07 Jul It Takes a Campus to Prevent a Default: Gathering Internal Support to Promote Financial Education

By Carissa Uhlman, Inceptia Vice President of Student Success

When I first began working in financial aid, I was amazed at how much I did not know about the student aid process. My time in academics, records, admissions and student services had never required that I learn anything beyond how to file the FAFSA; the rest of the details were to be covered by the experts in the financial aid office. It was only after I became part of their ranks that I realized what a travesty it was that more offices weren’t made aware of financial aid policy, not only to help educate students, but to make the most of our clearly interconnected working relationship.

Fast forward several years, and I now see the same situation playing out as it applies to financial education. Although important to all, the execution of a financial education program almost always falls squarely on the shoulders of the financial aid department. For an all hands on deck approach, such a massive and critical undertaking is daunting and may simply be a system overload for one department to manage alone. Here are the reasons and data as to why financial education is everyone’s job, and how to gain buy-in for campus-wide collaborative efforts.

Why: Doing well by doing good

Schools need students to survive, plain and simple. Thus a renewed focus on retention is a hot topic on many campuses. But seldom do discussions address the influence that external factors (like money) can have on student retention levels. This is surprising, given that financial pressure is the number one reason that students leave school (Chiang, 2007). An absence of consideration for this leading cause is presumably because a student’s finances are considered to be outside the college’s sphere of influence, or too taboo to discuss. However, an ESDA study shows that students disagree and are looking for schools to address this need: 100% of respondents feel their schools should provide financial education, but 79% find school efforts inadequate (2010). Clearly, higher education is doing itself a huge disservice by viewing student retention through a purely academic lens and not utilizing a holistic approach.

Additionally, 89% of survey respondents indicated that they would have a more favorable view of schools with financial literacy programs (NFEC, 2013). So by addressing the number one drop-out factor, helping students understand how to manage money while balancing education costs, and providing comprehensive financial education, schools may be able to see an increase in retention rates and a competitive advantage over schools with no financial education programs. All while doing immeasurable good for the students they serve.

How: Help create top-down momentum

Let’s face it, your program has a much increased chance of success if your leadership team makes student financial literacy a priority. And yet that support is hard to come by; just ask any financial aid director who has been banging this drum for years.

Fortunately, those at the top are usually motivated by numbers and hard data. Even more fortuitous is the recent focus on shopping sheets, college ratings systems, and other proposed legislation that has put the financial aid office in the spotlight. These developments, in addition to the aforementioned retention facts, can be used to spark an interest at the higher level. Some key points to consider:

  • Help upper administration to understand how cohort default rates work, where yours currently stands, and the consequences of an increased rate. It is possible that they are not aware of the effect of CDR on an institution’s Title IV eligibility.
  • Highlight specific components of your program that would focus on default prevention (i.e. mandatory entrance counseling every year, for every student) and decrease the amount of students who over borrow (i.e. staggered disbursement schedules). With shopping sheets allowing students to compare default rates and median borrowing amounts, it is important for leaders to understand how increasing financial literacy can help to improve those numbers.
  • Stress the advantages to be gained from a proactive approach. A number of pending new legislative proposals will continue to require schools to take more responsibility for student borrowing and default management:


  • The college ratings system (Pay for Performance) will evaluate factors such as keeping tuition low and helping students avoid excessive loan debt to determine a school’s financial aid eligibility.
  • The Smarter Borrowing Act would hold schools accountable for entrance and exit counseling requirements.
  • The Protect Student Borrowers Act would require schools with high default rates to pay a penalty that represents a portion of their students’ defaulted loan amounts.

By forming your argument for a financial education program and presenting your case for approval, you will have taken two big steps in positioning your program for success. In part two of this article, we will address how to inspire and empower other campus departments to become program ambassadors.