We are in the midst of a student financial aid crisis. Student loan debt exceeds $1.5 trillion, 70 percent of college graduates leave school with debt, and 36 million Americans currently have some college with no credential. With rising tuition costs and lower federal funding, colleges face the frustrating task of helping students make sense of financial aid processes. Through no fault of their own, they often fail. 

The Real Student Financial Crisis

Today’s financial aid system is a series of overly complicated processes and regulations hidden in thousands of pages of legislation and complex terminology. Advocates, including the financial aid community, are overstretched and under-resourced, leaving students and families to navigate the myriad complexities in the funding system while access to aid gets harder and costs escalate each year. 

The actual crisis is not the $1.5 trillion student debt, but rather the three million college students who drop out annually, many with student loans. We have a completion crisis, exacerbated by an underinvestment in technology and staff. The result is a lack of transparency, understanding, and affordability in the financial aid process, from students’ first decisions regarding college and financial aid through to their final repayment. While limited progress has been made at both the institutional and federal levels, the system is still largely seen as broken and clearly failing at-risk populations.

Community colleges have the power to solve this problem for many students. Institutions that organize, design, communicate, measure, and innovate for student financial success will enroll, engage, and retain more students.

Understanding the Student Financial Journey

Students today have more questions and fewer answers regarding financial aid. Community colleges face shifting demographics and diversified student needs across multiple generations and delivery methods. National media and federal policymakers have amplified a message that questions the value of higher education and the return on investment of a postsecondary education. 

With little to no change in access to technology or personalized financial counseling resources, many students and parents lack a clear understanding of how much financial aid is needed, how to apply for it, and how to make good borrowing decisions. Low transparency and high complexity results in three fundamental problems: a comprehension problem because students lack the financial literacy to decode relevant financial aid information; a complexity problem where students must navigate a series of overly complicated processes; and a prioritization problem as schools struggle to identify and assist at-risk students. 

An overhaul is needed regarding our thinking about financial aid and how we achieve student financial success, beginning with every community college developing and investing in a strategic student financial success plan embodying the following five core principles.

1. Organize for Student Financial Success

The typical financial aid system was built to make decisions that favor compliance and policy as opposed to student experience. The organizational structures and teams in place turn the complicated financial aid journey into a series of rote processes that can be executed quickly and accurately by offices. It may be easier to build the financial aid journey so that each piece works independently, but with little cross-integration, students feel the brunt of this disconnect as they wander through the campus maze trying to get answers to individual pieces of the funding and payment puzzle.

Colleges that embrace student financial success, however, organize around the student, focusing less on the function of financial aid and more on successful student outcomes. They organize by establishing a student financial success center populated with student financial success coaches who are student-driven cross-functional resources.

2. Design for Student Financial Success

In addition to organizing around the student, community colleges must design processes that make funding education simpler. Funding college is many students’ first major purchasing decision and it is a daunting multi-year journey. They need guided processes designed to make their choices easier and more efficient.

By partnering with external groups at the federal, state, and employer levels, institutions can better invest in student outcomes. Through redesigning and simplifying current processes and language, institutions can orient around the actual student experience. The entire ecosystem of inputs and outputs must be realigned to connect the student to the right people and resources at the right time. With innovative technology, colleges can eliminate superfluous tasks, automate repeatable processes, and empower students to self-service when possible.

3. Communicate for Student Financial Success

Historically, budget and technology restrictions have made communication between students and the financial aid department at most community colleges strictly transactional, with little to no personal advising available. Communicating for student financial success means approaching student interactions from a coaching and education mindset rather than a compliance one. Proactive, personalized advising becomes crucial to financial success, enabling institutions to provide students with the support they need to make decisions that maximize success and achieve better outcomes, like increased comprehension, lower borrowing, and higher completion rates. In return, colleges will be better able to identify at-risk student groups, creating more effective communication strategies.

4. Measure for Student Financial Success

Community colleges must track and analyze the outcomes of these key strategies. Incorporating tracking analytics and data collection into their processes enables colleges to monitor what works and what doesn’t, and to quickly course correct to achieve their goals. Creating a framework to identify what, when, and how to measure is crucial. Each step in the student financial success framework will reveal ever more targeted and specific data that will aid institutions in delivering timely, proactive, and prescriptive interventions.

5. Innovate for Student Financial Success

Finally, armed with clearer and more targeted information, community colleges should embrace a culture of innovation and experimentation. The current, broken funding model is unsustainable. Institutions must start thinking outside the box in order to enact positive change. Trying new ideas, creating new initiatives, and overhauling current processes can yield ever more specific data that will help colleges realign in the right direction. Through experimenting with alternative funding types or developing innovative partnerships, community colleges can begin to promote better outcomes, one new idea at a time.

Innovation Benefits Colleges and Students

Many institutions have attempted to improve student success by investing dollars and resources in academic success initiatives, but have left a glaring gap by not addressing students’ financial needs. By broadening initiatives to include programs and processes that address not only educational needs, but also student financial needs, institutions can better serve their diverse student populations. Colleges that focus institutional efforts on student financial success rather than student financial aid will see an uptick in student enrollment, engagement, and retention. This emphasis will lead to positive outcomes for students, as well as the institutions they attend.

Amy Glynn

Vice President, Student Financial Success, CampusLogic


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