Topics FOSTERING STUDENT SUCCESS AT JOHNSON & WALES UNIVERSITY Tom Dwyer & Marie Bernardo FOCUS 2011 JWU Approach to Enterprise Risk Management Student Loan Market Financial Risk Enrollment Risk External Conditions JWU Assessment and Proposal December 3, 2008 2 JWU Strategic Plan Strengthening Student Potential 3 FOCUS 2011 Strengthening the EXPERIENCE Academic and Student Life Extensive program assessment Strengthening STUDENT POTENTIAL Admissions and Enrollment Selectivity Affordability International Recruitment Strengthening CAREER OPPORTUNITIES Career Development Career Progression Study Strengthening the FOUNDATION Resource Development Organized to achieve objectives 4 Johnson & Wales University will be the destination of choice for individuals seeking career education who are highly motivated and demonstrably capable of success in J&W programs. The university will endeavor to establish tuition at affordable levels, and offer financial assistance that support improvement of retention and graduation rates. 1
Reputation Portfolio Risk Concentration of Risk Internal Controls Concentration of Risk Policies & Procedures Financial Controls Segregation of Duties Graduation Rates / Retention Academic Rigor Pricing / Debt Burden Career Progression Food Safety Succession Planning Regulatory Concerns Title IV Accreditations 501 (c) 3 State Licensing FERPA Enterprise Risk Management At JWU Student Enrollment Team Investment Policy Market Risk Asset Allocation Business Continuity Crisis Contingency Plan Financial Security Data Security Network Security Business Continuity Plan Financial Market Turmoil Natural Disasters Security Concerns Insurance Integrated Contingency Plan Loan Generated Revenue $143,142,152 system wide Net Billable $267,580,757 system wide Loan Summary Stafford Subsidized and Unsubsidized $79,473,828 Perkins Overall $11,498,911 PLUS Federal Plus Stafford $25,558,471 Private Private $26,610,942 0708 vs 0809 Changes in Borrowing -30% -20% -10% 0% 10% 20% 30% 40% Charlotte Denver North Miami Providence University 5 6 80% 75% 70% 65% 60% 55% 50% Cumulative Change in Inflation Adjusted College Cost of Attendance, Family Income, and Financial Need Family Income COA Tuition and Fees Financial Need Remaining Cost Remaining Need Cumulative Change in Inflation Adjusted Dollars 20.0% Remaining Need After Grant, Work, 15.0% Achievement Loan and EFC 45% 40% 35% Financial Need 10.0% Cost of Attendance 30% 25% Tuition and Fees 5.0% 20% 15% 10% Cost of Attendance 0.0% Financial Need Family Adjusted Gross Income 2004 2005 2006 2007 2008* 5% 0% 7-5% Family income 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006-5.0% 8 Source: Bureau of Labor Statistics - CPI 2
JWU Average Family Adjusted Gross Income Band Comparisons to National Average 40% 35% 30% 25% 20% 15% 10% 5% 0% Less then 30k 30,00-59,999k 60,000-99,999k 100,000-149,999k Greater then 150k Charlotte Denver North Miami Providence University USA Financing the GAP Federal Loans Stafford (Subsidized and Unsubsidized) No Credit Check Based on need amounts range from $3500 - $5500 subsidized Interest rate 6% subsidized, 6.8% unsubsidized Additional Unsubsidized $2,000 PLUS LOAN Credit qualification loosened until December 2010 No 180 day delinquency on mortgage or medical bills No 90 day delinquency on all other credit worthy accounts Interest rate 8.5% Deferment options Private Loans 2009-20010 loan access unknown due to liquidity issues Expect increase in FICO score minimums in 0910 Lender specific credit qualifications 9 Source: Census.gov - American Community Survey USA Households 45-64 10 Distribution of Student Aid 0708 Distribution of Undergraduate Aid - JWU Distribution of Student Aid 11 Federal WorkStudy 4% State Grants 2% Private Loans 15% 0708 Distribution of Undergraduate Aid - Nationwide Federal WorkStudy State Grants 7% Pell 12% Private Loans 14% Pell 6% Federal Loans 39% Outside Grants 6% Outside Grants Institutional Aid 3 Institutional Aid 20% Federal Loans 37% Federal Grants - other than Pell 2% Federal Grants - other than Pell 3% 12 0809 Distribution of Undergraduate Aid - JWU Federal WorkStudy 4% Private Loans 10% State Grants 2% Federal Loans 43% Pell 6% Outside Grants Institutional Aid 33% Federal Grants - other than Pell 3
