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Iowa universities to debut financial literacy initiative

Jun. 15, 2017 2:51 pm
Having spent years urging college students to improve their money management skills through volunteer courses, loan advising and support services, Iowa's public universities in the upcoming academic year will - for the first time - begin automatically enrolling new students into a financial literacy education program.
Leaders from the University of Iowa, Iowa State University and the University of Northern Iowa have spent months fine tuning the financial literacy education initiative after the Board of Regents last year slammed their efforts to that point as not enough.
'They are trying to water down this approach, once again, when student debt reduction should be our highest priority,” former regents President Bruce Rastetter said in October 2016.
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At that time, the board charged the universities with coming up with a mandatory, classroom-based, credit-bearing financial literacy course.
The directive followed a report by Tahira Hira, an ISU professor of personal finance and consumer economics, recommending as much.
The financial literacy training announced last week is not that - as administrators said mandated courses are costly, time and space consuming and challenging to implement. But in a follow-up report to the board meeting Thursday in Cedar Falls, Hira said she believes Iowa's universities still are leading the country in the financial literacy initiative.
'You will be happy to know that Iowa is making history by being the first one in the country to put this program in place for all three public universities in the state,” Hira said. 'I know there are many other institutions who are watching our program.”
The new online curriculum, providing by the National Endowment for Financial Education's CashCourse at no cost, was piloted at ISU during the spring semester.
Because the university did not have the ability in the pilot program to automatically enroll students, it opened it up to volunteers and got about 400 of 8,000 potential participants, officials said.
ISU offered modules on budget and money management, spending and financial decision making, credit and debt, financial aid and student loans and banking and car buying.
Participants reported finding most helpful the courses on budget and money management and financial aid and student loans, according to Hira.
In scaling up the initiative this upcoming year, all three regent universities have different plans. The UI and UNI will begin automatic enrollment in the fall, while ISU will wait until spring. ISU and the UI will provide four weeks for completion, while UNI will give students the entire semester.
The initiative also will increase personal contact with financial mentors. And the universities will continue reviewing and adjusting programs going forward.
Hira's report on the new course came just minutes after regents approved a second tuition increase for the coming fall - raising rates for resident undergraduates by $358 over last fall and by much more for other categories of students.
The universities argued for the need to increase tuition by citing dramatic state funding cuts and losses in faculty and researchers.
The burden of tuition increases on students could be compounded by fewer opportunities for financial aid.
Earlier in the week, regents received a financial aid report from concerned university administrators, who indicated cuts in federal loan and grant programs would make landing assistance more challenging.
'It means less access and the potential that they'll have to be looking at private loan sources,” said Roberta Johnson, director of student financial aid at ISU.
Although financial aid from the universities is increasing, and student debt in recent years has been decreasing across Iowa's public university campuses, drops in federal and state support paired with tuition hikes could reverse those trends, officials said.
Johnson expressed concern with the proposed cutting of three federal programs. The first, she said, is all but a forgone conclusion. The Federal Perkins Loan Program - offering low-interest loans to students who demonstrate financial need - is set to sunset in September.
ISU, on average, was getting about $3 million annually through the program - money it was allowed to target toward the students who needed it most. The UI was getting between $2 and $3 million, and UNI was getting about $2 million, officials said.
'It has, I would say, very fair repayment terms,” Johnson said. 'So as a result, it will be more difficult for our students.”
Another two proposed cuts in federal aid are included in President Donald Trump's budget plan, meaning they have yet to be approved by Congress. They include the Federal Work-Study program, allowing students to help themselves by working in school, and the Federal Supplemental Educational Opportunity Grant program, which helped the very neediest students.
Those programs together funnel millions annually to Iowa's public universities.
If all that federal aid evaporates, Johnson said, more students might take out private loans - which come with higher interest rates and often require co-signers.
'But for some, finding creditworthy co-signers is a difficult challenge,” she said. 'It really cuts off access for those students.”
The Pentacrest, including the Old Capitol, Jessup Hall, Macbride Hall, MacLean Hall, and Schaeffer Hall, in an aerial photograph in Iowa City on Thursday, July 14, 2016. (Stephen Mally/The Gazette)