Aid Like A Paycheck – Project Overview

1. Aid Like A Paycheck – Project Overview North Carolina Association of Community College Presidents July 24, 2014 Michelle Ware, Operations Associate, MDRC Kim Sepich, VP of Student Affairs, Davidson County Community College Kevin Lineberry, Associate Dean Student Success, Davidson County Community College

2. Overview • Who is MDRC? • Aid Like A Paycheck – Overview, Pilot Findings, MDRC’s Large Scale Evaluation • Davidson County Community College • Next Steps in North Carolina

3. Who is MDRC? • MDRC is a national education and social policy research firm with 40 years of experience designing and testing programs and policies to improve the lives of low-income people • Ten years of partnerships and rigorous research with community colleges across the nation www.mdrc.org MDRC

4. What is Aid Like A Paycheck? Aid Like A Paycheck: • Program • Delivers existing financial aid – after tuition and fees – in a new way to help students balance work and school • Changes the frequency of financial aid disbursement to every two weeks, like a paycheck • Research project MDRC

5. Aid Like A Paycheck • vs. Standard Disbursements • Aid Like A Paycheck provides 8 biweekly payments MDRC

6. Why Deliver Aid Like A Paycheck? • The goal of the program is to help students succeed in college and better manage their money. • Aid Like A Paycheck may also make financial aid more efficient, distributing aid to students while they maintain enrollment. • Can influence policy, and ultimately may impact millions of students. MDRC

7. Potential Benefits for Students Standard Disbursement: Financial AidMoney Decreases and Work Increases Throughout the Semester Aid Like A Paycheck: Financial AidMoney and Work Stay the Same Throughout the Semester MDRC

8. Potential Benefits for Colleges • Make financial aid programs more cost-effective by ensuring aid is distributed while students maintain enrollment • Limit Returns to Title IV • Potential fit with your student success agenda • Potential to help reduce the college’s default rate MDRC

9. Important Aspects of Aid Like A Paycheck • Incorporates all sources of aid • Applicable to all students (full and part-time) if they receive a financial aid refund • Falls with current federal regulations • Financial Literacy inclusion varies across colleges MDRC

10. Original Pilot Sites • Mt. San Antonio College, started in fall 2010 • Walnut, California (Los Angeles area) • 200+ students volunteered for Aid Like A Paycheck • Triton College, started in spring 2012 • River Grove, Illinois (Chicago area) • About 100 students volunteered for Aid Like A Paycheck • Another 100 were randomly selected to receive biweekly disbursements MDRC

11. Current Pilot Site • San Jacinto College, started pilot in spring 2014 • Houston area, TX • About 60 students randomly selected to receive biweekly disbursements MDRC

12. Lessons from the Pilot • Positive responses from students • Financial Aid Advisors provided good input during planning phase. • Valuable data was collected to prepare for full implementation. • Important lessons learned regarding implementation MDRC

13. Lessons from the Pilot - Challenges • Management Information Systems (MIS) changes • MDRC and Texas colleges working on short-term and long-term solutions • Different types of aid • Pilot included primarily Pell Grant • Evaluation will include loans and other aid (depending on site) • Multiple starts in a term • Others challenges specific to North Carolina? MDRC

14. Lessons from the Pilot (continued) Debt Reduction – One College’s Story: • The pilot project demonstrated that students can save money. • The 3 students who either stopped attending or withdrew created a lower debt. • Payments were stopped when the Financial Aid Office received attendance tracking data. • Students can return for future semesters without having to repay a large debt before reenrolling. MDRC

15. Next Step: A Large Scale Evaluation • Important Questions and Issues Remain: • Can Aid Like A Paycheck be implemented at a larger scale? What facilitates successful implementation? • Does Aid Like A Paycheck improve students’ academic outcomes, such as credits earned or persistence in school? • Does the policy affect economic outcomes, such as total aid received or debt accumulated? • What are the benefits and costs to students, colleges, states, and the federal government? MDRC

16. Randomized Control Trial • Only “new” students included in sample • 5000 Students randomly assigned to two groups • Aid Like a Paycheck – “Program group” • Normal college disbursement – “Control group” • Difference in students’ outcomes = impact of the program MDRC

17. Colleges in the Evaluation • Up to two sites in two states • Texas • San Jacinto College, evaluation start in spring 2014 • Houston Community College System, pilotstart in fall 2014 • Large system in Houston, TX • Approximately 75 students will be randomly selected to receive biweekly disbursements • Second state TBD • - Conversations with colleges going on now MDRC

18. Full Evaluation Timeline MDRC

19. What Does it Mean to be an Evaluation site? • Influence: • Positive influence on students, policy, and practice • Support: • Technical assistance and financial support for participation in evaluation • Lessons learned from the pilot will be utilized during the evaluation • MDRC will work with colleges and external partners to find solutions to implementation challenges. MDRC

20. What is Required of an Evaluation site? • Site must collaborate with MDRC to implement the Random Assignment research design • Site will be required to share data with MDRC • Site must designate a liaison/project lead to work closely with MDRC • Administrative support to facilitate the effective implementation of Aid Like A Paycheck MDRC

21. Aid Like A Paycheck and Policy • What policy changes are needed to implement Aid Like A Paycheck? • Federal? • State? • Institutional? MDRC

