Session 27

Financial Literacy
“What” Students Need to Know
Elizabeth Coogan and Ed Pacchetti | Nov. 2012
U.S. Department of Education
2012 Fall Conference
 What We Are Covering
• “What” Students
• Segments of student borrowers at risk
• Common characteristics

• “What” are the Financial Literacy Basics

• Budgeting
• Borrowing
• Repayment Strategies

• “What” are Schools Doing to Promote Financial

Literacy?

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What Students to Target
• Students at risk of non-completion

• Students at risk of default

• Students at risk of taking on unsustainable amounts

of debt

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Characteristics of Non-Completers

• Students taking remedial courses

• Students working more than 20 hours per

week

• Students with limited financial resources

• Students attending school part-time

• Students attending for-profit schools

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Characteristics of Defaulters
• Students who do not complete a program

• Students who attend for-profit schools

• Students who rely on private loans

• Students who borrow much more than the average

• Students from low-income backgrounds

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Unsustainable Debt

• 7% of undergraduate borrowers have loan

balances over $50,000

• 46% of graduate borrowers have loan balances

over $50,000

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Risks Related to These Segments
• Borrowers who dropout of school are 4 times more
likely to default on their student loans

• 16.8% of borrowers who dropout of school default on

their loans, compared to only 3.7% of borrowers who
graduate

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 High Amounts of Debt (>$50,000) by Age
1000000

900000

800000

700000

600000
Borrowers

500000

400000

300000

200000

100000

0
24 and under 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65 and over
Age

Source: NSLDS borrowers as of June 30, 2012 with open loans and a balance greater than zero; age is calculated as of June 30, 2012; Parent
Plus loans excluded.

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Overlap

• Students from low-income

groups are less likely to
complete than their higher-
income counterparts, which
puts them at higher risk of
default
• Low-income students are more likely to attend for-
profit schools

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What is Financial Literacy?
GENERAL DEFINITION
The ability to use knowledge and skills to manage financial
resources effectively for a lifetime of financial wellbeing.
2008 Annual Report, President’s Advisory Council on Financial Literacy

FOR OUR PURPOSES

The ability for postsecondary students to use knowledge
and skills to make good decisions related to budgeting,
borrowing, and repayment strategies.

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The Basics
• Budgeting

• Borrowing

• Repayment Strategies

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Budgeting
Incoming Outgoing
Grants Tuition & Fees
Scholarships Books & Supplies
Work-study Housing
College Savings Plan Transportation
Family Assistance Food
Individual Income Health Care
Loans Entertainment
Loan Costs
$$$ $$$
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Borrowing
• Federal Loans vs. Private Loans
• Maximizing other sources
• Minimize borrowing

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Repayment Strategies
• Basic fundamentals of a loan
• Repayment benefits of a federal loan
• Who to contact and keeping in touch

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Federal Student Aid Resources
• Financial Awareness Counseling Tool (FACT)
www.studentloans.gov
Session #9: Loan Counseling Tools
Session #13: Default Aversion Activities

• Federal Student Aid

www.studentaid.gov
Session #25: Hands-On StudentAid.gov

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 Things To Consider
Things to consider when implementing your own program
• What type of program delivery makes sense
• Institutional resources
• Possible external partners
• Methods of outreach

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Resources
White House Toolkit – Page 28: Higher Education
A Guide to Increasing Financial Capability among Students in Higher
Education
www.whitehouse.gov/webform/financial-capability-toolkit-tell-us-what-
you-think

Student Financial Literacy, Campus-Based Program

Development
Sonya L. Britt & Dorothy B. Durband, 2012.

