State Update November 13, 2012 Concord, North Carolina Steven E. Brooks Executive Director North Carolina State Education Assistance Authority.

State Update

November 13, 2012

Concord, North Carolina

Steven E. Brooks

Executive Director

North Carolina State Education Assistance Authority

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Wendy McAlister

President, College Foundation, Inc.

July 1, 2012

North Carolina State UniversityDegree in AccountingLicensed CPA

1985-1993 Koonce, Wooten, Haywood

Senior Auditor, CFI and NCSEAA

1995-2011 CFI Vice President for Quality Assurance

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General Assembly – Republicans Expand Majority

HouseSenate

2011 2013 2011 2013

Republicans 68 77 31 32

Democrats 52 43 19 18

• Key legislators not returning (did not seek re-election) –among them Sen. Richard Stevens, Sen. Jean Preston, Rep. Mark Hilton

• Unlike 2010 and 2011, the General Assembly in 2013 will have veto-proof majorities in both houses

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New Governor Pat McCrory

Republican Governor makes veto unlikely in most cases.

• First time in 140 year that Republicans have control of House, Senate, and Governor’s mansion

• Mr. McCrory has not said much about financial aid, focusing more on keeping higher education costs low and gaining efficiencies.

• “McCrory would examine the costs of state universities and seek to make financial aid more performance-based, specifically granting financial incentives to students who finish their degrees early.” Daily Tar Heel 10-8-2012

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K-12 and higher education represent two of nine key issues for Governor McCrory. Policy proposals include:

1. Two diploma pathways, one to certify a student college ready and the second diploma to certify a student career ready

2. Provide more aggressive community college career counseling

3. Expand partnerships between higher education and economic development

4. Promote enrollment in high-demand fields and require curricular input from employment decision makers

5. Provide financial incentives to students who finish their degree program early while meeting a minimum grade level

6. Encourage students transferring from community college to a university to first complete an associate’s degree

7. Integrate resources across campuses and expand use of technology to improve educational quality and drive down costs

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Growth in State Grants in North Carolina

1996-97 to 2012-13 (est.)

1996-97

1997-98

1998-99

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

2012-13

0

50

100

150

200

250

300

350

400

450

46% 45% 45% 46% 49% 54% 65%69%

72% 73% 74%

79%

83% 84% 83%82%

99%

54% 55% 55%54%

51%46%

35%31%

28%27%

26%

21%

17% 16% 17%

18%

State Grants - Dollars Awarded to Students

Non-need

Need

In M

illions

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LEGISLATIVE CHANGES Proposed by Legislative Staff Study

• Community College Grant: 5-semester statutory time limit

• Education Lottery Scholarship: Change the current 8 semester limit to match the 9 semester limit for UNC NBG and Private NBS

• Coordinated time limit across all state grant programs:

– SEAA to ensure that no student receives more than 9 semesters across all State grant programs

• Standard waiver process for one additional semester in defined special conditions

General Assembly may consider in 2013 Session

Research Pilot with College Board

Target population: • Parents of children in grades 6-8• With household incomes of $30,000 or less

Target sample size: • 250 completed interviews in each group – test and control

Test / control design: • Test group was screened for qualification and pre-recruited to agree to

participate, mailed a brochure and cover letter, and interviewed after stating that they had looked over the material.

• Control group was screened for qualification and interviewed in a single call

Material Tested:• The brochure, envelope, and cover letter were tested in focus groups and

individual in-depth telephone interviews prior to finalizing the materials. Insights from these sessions were used to refine the materials prior to publication.

Brochures

Key Findings: Areas we found impact

• Knowledge of college costs: +13 points• Only 59% of control group respondents but 72% of test

group respondents said they actually knew how much it costs to attend college in North Carolina.

• Understanding that many students pay far less than published prices: +22 points

• 65% of test group respondents and only 43% of control group respondents agreed with the statement that most students pay far less than the prices colleges publish.

