroll 30 percent of students, Scheutzow said.

The organization that created SALT works to engage recent graduates, Scheutzow noted, sending letters congratulating them on graduating and communicating when loans will start to be due.

“They’re always watching the portfolio of repayment and guiding users through the process,” she added.

The work is growing in importance given the cost of higher education, Scheutzow noted. In the last decade, tuition and fees rose by 4.1 percent at private non-profit four-year colleges and 4.3 percent at public four-year colleges. This rate has increased from the previous decade, when tuition and fees at both private and public colleges grew in the 3 percent range.

As the cost of college continues to rise above the rate of inflation—in the case of public four-year colleges, 27 percent above the rate of inflation from 2008-09 to 2013-14—student loans have received national attention.

The number of borrowers and average debt balances of student loans have increased more than 70 percent in the last decade, the Federal Reserve Bank of New York reported.  Higher tuition costs along with the recent recession both play a role in this rapid rise, the national Vanguard Group found.

In addition to focusing more on student financial literacy, there are other ways colleges are working to address this issue. Every institution of higher education that admits first- year full-time students is required by the federal government to offer a net price calculator so prospective students can estimate a financial package, said Angela Monnat, director of financial aid at St. John Fisher College.

“That’s a nice tool that helps parents and students get a feel for how much they might have to come up with, depending on what school they’re interested in,” she said.

St. John Fisher extends its outreach to high school students in the Rochester area, helping them understand the costs of higher education and teaching them how to fill out financial aid forms.

“It’s a very hot topic, and certainly college costs are rising and won’t be going down or even staying the same,” Monnat said. “It’s a challenge for families, and it’s also a challenge for colleges to help meet their needs and bridge the gap between financial aid and what it covers.”

Like Nazareth, St. John Fisher offers wide-ranging financial literacy programs for students, starting with freshman seminars.

“Even after they come to college there’s still a lot they need to know about things like how to manage money or how to borrow conservatively with their loans,” she said.

Students can find assistance through private companies as well. Locally, companies such as College Assistance Plus LLC work with high school students to help them navigate their college choices and understand the costs involved.

College Assistance Plus negotiates directly with colleges to lower tuition costs, a process founder Paul Celuch likens to buying a car.

“If you’re going to buy a new car you might go to the dealership and look at the sticker price, but a prudent buyer would (research) what the dealer bought the car for,” he said.

His company works beyond negotiations, helping prospective students learn how to interview and pick the right major. The goal is to give them the most efficient and effective college experience, Celuch said.

Colleges nationwide have increased efforts to teach financial literacy, Scheutzow noted, and these efforts will grow as more colleges get a better grasp of their responsibilities to graduate students who are well-equipped to handle their own finances after college.

“It’s a huge need for us to help them manage loans and finances successfully, and it’s a responsibility of institutions to provide this information,” Scheutzow said.

10/31/14 (c) 2014 Rochester Business Journal.

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