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Did you know…

A full 80 percent obtained at least some of their

student loan information from their college’s
counselors or website.
6,500 undergraduate and graduate respondents
Citation: NERA Economic Consulting on behalf of Young Invincibles (2012)

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Telling Their Story
University of Florida
Michael S. Gutter, PhD
Associate Professor and Family Economics Specialist
Amanda Blanco
Project Coordinator

Georgetown University
Marina Test
Executive Assistant to the Dean

Central New Mexico Community College

Ann Lyn Hall
Executive Director, CNM Connect

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 Objectives

• General Overview of Financial Literacy at UF

• Student Outreach (methods of getting
students to participate, are particular students
sought after/mandated to attend)
• How does your program address:
– Budgeting
– Advising Students the Cost of Attendance and
Amount of Borrowing
– Repayment Obligations and Strategies
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 Overview of Financial Literacy at the
University of Florida
• Major Efforts Led by
– Family, Youth and Community
Sciences (FYCS)
• Gator Credit and Spending
Help (C.A.S.H.)
• Savings in the Swamp
– Students in Free Enterprise
(SIFE)
• Partnership with FYCS
faculty and Staff
– Office of Student Financial
Affairs
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 Student Outreach
• Florida Master Money
Mentor (FMMM)
• Recruiting Volunteers
– PFFP Students
• Service learning
– Internships
– Practicums
• Financial aid
counselors
– Training
– Referrals

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 How do we reach students?
• Mobile Campus
• Social media
– Facebook
– YouTube
– Twitter @gatorCASH #Gatorcash #PFFPUF
• Financial Education Seminars
– Invited and promoted
• Networking
– student financial aid, student organizations,
fraternities, sororities, Florida Opportunity Scholars
• One-on-One Peer mentoring

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 Common Budgeting Approach
• We focus on semester based-budgeting
– Done in groups or one-on-one

• Process includes
– Identifying issues and goals
– Tracking or reviewing expenses
– Establishing a monthly budget
– Spreading loan distributions out to avoid shortfall
– Possibly learn to borrow less

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 And…

• This becomes a tool they can use and adapt as they

take on new obligations
– After graduation when loans are due
– Living within their means as they begin their careers

• Works with different apps as well if one has a

Smartphone

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 CNM Connect

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 CNM General Information

Central New Mexico Community College is the largest

postsecondary institution in the state.
• Serving over 29,000 credit students
• 65% minority
• 60% first generation college goers
• Average age 29 years, with children
• Annual income is $20,000 or less for 66% of our
students

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 CNM Connect

CNM Connect has over 6,411 active participants

• Mostly female 59% and minority 73%
• 71% with children
• 53% first generation students
• 67% have trouble paying monthly bills

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 What the Data Told Us
• Based on data from SENSE and Non Retained Students
Survey Team (NRRST)
– Community Connections: A strong connection to
someone at the college who can help when difficulties
arise
– Instruction: Academic resources and modes of
instruction that promote greater levels of student
engagement
– Financial Aid: Financial support including advisement,
resources, and aid
– Awareness and access to resources: Promoting
access to an awareness of resources so students can
use them when needed
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 WHAT IS CNM CONNECT?

• Focus on student navigation and success through

students’ entire experience of CNM – from pre-
enrollment through completion of students’ stated
goals
– This is the right door
– Students don’t experience silos, multiple
referrals
• Holistic, comprehensive understanding of students’
needs and the college and community's resources
• Concept/place/people
• In person, online, and telephone support

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 Timeline
Institutionalization
Pilot Phase 2012
2005 6,411 students
31 students 10 coaches
1 PT coach 30 Connect staff
1 campus 7 campuses

Intermediate
2008-2010
2057 students
1-5 coaches
within one school
1 campus
Contact Center
initiated
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 Students Served

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 Contact Information

Ann Lyn Hall

505-224-4311
www.cnm.edu/connect
ahall@cnm.edu

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A Call to Action

We must work together

Your students are our customers

We share the same goal

STUDENT SUCCESS!

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Contact Information
We appreciate your feedback and comments!

Elizabeth Coogan
Senior Advisor, Customer Experience Office
elizabeth.coogan@ed.gov

Ed Pacchetti
Director, Customer Analytics
ed.pacchetti@ed.gov

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