• Recognition that for low-income families in North Carolina, parents pay $0 for tuition at many in-state colleges : +24 points

• 68% of test group parents and 44% of control group parents agreed with the statement that college tuition and fees are free at many colleges for families with incomes less than $30,000

Findings: Areas we did not see impact

• Knowledge of and positive attitudes toward postsecondary education are widespread throughout the low-income population of North Carolina.

• The brochure’s impact was negligible in changing attitudes about the importance of education beyond high school because the control group’s positive attitudes were so high that there was little room for increase.

• Low-income parents are generally aware of the financial aid system and how it works.

• Low-income parents understand that a college education provides benefits in addition to higher income.

• College is understood to be broadly accessible (not just for top students, geographically widespread).

Research firm believes this is due to work of CFNC and may be different in other states

Lessons Learned and Next Steps in North Carolina

• Credibility is key – CFNC and College Board seen as valid, trusted sources

• Find local gaps in knowledge • Be specific and personal

– Help people see themselves in the data (case studies)• Keep all charts and text simple and clear• Repetition could be key• Next steps: Disseminate findings and materials

– Press release, Op-Ed by system heads, meet with educators

– Enhance CFNC website with more specific information and case studies to help families find themselves in data

Grades 7-8 Grades 9-10 Grades 10-110.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

59.9%

84.4%

89.5%

42.6%

52.0%

78.5%

Total AwarenessUse

Student Awareness and Use of CFNC by Grade Level

Less Than $35,000 $35,000-$75,000 Over $75,0000%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%91% 91% 90%

50%51%

62%

Parent Awareness & Use of CFNC, by Income

Awareness

Use

Students Parents Adults Educators0%

20%

40%

60%

80%

100%

64%

54%

62%67%

61%58%

55%

88%

59%55%

* *

Use of CFNC, by Ethnicity

Caucasian

African Amer-ican

Hispanic

When Hispanic Cell is flagged with *, the African American cell contains all non-Caucasians

$1 Trillion in Student Debt• Headlines:

“US student loan trillion dollar ticking time bomb”

“America’s Trillion Dollar Student Loan Train Wreck”

• Is press reporting reality? Real Questions to ask:– Are there really lots of students with debts of $80,000

and majors in parks and recreation?– Are students borrowing more or are more students

borrowing? – Or both?– What are average debt levels and how are they

changing?– How does North Carolina compare to national trends?

2001 2011 % Increase

UNC 135,567 174,805 29%

Community College 40,867 61,581 51%

Private 61,706 70,147 14%

Total 238,140 306,533 29%

Degree Credit Headcount EnrollmentNorth Carolina

2001 2011 % Increase

UNC $2,134 $4,956 132%

Community College $909 $1,854 104%

Private 4-Year $12,497 $23,341 87%

Average Tuition and Fees

North Carolina

2001 2011 % Increase

Need Based State Grants $60 $329 448%Pell Grants $185 $953 415%

Sub Stafford Loans $213 $535 151%Unsub Stafford Loans $165 $544 230%

Student Financial Aid (in millions, rounded)

North Carolina

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011$100,000,000

$200,000,000

$300,000,000

$400,000,000

$500,000,000

$600,000,000

$212,909,621$223,889,867

$250,548,425

$284,686,588

$323,537,357$325,924,071

$332,249,453

$381,322,762

$379,725,821

$454,248,356

$535,383,363

$164,675,529 $177,745,873

$200,966,769 $216,332,144

$241,330,846

$271,665,404 $283,512,844

$307,706,897

$440,878,149

$533,511,810

$544,237,294

North Carolina Subsidized and Unsubsidized Loans - Dollars Borrowed

Total SubTotal Unsub

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 201120000

40000

60000

80000

100000

120000

140000

160000

68,037

71,92480,032

87,698

92,033

99,581 100,213105,631

104,027

124,310

142,183

50,08753,861

59,44862,999

67,949

77,07078,748

83,771

102,287

127,034

139,537

North Carolina Total Borrowers, Subsidized and Unsubsidized Stafford Loans

Total SubTotal Unsub

2001 2011 % Increase

Sub Stafford 3,129 3,765 20%

Unsub Stafford 3,288 3,900 19%

Total Stafford 3,197 3,832 20%

Average Annual BorrowingNorth Carolina

Average annual borrowing rose at rate of 2% per year during the decade, slower than average costs of tuition and fees.

