University of Southern Indiana

Traversing the Cost of Education

stock photo of a woman climbing a cliff over a river

by C. L. Stambush

Setting Out

In many ways, Morgan Murphy’s story is both unique and common. It began with a dream in a little house in Seymour, Indiana. One of six children, she grew up watching her mother ration her stepfather’s paycheck into envelopes labeled food, housing, transportation, entertainment and such, and being told she’d one day earn a college education. “It was my mother’s dream for me to go to college,” she says, “so I made sure I had the grades I needed to get in.”

The grades depended on the subjects. Morgan breezed through language arts classes, easily retaining the information, but STEM courses were challenging. “I have always pushed myself to get the best grades I could in both high school and college,” she says. “The first time I got a C in geometry in high school, I went home and cried because I was so disappointed in myself.”

Morgan graduated high school with academic honors—the start of her and her mother’s dream shimmering at the end of summer. Months before, the two toured three Indiana institutions: a community college, a Big Ten and USI. “I had never been away from my family for more than a few nights, so going to school close to home appealed to me. I looked into IU because of the programs it offered,” she says. Images of having to sprint across a campus the size of a small city in 10 minutes, however, flashed through her mind. When she visited USI, it beckoned like Shangri-La. “I fell in love with the campus; it’s so beautiful. The size fit my personality.”

As a first-generation student, Morgan arrived on campus in a bubble of excitement, anticipation and trepidation in early August 2015—with her parents, brothers, grandparents, furniture and more in tow—and settled into O’Bannon Residence Hall. She’d received a 21st Century Scholars award in the eighth grade which covered her academic costs, but living necessities required federal loans. Debt.

Still, with her mother’s devotion to financial awareness ingrained in her psyche, Morgan was confident she could manage. “When I came to USI, I wasn’t the best at budgeting, but I had common sense,” she says. “If I didn’t have the money, I didn’t spend the money.”

Because she grew up on a shoestring, she selected a major that offered a solid financial future. “I went into dental hygiene because I wanted a profession I thought my family could be proud of. I always loved English, and I wanted to be an author when I was younger, but I was told by my grandparents that it wasn’t a stable profession and I should look into others that would provide more money.”

Even though science classes weren’t Morgan’s strength, she settled into her new life thinking, I got this. Then, two weeks before spring registration, she received notification from the Bursar’s Office that she owed USI $2,500. Somehow her FASFA[i] form contained misinformation, including transposed figures in her social security number. “My financial aid wasn’t coming through properly, so some of the grants and scholarships I qualified for were no longer available,” she says. She wouldn’t be able to register for more classes until she paid the bill, but she didn’t have the funds. The dream began to dim. “I was terrified. I thought that was going to be the end of my college career,” she says. “I didn’t know what I was supposed to do.”

Scaling the Impossible

What to do is the question the Bursar’s Office grapples with too, as currently-enrolled students owe USI a few million—a figure in constant flux. The reasons for not paying vary. Some, like Morgan, have financial aid withheld due to problems with their FASFA form, some aren’t prepared for the actual cost of attending college, some lose financial support when family circumstances change, some don’t have jobs to generate income, and some don’t want to take out educational loans for fear of going into debt, failing to understand unpaid bills amount to debt. “Some of them have true financial need and for some of them it’s behavioral,” says Jeff Sickman ’94 M’00, USI controller and assistant treasurer.

A snapshot of students’ accounts receivable in March 2019 revealed 1,460 students owe between $1,000 and $5,000 each, totaling $10.5 million. When they received notifications of holds a month later, 54% were motivated to pay in full. “We had almost $3 million in payments,” says Jeff. “That tells us there is a group of students intentionally not paying their bills…and were incentivized by the holds.” 

If those who owe don’t pay their bills—thus severing their relationship with the University—their files are referred to a third-party collection agency the following semester. The agency sends a letter stating the person has 30 days to pay before collection fees start racking up. “We like to avoid doing this because once you send somebody to collection, their likelihood of coming back to USI to reenroll is not good,” Jeff says.

Those who made no attempt to pay and are no longer affiliated with the institution owe $5 million. The recovery rate on accounts that go to collection is about 15%, resulting in an 85% loss for the University. These arrears are not unique to USI; every college in the country faces a percentage of people owing. “This is not insanely high for the higher-education industry, but it’s higher than it used to be,” Jeff says. “USI has a stable financial picture, which is good in today’s higher education environment. However, when you see trends emerging in the opposite direction of what you are used to, you jump into action.”

Many institutions require tuition payment up-front. That’s not USI’s way—but it doesn’t want to chase remuneration either. “We try to remember the students we serve. We have a lot of first-generation students, so we like to extend the ability to pay over time, but sometimes a payment plan isn’t enough,” says Jeff. “Sometimes they simply haven’t completed the steps necessary to get the aid they are entitled to; they don’t understand the system, so they made a decision that wasn’t in their best interest. The idea is to get them paying earlier so we can more quickly identify people in financial distress, to get them the resources and support available to help them.”

Stress derails education, impacts students’ mental and physical health, and increases the risk of disenfranchising them from the University. They are going to be saddled with debt they might have avoided, with no educational accomplishments to show for it. “Nobody wins in that scenario,” says Jeff.

 stock image of person on mountainMountains to Conquer 

Students in need of financial assistance show up in Mary Jo Harper’s office. They’re predominately middle class and eligible for loans, says the director of student financial assistance. “Only 30% are eligible for Pell Grants, and of them only about 5% receive the maximum[ii] award.”

The cost of in-state tuition for 30 credit hours (15 per semester) per academic year is $7,986, plus miscellaneous fees. Students can receive up to $5,500 in federal loans, leaving a $2,486 gap, plus the cost-of-living expenses. “That gap can be filled by making payments or a parent taking out a Parent PLUS Loan,” says Mary Jo, “but it has to be filled.”

