From the Vice Provost
Financial Aid — Putting the R in ROI
One of things I love about living in West Lafayette is being able to zip up to Chicago, a quick two-hour drive, to take advantage of big-city opportunities, like the Broadway phenomenon Hamilton. Not long after seeing the show, I joined a standing-room-only audience at Purdue to listen to Ron Chernow, author of the award-winning biography that inspired the musical. Talk about “wow!”
It got me thinking of our extraordinary forefathers, including Abraham Lincoln who signed the visionary Morrill Act – legislation that started a revolution in U.S. higher education. Land-grant universities, such as Purdue, are one of our country's great, democratic, truly American accomplishments. Investing in education so that working-class people, and our country, could succeed.
Fast forward to 2017, it’s never been more important for all of us – “we the people” – to have a voice in how to make higher education affordable and accessible.
So today, I’d like to focus on college financial planning (apologies to Lin-Manuel Miranda for taking a few liberties).
It’s a Mixtape
There’s no magic bullet for college financial planning. Savings, income, borrowing, debt – all play a part. Knowing what to do and how can be intimidating for many families. That’s why financial literacy has become a buzz phrase on college campuses – financial aid departments, like Purdue’s, are proactively providing information to help students navigate the process and make smart decisions with their money and borrowing.
Here at home, Purdue Moves represents the University’s commitment to providing higher education at the highest proven value. Decreases in borrowing and debt at graduation are two indicators that the Purdue Moves strategy is succeeding. Overall borrowing, both student and parent, continues to decrease as do student debt and the percentage of students who borrow. In 2015-16, the percentage of all students who graduated with debt continued its decline and for the first time since 2011-12, the percent of Indiana residents who graduated with debt fell below 60%. The overall dollars of undergraduate student and parent loans has decreased more than 30% over the past five years.
Wait for It
Students can now file a FAFSA as early as October 1 for the following academic year, and because the FAFSA is now based on taxes that are already filed, more families can take advantage of its IRS Data Retrieval Tool, decreasing the need for verification and additional document submission. In addition, many universities can provide financial aid packages earlier, which means families have more time to consider options.
When students receive financial aid packages, they should recognize that the best offer may not be the one that offers the most money. The real monetary evaluation is not what you have, but what you have left – the net cost after scholarships and grant aid have been applied.
Our advice? Students should wait until they receive all financial aid packages and then sit down at the dinner table to talk about the “triangle of fit” – academic, personal and financial fit.
Frozen tuition is one approach Purdue has taken to manage students’ net costs, and the graduating class of 2016 was the first cohort to complete four years at Purdue with no tuition increase. Room and board costs have actually decreased at Purdue in recent years.
Strategic use of institutional aid is another. We’ve made sometimes difficult decisions to align financial aid policies more closely with intuitional goals. For example, we’ve doubled the value of our Marquis Scholarship (for middle-income Indiana residents), which provides these students with an additional $8,000 in gift aid over a four-year degree.
History Has Its Eyes on You
Last year Purdue launched the first-ever income sharing agreement (ISA) at a public university, aptly called Back a Boiler. In the simplest terms, Back a Boiler is an agreement that allows students to help finance their education with future income, an option that is potentially less expensive than private and Parent PLUS loans.
Back a Boiler takes the pressure off. Students agree to pay a set percentage of their post-graduation income and payment doesn’t begin until they have a job. They don’t pay if they don’t meet a minimum income level, and those with a substantial income don’t pay more than a predetermined maximum. Right now, we’re offering this program to junior- and senior-level students. (In 2017-18, it will include sophomores.)
What Comes Next?
Of course, Purdue is not the best financial fit for all students. And while we cannot commit to a zero tuition increase indefinitely or produce the optimal financial aid package for all families, we do commit to transparency and support as students make decisions about Purdue and college financial planning.
As always, we are just an email or telephone conversation away.
Vice Provost for Enrollment Management