How important is student enrollment to your school? For certain institutions, it’s life or death. For others, it’s a recent phenomenon due to current economic trends. Regardless, it’s in your President’s wheelhouse and would be a benefit to be on your radar as well. Recent reports show that students cite financial difficulties as the primary reason for withdrawing from school. Financial literacy programs are key to helping retain those students.
Here are three easy ways to affect retention through financial literacy without busting your budget.
1. Interpret the Investment
Help students understand the financial commitment they are undertaking with 4 calculations:
i. Anticipated total loan debt
Calculate Cost of Attendance minus gift aid, from start to graduation
ii. Anticipated monthly loan payments
Using the anticipated loan debt, calculate using an online repayment calculator
iii. Anticipated income
Utilize a website like Salary.com
iv. Debt-to-income ratio
Divide the monthly income by the monthly payment
A student can then determine if the loan debt is worth the investment, or the beginning of a financial grave. It is most-commonly recommended to limit the debt-to-income ratio to 10% or less.
2. Build the Budget
Guide your students to create a customized personal budget to adhere to during college. It will not only keep lifestyle expectations realistic while in school, but will also help establish healthy financial habits that can be transferred to life after college.
3. Complement the Counseling
Since federal regulations already require loan borrowers to complete Entrance and Exit Counseling, supplement those communications with financial literacy information. Strongly encouraging loan borrowers to watch a video session on money management can help provide a foundation for future financial success!