Funding a college education is the most complex path in higher ed because there are so many different types of financial aid—federal aid has nine programs, the State of Indiana has eight, in addition to institutional and Foundation aid, and NCAA and athletic aid. There are loans and work-studies too, for qualifying students. “Our job is to determine exactly what types of aid the student is eligible for, and how we can best serve their financial need,” says Mary Jo. “Our priority is to garner as much gift aid as possible, which students do not have to pay back.”

To help students navigate the financial aid system and generate more funding for college, the department refined its communications to send notifications of critical information both electronically and physically at various timeline trigger points. The result has been a decrease in people showing up in financial crisis, but the process remains daunting for first-timers.

Since the phrase FASFA form is enough to give some people an eye twitch, so the Department of Education took steps to simplify the filing process—the biggest change being which year’s tax return is filed with the form. Until 2016, the prior year’s return was required with a filing date in January. But many people hadn’t completed their 1040s, which weren’t due until April 15. Now the government allows two-year-prior returns with the FASFA filing date October 1. “This allows students to know in advance what type of aid they will get,” says Mary Jo. “It allows us as administrators to send out award letters as early as December.”

The government further eased the process in 2018 with the launch of Mobile FASFA for use in the 2019-2020 academic year, making it convenient for 300,000 more students to file than had in the previous year.

Getting an education is part of the American Dream for many, yet the ability to achieve it without debilitating debt is fading for more and more. Earlier this year, the Institute for College Access and Success reported 44 million borrowers nationally owe $1.5 trillion collectively. Morgan and 49% of her USI peers are among those who leave with debt. Despite USI’s affordability compared to other institutions, any debt can be difficulty for recent graduates.

Raised to pay-as-you-go, Morgan’s simple mistakes on her FASFA form jeopardized her dream. She didn’t have a credit card or enough savings to pay her balance, and she worried she was letting her mother down. Fortunately, her grandparents were able to float her a loan. “It definitely taught me that no matter how financially aware you are, there are always going to be problems that come up,” she says. “You have to deal with them.”

Not everyone does, and when some don’t pay, their debt trickles down to future dreamers, increasing their cost of education.

Bridging the Gap

Creating barriers to education is not in the interest of the students, the institution, the community, the city, the state or the nation. The first step USI took toward success was to shift billing dates to align with USI’s percent refund period, a seemingly small act aimed to help ensure students don’t overextend their financial obligations by taking classes they can’t afford. “We are aligning our bill due date with the 100 percent refund period beginning in fall 2019,” says Jeff. “The idea is to identify students with financial difficulties earlier. The current due date of September 25 did not allow sufficient time for outreach and action before priority registration for the next term.”  

Next, the University sought fundamental solutions that focused on supporting students before they defaulted on their financial obligations to USI by creating two independent, but connected, services. The Financial Care Team addresses University-related financial matters and the Student Financial Success Center provides students with financial education and mentoring. “It’s not a single distribution channel solution,” says Jeff. “This is a comprehensive effort.”

The Care Team is a cross-functional initiative consisting of 15 to 20 people from 13 offices, ranging from the Bursar’s Office and Dean of Students, to the Provost’s Office and USI Foundation. The goal is both long- and short-term student financial, mental, emotional and physical wellness that results in recruitment, retention, success, accessibility and affordability for all students. “It’s not about University versus student. This is University and student walking together to help both the student and the institution be successful,” says Jeff, “so we can keep the price manageable and affordable and be able to offer new programming and grow the institution.”

Wholistic education is at the heart of the team’s purpose and it starts with providing students and families support and financial literacy skills says Jeff, who credits Steve Bridges ’88 M’95, vice president for finance and administration, with the idea. “Right now, we have a cultural change to undertake. Having students pay is not antithetical to their success, it’s part of their success because it’s about barrier elimination.”

The barrier Morgan once faced led her to become part of the solution when Shawn Robey, instructor in finance, noticed her pecuniary acumen. Morgan and Jordan Winka ’20, finance, were hired for the Student Financial Success Center last fall and trained to mentor students, using Dave Ramsey’s Financial Coach Master Training online program. “It’s not our job to hand them $20,” she says. “We have to teach them how to deal with money. How to budget. Otherwise, once they leave the office they will go right back to their old ways.”

Breaking cyclical behavior and establishing new pathways to financial success won’t be simple. When the office opened last fall, students in precarious financial positions were contacted and offered mentoring and a course in financial awareness. Three accepted the assistance. The Care Team paused and pivoted, putting the two mentors to work creating marketing material, a website, a budget template and more, to realign the approach to reach students in need through awareness.

Keeping students on track to reach their goals and not accrue unsustainable debt requires involvement from everyone in USI’s community, and this fall the Financial Care Team cast a wider educational net to develop resources and encourage faculty and staff to alert the team to students in financial distress using an online referral form. “Our enthusiasm on campus for engaging and helping people is very encouraging,” says Jeff. “People really do care.”

Morgan’s education included lessons beyond the classroom that threatened to torpedo her dream—but didn’t. She graduated cum laude this spring with a degree in English and a minor in business administration, and is working on embarking on a career as a medical technical writer, a path that will blend the science courses from her initial dental hygiene major with her love of writing and English degree. Yet, despite her scholarships and work-studies, she owes the government $27,000[iii]. “It scares me to have to pay that money back, because it is a substantial amount,” she says, “but I also feel relieved that I got something out of it. There is a difference between going into debt and not receiving anything as a result, and going into debt for a purpose.”

[i] Free Application for Federal Student Aid

[ii] $6,195 in 2019-2020

[iii] The national average undergraduate student debt is $28,288.

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