The Impact Of Rising Student Debt On Alumni Engagement And Giving

Transcription

1 The Impact Of Rising Student Debt On Alumni Engagement And Giving January 2015 Jonathan Sparling, American Student Assistance

2 Agenda 2 1. National Trends 2. Institutional Data Insights 3. Suggestions for Action

3 American Student Assistance 3 More than 275 participating schools Over 1.1 Million active members

4 National Trends

5 Life Delayed Survey of Recent Grads 5 A broader reach and expanded number of respondents Nearly 2,000 respondents distributed across the following populations Community College grads 4 year Public and 4 year Private grads Graduate students or Graduate degree holders and Medical/Law students or degree holders All participants either currently have or had student loan debt that they have subsequently paid off. All respondents were 15 years or less out from earning their degrees

6 Majority Full Time, Earning <60K, In Active Repayment 6 Q. Which of the below best describes your current state of employment? Volunteer Self-employed Military Employed full time Working part time, looking for full-time work Working part time, not looking for full-time work Unemployed but not looking for work now Unemployed and looking for work now 1% 0.4% 6% 9% 6% 8% 7% 61% 0% 10% 20% 30% 40% 50% 60% 70% Q. What is your annual income? Prefer not to answer $100,000+ $90,000-$99,999 $80,000-$89,999 $70,000-$79,999 $60,000-$69,999 $50,000-$59,999 $40,000-$49,999 $25,000-$39,999 Less than $25, % 6% 6% 8% 10% 12% 12% 14% 14% 16% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18%

7 Majority Reported Debt In Excess Of 30K 7 Q. If you feel comfortable sharing, please tell us the approximate amount of your loans. I'm not sure 1% Prefer not to answer 2% 90K + 16% 70K+ to 90K 8% 50K+ to 70K 13% 30K+ to 50K 19% 10-30K 28% Less than 10K 13% 0% 5% 10% 15% 20% 25% 30%

8 Source of Student Loan Debt 8 74% From undergraduate studies 43% From graduate or post-graduate studies 18% From both undergraduate and graduate studies

9 Ease of Repayment 9 45% of undergraduate respondents said it was difficult or very difficult to make monthly loan payments. Q: How easy or difficult is it for you to make your monthly loan payments?

10 Sizable Impact on Purchasing Decisions & Power 10 55% say yes it has impaired their ability to buy a home 52% say yes it has limited their ability to buy a car 60% say yes it has impacted their ability to take a vacation 35% say yes it has even limited their ability to purchase daily necessities Q. Has your student loan debt negatively affected/impacted your ability to do any of the following?

11 Framing the Budget Realities 11 $45,327 (Average Starting Salary) $1,192 $327 $151 On average, mortgage, student loans, and credit card debts equals $1670 or 63% of the average college graduate s take home pay* * Assuming 30% taxes, insurance, etc.

12 Impact on Ability 12 73% Agree or Strongly Agree that student loan debt hinders their actual ability to donate to their alma mater. Q: To what extent do you agree or disagree with the following statements when thinking about your alma mater? Student loan debt hinders my actual ability to donate to my alma mater

13 Impact on Willingness 13 67% Agree or Strongly Agree that student loan debt impacts their willingness to donate to their alma mater. Q: To what extent do you agree or disagree with the following statements when thinking about your alma mater? The amount of student loan debt I incurred impacts my willingness to donate to my alma mater

14 Institutional Data Insights

15 Graduation Debt 15 According to the Project on Student Debt, Seven in 10 seniors (69%) who graduated from public and nonprofit colleges in 2014 had student loan debt, with an average of $28,950 per borrower. * Do You Know What The Figure Is At Your Institution? Have Fundraising Dollars Filtered Into Decreasing Educational Costs? Source:

16 Private Student Loan Debt 16 For the class of 2014, about one-sixth (17%) debt was comprised of private student loans. * Do you know the breakdown for your graduates? If private loan debt is higher than average, why is this important? Source:

17 Types of Degrees Offered 17 As of September, 295,000 Americans had signed up for [Public Service Loan Forgiveness] and were on track for forgiveness, the Education Department says. An estimated 600,000 total are expected to receive forgiveness over the next decade.* Can you identify graduates who would most benefit from information regarding certain repayment options? Source:

18 Average Starting Salary 18 High debt plus lower than expected average starting salary decreases the amount of discretionary income, further impacting the ability of one to donate. This should not, however, impact a willingness to stay engaged. Are you current on latest loan repayment options? Who are the best individuals to partner with across campus?

19 Suggestions For Action

20 Action 1: Education about Repayment Options 20 Once out of school, how valuable would the following types of information be? Different repayment options potentially available for me Training on how to incorporate loan repayment as part of my post-graduation living expenses General training on how to maintain a budget 82% 81% 84% 10% 20% 30% 40% 50% 60% 70% 80% 90% My alma mater(s) should play a larger role in helping me manage my student loans Strongly Agree, 23% Agree, 26% Strongly Disagree, 7% Disagree, 14% Neither Agree nor Disagree, 30%

21 Action 2: Provide Financial Education 21 84% 82% 80% 78% 76% 74% 72% 75% Q: How valuable would you say that the following types of information/resources are to offer to an undergraduate? 77% 79% 79% 80% 82% 83% 70% Counseling on how loan debt may impact my career choices Counseling on how loan debt may impact my future life choices General training on how to maintain a budget Training on how to incorporate loan repayment as part of postgraduation living expenses Strategies on how to get the education at the most reasonable cost Different repayment options potentially available Options on how to reduce student loan debt, e.g., scholarships or grants Q: Once out of school, how valuable would the following types of information be? Different repayment options potentially available for me Training on how to incorporate loan repayment as part of my post-graduation living expenses General training on how to maintain a budget 82% 81% 84% 10% 20% 30% 40% 50% 60% 70% 80% 90%

22 Action 3: Speak their Reality (Use Your Influence) 22 87% Reported that college was important to their feelings of personal success 84% Viewed college as central to their ability to make a comfortable living

23 Action 3: Speak their Reality (The Value Exists!) 23 Q: Complete the Thought: My College experience was 70% 60% 50% 40% 30% 20% Aggregate Struggling with repayment 10% 0% "Was valuable and left me better off, despite the debt I incurred." "Wasn t worth it and has left me worse off than if I hadn't attended college, because of the debt I incurred." "Has had little impact on my life for the better or worse." Other, please specify

24 Action 4: Prove the Value 24 According to a 2015 study by Achieve, one third of Millennials who did not give to their alma maters chose not to because they thought their donation would be better used elsewhere. Millennials want to see a need for their gift (Achieve and Ever true) Think about it: How well are you articulating where the donation will make an impact? What stories are you crafting about their dollars doing to support x?

25 Action 5: Understand their Motivations 25 Sources:

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