Breaking the Cycle: Prioritizing Student Financial Success for Higher Education

Driving student success—continually finding ways to improve academic outcomes for students—is the fabric of higher education in the U.S. It's as necessary as air. Gaining traction for decades, today, the student success movement is embedded in the very fabric of higher education. Front line employees across departments execute on the concept daily, and executives allocate millions to fund student success initiatives across institutional strategic plans. We regularly see deans, associate deans, and advisors whose sole focus is driving student success. You'd be hard-pressed to find a meeting that doesn't include a discussion of goals and metrics measuring retention and graduation rates, time to completion, and academic performance.

Continued national attention on ensuring academic persistence is crucial. Students deserve to be supported on their academic journey and provided with resources and guidance to complete their degree in an efficient and timely fashion.

Changing the Conversation

But focusing support solely on the academic pillar of student success is myopic and irresponsible. We need to pivot and begin to address the most important—but least talked about—component of student success: financial success.

How can we ever expect a student to complete a semester or year—to say nothing about an entire degree—if they cannot afford their tuition and fees? Put yourself in the shoes of the average student parent. You are taking 12 credits and spending 6-10 hours a week on homework. You are working 30 hours a week and still struggling to pay for food, housing, childcare, and car payments. And nothing is getting easier. Food and housing insecurity are on the rise—as are college costs. Until we address how students finance their education, we will never solve higher education's completion crisis.

Students Need to Fund Completion

The education crisis we face today is not one of student loan debt—at least not the debt of students who have completed college. For students who completed a four-year degree, the average student loan debt held is just over $28,000. Individuals with an undergraduate degree earn on average 1 million more dollars than those with a high school degree. That's a pretty amazing return on investment. The education earned from that investment can impact lifetime earning potential, employment opportunities, and the trajectory of future generations.

The debt crisis that headlines nationwide love to talk about is largely fueled by students who have debt, but no degree. And that is the true crisis: to invest time, energy, dollars, and hope into something you never complete, and ultimately never realize value on. It's wasted potential for everyone.

Research estimates that we lose 3 million college students a year due to financial reasons. It's not surprising when you consider that 63% of students say they would have difficulty getting $500 in cash or credit to cover an unexpected expense. How can we ever expect students to achieve academic success when they simply can't afford life's necessities? Today's students are struggling to move past the bottom tiers of Maslow's Hierarchy of needs—covering basic physiological needs encompasses 100% of their energy. The answer to how can we ever expect students to achieve academic success in this environment is simple: we can't.

The Awful Reality for Non-completers

There are 40 million former students who have earned some college credit but no degree. If they were a country, they'd be roughly the 36th largest by population size in the list of more than 230. When students take on student debt and do not graduate, they are three times more likely to default on their student loans, which happens when they go 270 days without making a payment. A student in active default of a loan is no longer eligible for Federal Financial Aid and needs to bring loans out of default to get financial aid again, effectively stopping them from returning to school.

Default is also almost as destructive to a student's credit as claiming bankruptcy. In fact, it may be more damaging. Defaulting often leads to stronger collection agency activities like wage garnishment. If left unresolved, default can live on a credit report longer than bankruptcy.

Why Are We Okay Knowing That Students Are Worse Off Than When They Started?

Students who drop out of school with debt and no degree are worse off than those who never attended school. They've potentially missed years in the workplace, giving up jobs or shifts to make time to attend school, but now they don't have the credential necessary to move up to the next level of employment. And if they hold debt, like the 50% of students who have attended college, they have a new monthly bill that needs to be paid—without improved employment prospects.

Prioritizing Student Financial Success Outcomes Solves the Completion Crisis

There is a crisis, but not the completion crisis you are thinking. The low levels of college completion are a lag measure demonstrating that we have a student financial success crisis that starts before students step on campus. When looking for the right college, students aren't being provided the correct tools, data, and counseling to be able to make well-informed buying decisions when choosing the right college, making it a highly personal, emotional choice.

Just ask the 30,000 financial aid professionals who spend their lives on the front lines of all the pressure, confusion, and excitement students deal with as they try to fund an affordable American dream. No one builds a career in the financial aid office to limit access to students. But without the appropriate resources and investment, financial aid professionals can't fulfill their personal mission to increase access either.

Change the System & Focus

Schools in the U.S. have been overly focused on academic success, ignoring the fact that a student who can't afford to be at school can't ever succeed. Often the voices of aid offices have been diminished in the fight to improve student success—so we need to shout louder. We need to shift attention and resources to focus on more impactful counseling, on ensuring students understand the true cost of a degree, on making improvements to allow access to alternative funding opportunities, and to educate and fund emergency resources. The power to change the trajectory of hundreds of thousands of lives each year depends on it.

Learn more about financial friction's impact on student well-being.