State Update

Steven BrooksState Education Assistance Authority

Cherokee, North CarolinaNovember 2013

Legislative Issues: Limits on grant receipt

• Per program– UNC NBG, NC NBS, ELS 10 semesters– Community College Grant 6 semesters

• Coordination among programs required – 6 full time semesters used at Community College, 4 semesters eligibility left– Transfer from UNC to private with 5 semesters used, 5 semesters left

• Exceptions– Part time students get equivalent number of semesters (20 of half time)– Officially designated 5-year programs 12 semesters– Institutional waivers: one additional semester IF studies disrupted by

military service obligation, short or long term disability, or another extraordinary hardship

• Guidance on waivers will be issued by SEAA

Legislative Issues: Full time ... PLUS

• Authority is required to structure grant payment schedules to encourage completion of average 30 credit hours per year

• Studied using annual total of 30 with a bonus in next year• Data limitations preclude that strategy• For now:

– Payment schedules will reflect a new status: Full time PLUS– Aware of your system limitations with status, given federal definition– Will let you report hours enrolled as of a certain date; we will translate– Bottom line: less than now if 12-14 hours and more if 15 and up

Legislative Issues: K-12 at SEAA

• Two new programs– Opportunity Scholarships - $ 10 million

• Applications by February 1• Up to $4,200 in tuition expenses• For non-public schools but not for home schools

– Special Education Scholarship Grants for Children with Disabilities - $3.67 million• Applications being processed now• Reimburses for services as specified by IEP• For non-public schools and for home schools

• Over 700 private schools statewide• Electronic process to apply

Education Cabinet

• Presidents Ross, Ralls, Williams; Superintendent Atkinson; Secretary Wos

• Extended effort chaired by President Ross and State Board of Education Chairman Bill Cobey – to encourage greater cooperation and efficiency in education

• Among the many topics being discussed– Funding for CFNC– Full time ... Plus to encourage completion

Appropriations for state grant programs

Education Lottery Scholarship– Eliminates 10% requirement– Funds at $30.450 million for each year of biennium

UNC Need Based Grant– $122.5 million for each year of the biennium– Reduction of 15% ($22 million vs. 2012-13

expenditures)– Creates a forward funding reserve for UNC Need Based

Grant

Appropriations (continued)

Community College Grant – $ 15.2 million in 2013-14 – $16.34 million for 2014-15

Need Based Scholarship– $86.4 million for each year of the biennium – Increase of $4.5 million (non-recurring) – Amount roughly covers the loss of ELS

Context of Need Based Aid Appropriations

• In total, grants to needy students down about 15% over past five years

• Costs of tuition and fees at UNC alone up 40% same period. Community colleges up even more.

• Looking for ways to improve need based aid? Fund it!

CFNC Update

Jan-Sept 2013Since inception

# of accounts 342,1984,930,011

# of applications 299,1603,400,367

# of transcripts 231,0641,225,076

Avg. Daily Sessions 10,484

CFNC remains the nation’s gold standard college access portal... And there is more to come!

CFNC and Mytonomy

Let me tell you ...

With a growing video library of over 3,000 videos, students can get advice on how to succeed in high school, picking the right college, mastering the college application process, and much, much more.

Coming late fall 2013... also a mobile app version

Let me tell you ...

NC 529 Update

• Scholarship contest– $529 in each of 100 counties– Funded by the State Employees Credit Union– Entries begin January 2, 2014– Winners announced 5/29/2014

• Current statistics– 121,061 accounts $1.29 Billion

• NC 529 accounts grow tax-deferred (federal and state) and are tax-free when used for higher education expenses

Shared Services

Federal verification can create negative impact on• Student enrollment

– Aid delayed is aid denied – defer/reduce enrollment, withdraw– Verification delays also slow down entire pipeline

• Customer service– Offices with telephone backlogs, closed for processing, long lines– Financial aid office seen as police rather than offering access

• Campus cash flow and budgets– Greater costs to fill seats– Lower tuition revenue– Burdens of emergency loans, etc.