22. Discussion • Evaluation Questions – What else should we be asking? • Can Aid Like A Paycheck be implemented at a larger scale? What facilitates successful implementation? • Does Aid Like A Paycheck improve students’ academic outcomes, such as credits earned or persistence in school? • Does the policy affect economic outcomes, such as total aid received or debt accumulated? • What are the benefits and costs to students, colleges, states, and the federal government? MDRC

23. Aid Like A Paycheck Davidson County Community College Kim Sepich, Vice President of Student Affairs Kevin Lineberry, Associate Dean, Student Success

24. Davidson County Community College • Why we are interested Aid Like a Paycheck • Benefits to students • Consistent aid disbursement over time • Not just incentive to enroll; also incentive to complete courses • May mitigate financial crisis and reduce reliance on one-time emergency aid • Benefits to the College • Completion initiative • Data source to increase understanding of relationship between financial aid and completion • Reduce Return to Title IV amounts and loan default rates Davidson County Community College

25. Davidson County Community College • As a pilot site, we want to learn: • Important psycho-social planning mechanisms • Specific financial literacy needs of students • Institutional policy changes • Value of Aid Like a Paycheck related to student completion Davidson County Community College

26. Aid Like A Paycheck’s Impact on • Return to Title IV – R2T4 • Currently, financial aid is awarded and disbursed to students at the beginning of the semester under the assumption that they will attend for the entire semester. • When a student completely withdraws (before the 60% point), the student is no longer eligible for the full amount of Title IV financial aid funds s/he received. Davidson County Community College

27. Benefit: Reduction in R2T4 School Liability Current (DCCC): • Hypothetical Aid Like A Paycheck Impact (DCCC): • If complete withdrawals were reduced by 15%, the resulting impact would be 55 fewer R2T4 calculations for the period aboveand a reduction of school liability in the range of $28,500 – $35,000. • GTCC, is currently disbursing loans in three equal payments throughout the semester. R2T4 calculations for students receiving loans decreased 37% between Spring 2013 and Fall 2014. Davidson County Community College

28. Benefit: Reduction in R2T4 Student Liability Current Disbursement Method Fall Semester: • Lillie stopped attending on the 28th day of the fall semester, making her eligible for only 25% of the $7,819 financial aid disbursed to her. She’s earned $1,954.75 (25%), leaving $5,864.25 (75%) to be returned. Davidson County Community College

29. Benefit: Reduction in R2T4 Student Liability Aid Like A Paycheck Disbursement Method Fall Semester: • Lillie stopped attending on the 28th day of the fall semester. With the Aid Like A Paycheck disbursement method, on the 28th day, only $1,944 of her $7,819 award had been disbursed. She’s earned $486 (25% of the $1,944), leaving $1,458 (75%) to be returned. Impact: Lillie’s liability for the complete withdrawal has been reduced by Aid Like A Paycheck. Loans were a significant part of the financial aid award, so Lillie will carry substantially less debt for the complete withdrawal from school. Fall 2013 and Spring 2014 student R2T4 loan debts for non-completers (completed 0 credits) = $564,561.31. Davidson County Community College

30. Benefit: Increase Money Management Skills/Financial Literacy • Financial aid “windfall” check. Many students don’t have the skills or discipline to use • a large financial aid disbursement wisely. Davidson County Community College

31. Benefit: Increase Money Management Skills/Financial Literacy • Provides stable, recurring payments throughout the semester, rewarding progression • and completion • Reduces fraudulent enrollments; Pell/Loan surfing. • Financial Aid Office of the Future: Focus on Access and Financial Literacy. Opportunity to • positively influence student’s money management skills with financial education/outreach • throughout their enrollment. Excellent compliment to current SALT and Ex$el initiatives. Davidson County Community College

32. Potential Benefit: Reduce Cohort • Default Rate • DCCC’s FY 2011 3 year default rate is 22%. 50 students defaulted in a three year period out of the 227 students who entered repayment. • Aid Like A Paycheck will limit loan debt for non-completers, which could have an impact on reducing a college’s overall default rate. • Removing 5 students off the default list would reduce the default rate by 2%. • 36 of the 50 students in default withdrew completely or successfully completed 0 credits. • Borrowers who graduate (or who earn a degree or who do not withdraw) have a much lower probability of defaulting on their loans (Dynarksi, 1994; Kanpp & Seaks, 1990; Meyer, 1998; Podgursky et. Al., 2000; Volkwein & Szelest, 1995; Volkwein et. Al, 1995: Wilms, Moore & Bolus, 1987; Woo, 2002). Davidson County Community College

33. Questions for Consideration • How might the incentive structure of Aid Like A Paycheck align with other student success efforts at your college? • Could your college implement Aid Like A Paycheck? Why or why not? • What additional areas should be explored when implementing Aid Like A Paycheck? MDRC

34. Contact Information Kim Sepich, David County Community College Vice President of Student Affairs kwsepich@davidsonccc.edu 336-249-8186, ext. 6311 Kevin Lineberry, Davidson County Community College Associate Dean, Student Success kjlinebe@davidsonccc.edu 336.249.8186 x6466 Michelle Ware, MDRC Operations Associate, MDRC michelle.ware@mdrc.org (510) 844-2237 For more information and downloads to our publications, visit: www.mdrc.org.