Average Debt at Graduation

2006 2011 % Increase

North Carolina 17,760 20,800 17%% With Debt 54%

United States 19,646 26,600 35%% With Debt 66%

Percent Under Avg 10% 22% 52%

Source: Project on Student Debt

Most Recent Cohort Default Rates

2-Year CDR (2010)

National9.1%

North Carolina6.3%

SEAA/CFI2.8%

3-Year CDR (2009)

National13.8%

North Carolina 9.0%

SEAA/CFI 4.6%

Clearly the low SEAA/CFI rates are largely responsible for the overall lower North Carolina rate compared to national rate in both two and three year cohorts.

Source: United States Department of Education

What about future defaults in Direct Loan?

• Campus as “fall guy” for national problem– What can you actually do about it?– We all know “intake” is most important factor.

• Understanding your borrowers -good first step– Know your data and know how to work with it– Consider hiring independent third party with

experience in helping borrowers avoid defaults• Default prevention is part of the college

access/financial literacy/loan counseling continuum

New Financial Aid Administrator Training

41 participants in Raleigh in October – our 24th such

conference

10 Community College 13 Private Colleges 13 Public Universities

5 CFI and SEAA

Total Trained by SEAA now 714Next training is March 19-21 in Raleigh

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2013 FAFSA Day

Saturday, February 23, 20139:00 a.m. to 12:00 p.m. at most locations Register at CFNC.org or call 866-866-CFNC

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NC 529

• Over $1 Billion in savings for college

• Growth of program in most recent 12 months (thru 9/30)– Dollars invested 33%– Number of accounts 14%

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Outreach: A New Resource for Homeless Students

• Homeless students have a support network in high schools, but what happens to them in college?

• CFNC has compiled a resource listing one person at each of the 110 colleges

• Provides these students a single point of contact– A safety net for an increasing number of homeless

students when difficulties arise• Special credit and much appreciation to our

colleagues Laura Misner, Robbie Schultz, and Nicole Roach

Return of State Grant Funds Academic Periods after July 1, 2012

– Differs purposefully from Title IV return of funds– Honors institutional refund policies for all students - not

holding aid recipients to higher standard

– Puts State in line for refunds before the student

– If campus policy provides refund to student upon withdrawal, state grant funds must be returned before issuing refund to student

– For non-institutional charges withdrawal before the 35% point, state grants are prorated and a return is calculated

– The institution is not required to return funds for non-institutional expenses if student withdraws after the 35% point of the term

– If campus cannot determine when student withdrew, must use 10% of the semester as withdrawal point to calculate a return of funds.

Return of State Funds

– Calculation error in spreadsheet

– Revised spreadsheet has been posted

– We apologize for the error

– Recalculations done by NCSEAA

– Campuses contacted as needed

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School Services – Working with Campuses

• At request of higher education system leaders last year, we began to explore how to use the unrivaled infrastructure at NCSEAA and CFI in new ways

• Goals:– Gain consistency in approach and outcomes– Gain efficiencies and save money– Free your staff to work on higher level counseling with

students

• First steps in current year– Verification Pilot with Community Colleges this year

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School Services – What is next?

• Expanding verification service in 2013-14 cycle– Expect significant usage by community colleges– Two UNC campuses will do pilot projects– Certainly open to others as well

• Working on enhanced loan entrance and exit counseling– Combine our financial literacy programming with loan

counseling to benefit North Carolina borrowers of Direct Loans

– Automated interface with USED– Exploring expanded services to reduce default

• Looking at other services to help campuses manage increasing work loads with current staff

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Questions?