Cover Letter

We are a group of University of North Dakota students who are concerned about financial literacy among UND students. We have spent this semester researching different areas of the higher-learning system and looking for ways to improve it, particularly right here at UND. Our team members are Abdullah Al-kharji, Lorraine Woiak, Alexander Walton, and Zach Drees.

In our research, we have noticed that college students seem to lack critical understanding about the financial aid process. Many students don’t know what types of aid are available to them, how to apply, and the deadlines to apply. They also may not understand the different types of student loans and how to manage them. These factors can even cause students to miss out on financial aid opportunities. This lack of understanding often leads to frustration for students. For some, this may be a minor inconvenience, but for others, the effects are more drastic. It can even affect the retention rate at UND.

Our goal is to make this process easier for incoming freshman and transfer students, as well as anyone else who needs extra assistance in this area. Our proposal will help students better understand the financial aid process from start to finish. We have an idea that will be relatively inexpensive compared to other projects with similar goals.

The proposal involves putting on a presentation at orientation. In this presentation, we will cover the following areas:

• Subsidized and unsubsidized loans
• CLEP

In order to keep costs low, we would ask for volunteers to put on these presentations. Finance students who are upperclassman may be willing to do this on a volunteer basis as it would be great experience for them. The presentations would be advertised on fliers that would be distributed throughout campus. The fliers will summarize the information given at the presentation. The financial literacy presentations can also be advertised on social media sites like Facebook, Instagram and Twitter. This will reach a much wider audience than the fliers and is essentially free.

In order to get this Financial Literacy program started we request an initial grant of $1000. This will help us pay for the following expenses:

• 250 Fliers – $40

• Treats and giveaways at the Financial Literacy presentations – $500

The balance of the $1000 will be kept for unexpected expenses. We expect that in time, this program will pay for itself. Informed students at UND are more likely to complete their education here.

Title Page

Executive Summary

We propose that a formal presentation on financial literacy is given to all students at orientation. This will reach most incoming students at UND. The presentations will focus on the financial aid process, showing students how to use and apply for the different types of aid. Incoming students will have the opportunity to ask any questions they have about things like student loans, CLEP (College Level Examination Program ®) exams, etc. Giving the students this knowledge should lead to less stress about finances. We are hopeful that this will lead to students who are more likely to stay in school, which will lead to increased tuition revenue at UND, and improved graduation rates.

Introduction

How will this benefit UND?

Increasing student financial literacy would be highly beneficial for UND because it would allow more funding to be allocated to the university both directly and circuitously in a variety of ways. An increase in funding would ideally result in a commensurate increase in the quality of education for students, which would, in turn, increase the number of applicants or the amount of tuition UND could reasonably charge its students.

There are many students who take semester-long breaks, and sometimes more, due to financial constraints which could easily be mitigated to some degree through increasing the understanding that students have of the options available to them. If students are less likely to take breaks from their education, this will in turn increase enrollment numbers and thereby increase revenue the university gains via tuition. Unfortunately, many students who leave the university with the intention of taking a small break from their education never return to finish their degrees, which drives down retention rates. UND has a decent retention rate, but increasing it even further would both raise annual revenue from tuition as well as attract more federal subsidies as a result of the greater performance of the university. Since the most commonly cited reason for “taking a break” or dropping out from college is due to finances, it stands to reason that increasing financial literacy would result in an increase funding both from the students and from the federal government.

Many students also graduate with mountainous debt – the average debt for a student upon graduation at UND is sitting at slightly below $40,000 (about average, nationally). When students are looking at which universities to attend, they often look at the debt-upon-graduation for each respective university. When student financial literacy increases, more intelligent decisions will be made regarding how they secure funding, and debt-upon-graduation is therefore also likely to decrease, indicating to prospective students that attending UND is a financially sound decision compared to its competition. This would be especially effective for attracting out-of-state students, a goal which is shared both by the government of North Dakota (as evidenced through its exceptionally low cost of tuition for out-of-state students compared to other state universities) and by UND, as is stated in its mission report – to increase diversity.

Aside from driving up revenue through attracting non-domestic students, lowering debt-upon-graduation also has the benefit of allowing alumni to make large-scale purchases more quickly after graduation such as property, or various amenities which can then be taxed (unlike loan repayments). Owing largely to the state oil boom, North Dakota is one of the few states which actively increases its subsidies for higher education, and if such large-scale purchases are made with less money going to loan repayments, we can reasonably expect that even more tax revenue will be allocated to NDUS schools. The reason for this (and the motive of legislators) is easy to discern: North Dakota is a mostly-rural state, and growth requires attracting people from other states somehow. One of the primary means through which North Dakota aims to attract non-domestic residents is through its relatively cheap higher education program. Every increase in tax revenue at the state level will come with an increase in state subsidies to higher education, and lower debt upon graduation will necessarily lead to higher tax revenue for the state.