Picture of a Private Loan Borrower at JWU Undergraduate enrollment 14,372 Private borrowers account for 15% of our student population (2107) Average annual loan is $12,608 Median EFC is $10,656 which is $5000 more than the median EFC at JWU Median AGI is $88,543 which is $16,624 more than the median AGI at JWU At risk $17,702,673 in federal aid Retention of a Private/PLUS Loan Borrower one year retention model not official calculation Entering Class Entering Class of Sept. 06 of Sept. 07 Difference PLUS 69.3% 73. +3.8% Private 68.7% 74.4% +5.7% No PLUS or Private 63.5% 68.3% +4.8% Overall 67.3% 73.1 +5.8% 13 14 Legislative Impact on Student Loans College Cost Reduction Act of 07 (HR 2669) Created a less desirable market for lenders (increased origination fees, percentage of federal guarantee reduced; a cut of 20 billion in federal subsidies) Volatility in the Student loan market Liquidity concerns A smaller marketplace Borrower benefits limited or non existent A movement towards direct lending Access to Education Legislation Signed as of 5/7/08 extended through 2009 H.R. 5715 extended for an additional year Increase of Stafford by $2000 Independent students; Plus Denial New Amounts will range from $5,500-7,500 Increase in aggregate loan amount from $23,000 - $31,000 PLUS Qualification adjusted until December 2009 No more than 180 days delinquent on a mortgage payment No more than 180 days delinquent on a medical bills No more than 90 days delinquent on any other debt Deferment options Impact on Study on College Costs - GAO 15 16 4
Focus 2011 Awarding Strategies 17 Freshman and Sophomore Increase affordability by maintaining 4 year awards at a consistent level Awards are determined based on a family s need Awards include: Academic/Merit, Johnson & Wales Grant, Pell, SEOG, Stafford Loan and State grants (each is set to meet a percentage of need) Average institutional awards for freshmen $8215 Junior and senior awards determined based on need, EFC, and scholarships Average discount rate of 30.7% for tuition and fees Institutional Grant Total University Freshmen $9,000 $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 $5,359 $8,067 $8,215 $5,157 $7,877 $7,301 $5,653 $7,911 $7,322 $6,133 yr1 yr2 yr3 yr4 $7,557 $8,177 2006 2007 2008 On average the freshman class in 0809 received $2856 more in total Institutional grant aid than in September 2006. 18 What we thought was going to happen $40,000 Projected Student Debt by Total Enrollment - University $35,000 $35,140 $40,000 $35,627 $34,495 $30,000 $25,000 $25,955 $25,324 $35,000 $30,000 $25,704 $24,596 $35,312 $20,000 $15,000 $8,487 $12,614 $17,107 $18,851 $25,000 $20,000 $15,000 $8,487 $17,107 $15,629 $16,638 $25,506 $10,000 $5,000 $6,413 $10,000 $6,413 $7,189 2006 $- 2006 $5,000 2007 yr1 yr2 yr3 yr4 2007 $- yr1 yr2 yr3 yr4 2008 19 20 2008 2007 2006 5
Solutions to Mitigate Enrollment Risks Strengthening the EXPERIENCE Award Adjustments ($2.4 million) Maximize Perkins awards Increase awards by $1000 - $4000 for students <75k previously denied PLUS Financial Planning Grants ($2 million) Customized planning grants ranging from $1,000 - $6000 Increase institutional caps Discount for annual payers Access to Education Grants ($2 million) Reports on loan denials will be run on a daily basis Institutional funds will be provided to reduce individual balances to minimum of $3,000 These awards will be reviewed for renewability in 2009 Entering Class Entering Class of Sept. 06 of Sept. 07 Difference PVD 68.4% 73.2% +4.8% NMI 62.6% 67.8% +5.2% DEN 64.2% 74.5% +10.3% CLT 69.4% 75.7% +6.3% University 67.3% 73. +5.8% 21 22 6