• Compliance and liabilities– Verification is among the top items causing required repayment to USED

Shared Services

Experience from our pilot schools in the verification program• Student enrollment

– Aid processed more quickly – less than one-third of national average time– Students with real issues can get through pipeline and get enrolled

• Customer service– Notable reduction in office visits and phone traffic– Aid administrators concentrate on those actually needing more help– Student reports “pleasantly shocked” by ease of process and speed of funds

• Campus cash flow and budgets– Report 50% more aid ready to disburse at beginning of term versus in house

• Compliance and liabilities– Fully compliant system and insurance to cover liabilities if errors occur

• High levels of satisfaction and repeat use of system among schools that piloted the program

Centralized Residency Determination

• S 402 requires UNC, Community Colleges, and SEAA, in consultation with Independent Colleges, to– “Develop and implement a coordinated and centralized

process to be used by those ... entities when determining residency for tuition purposes of students”

• Work on-going this fall• Final report due to General Assembly by January 1

May opt to take advantage of the technology used by CFI at the School Servicing Center (verification service) with the data coming from the CFNC applications for admission plus the online interview process in “long form” cases

Loan challenges for students

• Costs rising; more students borrowing more money• Lack of financial knowledge/awareness• Confusing repayment options

1. Income-based options• 3 distinct options: ICR, IBR, PAYE• 11% of borrowers use one of these

2. Extended/graduated options• 3 distinct options– Extended, Graduated, Extended-Graduated• 22% of borrowers use one of these

3. Standard 10 year plan• 66% of borrowers • Standard is the default option if an alternative is not selected

Loan challenges for schools

• More students borrowing more• Default rates rising• Servicers not paid for serious repayment success efforts• Schools getting blame although not in control• Negative press about price and borrowing• Staff lacks time/resources to manage defaults effectively• But must help students succeed • Must maintain reputation for administrative capability• Need a “default management plan” that really works • Boost repayment success of all borrowers, not just to prevent

some from defaulting

Federal Loan Default Rates

President Obama’s “Plan to Make College More Affordable”– “Help struggling borrowers”– Should take advantage of existing infrastructure– There are entities out there that know how to do this job

FFY 2010 2 year 3 yearSEAA 2.87% 4.62%Federal 9.1% 13.4%

FFY 2011 2 year 3 yearSEAA 3.05% 5.73%Federal 10% 14.7%

SEAA default rates about 1/3 of federal average

Smarter Borrower

Communications – Cohort Students

Intensive Counseling – Seriously Delinquent

Borrowers

Financial Education –

Current Students

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Financial Education and Repayment Success

Services are designed to:

• Help schools improve student retention and persistence to graduation

• Identify and assist students in financial stress

• Help students make intelligent borrowing decisions

• Enhance borrower understanding of repayment choices

• Guide borrowers toward successful repayment of their loans by finding the most favorable arrangements for them

• Help prepare borrowers for their financial and professional lives after college ends

• Help schools reduce their cohort default rates

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Understanding My Moneyfor enrolled students

• A modular, self-directed on-line course that:– Is targeted to currently enrolled students– Recognizes differences in financial experience in student groups – Tailors education experience to needs of each individual student– Provides analytics to campuses - at risk & financially stressed– Topics include

Financial Basics Budgeting Borrowing WiselyCredit Cards Identity TheftRepayment ResponsibilityDealing with Financial Trouble Much more

– Includes core topics to reinforce entrance and exit counseling

• Course materials supplemented with regular emails and texts with links to timely information

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My Future, My Money for borrowers as they leave school

• Covers grace period & 1st three years of repayment– Incorporates “literacy” portions of “Understanding My Money”

• as a review or • for those who did not complete in school (without analytics)

• Adds financial skills and employment skills, such as:– What to Do on Day One (filling out tax forms, benefit matching)– Business Etiquette and Professionalism (dress, dining, email, attitude,

problem solving, networking, even how to leave a job)– Broader Life Topics (buying a car, home or having a baby, etc.)

• Course materials supplemented with emails and texts with links to timely information

• For past due borrowers, specific assistance in finding best outcomes

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FELS

• Appropriation $16.6 million each year• For its second year, we have awards to 1,579

students under the FELS program (1,321 active; remainder pending)

• Applications up by 30% over previous years

• Streamlining these into one program has provided administrative efficiencies and a clearer path for students

Training and Outreach

• FAFSA Day• Counselor internships• New aid training

• Two new colleagues in interim positions at SEAA– Shawn Henderson (training)– Marcia Weston (outreach)

CFI Grant System

• Time to remodel and rewrite – 15 year old system• One place to go for all state grants and one place from which

all state grant EFTs come from/go back to (CFI)• Need your input into what works, what needs improvement,

what we should include • Listening sessions during the conference• But see me, Bill Cox, Trae Brookins, Traci Mitchell, Rose Mary

Stelma, others, anytime