Fundamentally, educating students about the financial options available to them in turns benefits UND financially. [add more]

Recommendation Report

The financial aid

Financial literacy would go a long way in enabling students to pursue higher education, realize higher retention rates and hopefully, reduce the amount of students loans owed (National Financial Educators Council, 2018). Achieving such financial literacy requires that the financial aid options be available to the students in question. One such financial aid option available to students is scholarship. According to Fung (2017), educational scholarships are given to deserving students based on merit, financial need, and academic performance. Moreover, scholarships are usually provided by leading corporations as a form of CSR (corporate social responsibility). It is worth noting that students are not expected to pay back scholarship money advanced to them. Such awareness is important as students are likely to be put off by the fear of accruing interest on loans.

Subsidized and unsubsidized loans Differences

Aside from scholarships, students can also finance their higher education through subsidized or unsubsidized loans. Financially needy students can access subsidized loans based on the cost of their attendance less the contributions made by their families, as well as any scholarships or grants extended to the student. In this case, it is essential to note that subsidized loans do not attract any interest for the duration of time during which the student is in school. The interest accruing from such loans is offset by the U.S Department of Education for the duration of time the student is in school.

Additionally, even after graduation, one is also granted a grace period of six months before starting to repay the loan (Huff Post News, 2019). Therefore, with subsidized loans, the student is in a position to clear such loans at a faster rate. The federal government often provides such subsidized loans depending on the level of financial need of an individual student.

A student may also benefit from unsubsidized loans. Unlike the subsidized loans, unsubsidized loans start attracting interest immediately the first loan has been disbursed. The good thing is that the student does not have to start paying any interest that accrues on their loan the minute it has been extended to them. In this case, the students only have to start paying the loan after they have completed school. Upon graduation, the accruing interest from your student loan is incorporated into the principal loan amount, and after that, the student can start repaying this amount (Federal Student Aid, 2019). They will be expected to pay this in the important date that s agreed. A key benefit of unsubsidized loans is that the student does not have to demonstrate that he/she is financially needy. Consequently, the student can benefit from a higher loan amount in comparison with a subsidized student loan. Moreover, this loan can be accessed by undergraduate as well as graduate students.

CLEP exams

During the student’s orientation presentation ceremony, it is essential to focus on CLEP exams given its potential in affording the student an academic advantage. CLEP exams allow students to earn credits. This not only means that they get to fulfill their introductory requirements, but it also enhances enrolment. In this case, CLEP affords students the luxury to take on more challenging courses, not to mention that it instills in students the persistence required to pursue a degree course. One of the main benefits of availing such information to students is that since they will be attending mandatory meetings, they have no choice but to listen to it. Consequently, they are more likely to acquire additional knowledge regarding the relevant subjects of interest. During orientations, most students are accompanied by one or both of their parents. They too will have to listen to the presentation on financial aid options or CLEP exams (McWhirther, 2019). As expected, the parents will also contribute towards the choice of financial aid by their children, and more so an option that they feel is cost-effective.

By choosing to make such information available to students during orientation, the university would be making use of a cost-effective mode of communication. This is because the setting and venue are geared towards imparting knowledge to students and educating them on the various financing options available for higher education. Consequently, universities are more likely to influence enrolments positively through such meetings.

It is not enough, however, to expect that students will show up for the orientations as organized by the university. Institutions of higher learning must make concerted efforts to ensure that such students get to know of the meetings beforehand so that they can make informed decisions. One way of dispersing such information is to design flyers and posters and distribute them around the university campus. This will not only create awareness among the students, but it is also likely to elicit interest in others, and hence contribute towards their attendance. Another platform for getting this information to reach the student is through social media. In this case, a Facebook post on the proposed event, venue, speakers, and activities to be covered would also reach out to a lot more students than say, fliers. This is because social media platforms are very popular with university students based on their rate of usage. Millions of people, including students, make use of it as a tool for communication, provision of crucial information, and to aid in networking. In this case, Facebook, as a social media platform, could act as a reliable tool that will mobilize university students to attend meetings where they will gain financial literacy.

Another viable platform for availing information on financial aid options and CLEP exams t students is the UND homepage. Students will easily stumble upon such information as soon as they visit the university’s website homepage. While some students may not get to visit the homepage, one or more of their friends will do so and pass the message across. The university should organize booths at related events such as during sporting days, educational fairs, or symposiums. On such days, students can stop over and seek clarification, ask questions, and get advice on the financial aid options available to the students, as well as information on the CLEP exams.

Besides, the university may also deem it necessary to stock such booths with brochures on various financial aid options. The extra information is vital in enabling both students, and their parents choose a scholarship or student loan that is most suited to them. Such booths would be of real benefit to students as they would help to reignite what they had learned at orientation, and which they may have forgotten after all. Such reinforcements imply that they are more likely to remember the information and more importantly, take up one or more of these financing options. Information booths are an indication that the students can easily access the relevant information. Increased access to information is important in minimizing any frustrations the students might encounter along the way. Besides, the ease in pressure implies that students can act on such information to their benefit.

In the long-run, increased access to financial information and CLEP Exams would be an added advantage to the universities. This is because they would not have to advertise heavily to increase students’ enrolments. All they have to do is organize student orientation events to get the students interested in their courses. Besides, during such orientation, access to financial information means that students are more likely to pursue these options, which means added revenue for the universities.

Works Cited

 

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