Student uses LRAP to help afford college and graduates

LRAPs can provide innovative solutions for students and institutions

This blog summarizes the key takeaways from our fiscal resiliency podcast, episode 13.

“Can I afford college?” is a common concern among students after high school graduation and is something that may keep them from attending a college or university of their choice within the timeframe they desire. This trending – and at times, daunting – topic of affordability consistently comes up in higher education board and leadership meetings, as well as conversations we have with institution leaders, especially when discussing current challenges related to enrollment and retention.

In Baker Tilly’s recent Higher Ed Advisor fiscal resiliency podcast, Drew Whipple, associate vice president for enrollment at MidAmerica Nazarene University (MNU) and Peter Samuelson, president of Ardeo Education Solutions (Ardeo), joined us to discuss an innovative solution that helps give students access to higher education within the context of affordability: loan repayment assistance programs (LRAPs). Our discussion emphasizes how institutions can provide LRAPs to students to enhance their ability to attend an institution and complete a degree program within their financial means. This program also has the potential to offer increased institutional resiliency as it strengthens retention and completion outcomes, which have a compounding impact on enrollment, and ultimately, fiscal results.

Giving access to higher education and supporting the MNU mission

Like many colleges and universities, MNU was witnessing enrollment decreases. Prior to introducing LRAPs, the institution’s enrollment had dropped 13% year over year, and the institution had significantly increased its discount rate as a result. MNU began investigating creative solutions that would address the issue of affordability to help students and stave off additional enrollment declines with significant impacts on the institution’s financial position. Whipple had prior experience and familiarity with Ardeo’s LRAPs and the positive impacts the program could offer MNU. Most importantly, Whipple understood the alignment between programs like LRAPs and MNU’s mission of allowing its graduates to “pursue their passion, not a paycheck.”

Oftentimes, after the excitement of receiving college acceptance letters, enthusiasm can become dismay when students receive their financial aid award and realize the significant costs that they or their families will assume. Students and their families may deliberate if higher education is simply an unattainable dream, or a dream deferred. In another scenario, students may anticipate suboptimal earnings potential post college graduation due to their pursuit of certain career fields, the prospect of unpaid internships or initial job offers at minimal pay levels. In these situations, students, graduates and families worry about their ability to repay student loans. Samuelson points out, that LRAPs have made all the difference for institutions like MNU because the program transforms the college affordability-related enrollment hesitancy into a “yes.”

Samuelson commented that innovative financial solutions in higher education, such as LRAPs, are like a “safety-net,” especially for students whose income after earning their degrees is expected to be modest or less than a specific threshold. The LRAP helps students repay their student loans at a level that is deemed realistic based on earnings. MNU’s “Pioneer Pledge” (LRAP) program is an example of this. Whipple explained that the Pioneer Pledge provides students a comfort level in committing to student loans, given that repayment expectations consider post-graduation earnings potential.

Whipple described how his institution achieves this when staff members meet with deciding students and their families. He said the discussion topics not only involve affordability but also graduation, which is the Pioneer Pledge’s main goal and requirement. Whipple adds that the institution uses a hands-on approach in educating students by providing as much information as they need to guide them with their borrowing strategy from day one. MNU advisers map out the student’s four-year college journey and specifically take the after graduation earning potential into consideration. As Whipple emphasizes, “Graduation is the goal. Students need to get to graduation, and one of the parameters of this program is that it only pays off if students get there.”

Contributing to fiscal resiliency and serving as a differentiator

Trends across the higher education industry continue to include concerns related to rising tuition and cost of attendance levels – which is a top barrier for prospective students. This is where LRAPs, like the Pioneer Pledge, can serve as a differentiator for colleges and universities. This type of program can make college attendance a reality and has the potential to increase competition among institutions and the ability to expand options for incoming and currently enrolled students.

Additionally, MNU’s Pioneer Pledge has allowed the institution to stretch its limited financial aid and scholarship dollars further, something many colleges and universities would like to do, elaborated Whipple. Since implementing the Pioneer Pledge program, MNU has increased net tuition revenue by 15% and reduced its discount rate by 7%. However, these improvements did not occur quickly. Whipple advised that an LRAP is not an immediate impact kind of program and that it takes time, planning and strategy to effectively implement. He discussed how MNU built its Pioneer Pledge program into its holistic and comprehensive recruitment and retention strategy and required every member of the institution, from leadership to frontline employees, to take ownership for the program to attain success. Further, the Program works side-by-side with and increases the value of MNU’s existing scholarships, grants and other forms of financial aid opportunities students receive.

Data reflects results reality

Samuelson referenced data taken from a survey of students at eight of Ardeo’s higher education clients that showed “16% of 1,200 students who matriculated expressed they would not have gone to college without the LRAP; over 30% of students of color, first generation and low-income families would not have gone to college without an LRAP.” In terms of enrollment numbers, MNU experienced a 10% increase in enrollment in the fall of 2020 (despite the pandemic) and is on track to grow enrollment again. As the data indicates, LRAPs can positively impact not only student retention and completion numbers, but also institutional enrollment.

In closing, students are being asked to borrow more money each year as the cost of tuition continues to increase and face tough decisions about whether and where to attend college. Strategic institutional support programs rooted in data and focused on student success (like LRAPs and the Pioneer Pledge) are becoming keys for students who choose to attend institutions with such programs given that they receive the financial assistance and supports needed to fulfill their aspiration of earning a college degree. As Samuelson encourages, institutions that offer creative solutions to make college access and affordability a reality demonstrate their belief and commitment to the value of a college degree and the higher education experience for their students.

For more information about readying your institution to enhance student success and institution resiliency, or to learn how Baker Tilly higher education specialists can help, contact our team.

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