Risk and Reward: How Financial Decisions Impact Community College Populations

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Risk and Reward: How Financial Decisions Impact Community College Populations

Marisa Vernon, Lauren Merante, Stephanie Pfeifer, Beth Stanley
Columbus State Community College


The landscape of financial management within the context of higher education is continually evolving as a result of tuition increases and changing federal regulations.  As an example, according to the College Board, the tuition and fees for in-state students at public four-year institutions increased by 2.9% for the 2013-14 school year, following a 4.5% jump the year before (Buschman Vasel, 2014).  Financial aid and student indebtedness continues to be a prominent part of conversation in the political realm as well.  Higher education issues do not often figure prominently in campaign advertisements.  But there are some indications that it may be getting some greater play during this cycle (Stratford, 2014).

It is vital that students have a good understanding of what it means to both apply for and accept financial aid as they begin their college careers.  Jason Comfort, age 23, graduated from Michigan State in 2013 with a degree in Civil Engineering and is living back at home.  He is now working a steady, full-time job, but with $160,000 in student loans. He reports, “My student-loan debt is enormous; I can’t make it happen.  I had no idea when I was applying to college how this was going to impact my future.  I feel like I am being left behind as all my friends move out on their own” (Buschman Vasel, 2014).

Accepting financial aid does not have the tangible feel of a transaction the way the acceptance of a product does when completing a purchase at a store, or even online.  Unlike some retail purchases, the financial aid consumer is making an agreement to purchase a service rather than a good.  Students are receiving an education in return for their money, which is a very valuable asset.  However, such an asset or credential differs in that it might not reap full benefits immediately.  In order to fully value this type of investment, students must understand that the education received equates to an increased skill level, and therefore, a heightened sense of employability and the quest to become more marketable.

As first-generation, low-income students enter today’s community colleges, student affairs professionals from areas such as orientation, financial aid, academic advising, and career counseling are charged with not only helping students to succeed academically, but fully understanding the financial decisions supporting their educational pursuits.

Short- and Long-Term Mindsets

Long-term versus short-term planning becomes a factor when students begin to make educational decisions, as degree completion and wise usage of funds are key.  While attaining knowledge along the way is valuable, it is important that the student completes the journey as well. All too often, we sadly see students start on their developmental education, or even general education, requirements and stop out before completion of a certificate, degree or other credential.  While students might have created a foundation for themselves, they may have very well spent funds towards classes that are not going to contribute to the original goal of becoming more marketable.

Extending beyond the completion of the FAFSA, low-income students often encounter significant hurdles in reconciling the need to further education with the intent of more secure employment and the immediate need to generate funds to address current financial needs.  It is the unfortunate reality that even with financial aid awards, the average financial gap between award and need for a low-income student is $5,277 (The Institute for College Access & Success, 2009).

With such outstanding need, there is little option for low-income students to forego work.  Despite on-campus federal work-study positions, opportunities in this category are limited on community college campuses, leaving many students seeking outside employment.  Grappling with these difficult choices, full-time enrollment is often not a viable option, leaving many students attending part-time at best, starting and stopping prior to reaching degree completion.

As student affairs professionals, we often witness students employing short-term strategies rather than focusing on the long-term return on investment education can provide.  For example, students may choose to utilize available funding for living and other non-academic related expenses, though fail to successfully complete classes.  This strategy can present both academic and financial implications that can be harmful to their forward progress, as discussed later in this article.

Often, if students focus too intently on immediate financial need, and they are not thinking long-term, student loan balances and the cost of additional semesters can balloon.  Students can be alarmed by the debt they have taken on, especially if they have not drawn a realistic picture related to their expected income and the ratio of their income to debt payments.

According to Stratford and Fain (2014), some 2.6 million federal loan borrowers across the country are in default on their loans, and another 2.87 million borrowers are behind on their payments.  Of these borrowers, community colleges and for-profits see the highest rates of default among their borrowers.  Cheng, Freeman, and Leopold (2013) suggest student-friendly approaches to net price calculators (NPCs) and financial aid award letters, which can make an enormous difference in helping students and families understand college costs and their options for meeting them at all stages of the process, and could lessen the number of students who default on their student loans.

Understanding Financial Aid Eligibility Requirements

The financial aid process, which consists of many factors, can often be confusing to students.  Of the numerous eligibility requirements to which a student must adhere in order to be awarded federal financial aid, one topic in particular may be fairly abstruse.

Students that receive federal aid funds to pay for tuition, fees and books are monitored through a process known as Standards of Academic Progress (SAP).  Every institution must have these standards set in place, and institutions normally generate reports either at the end of each semester or annually.  This process ensures federal aid receiving students are meeting certain grades and completion rates for their classes.  SAP standards are based on formulas that focus on percentages rather than exact credit hour requirements.  Materials designed to guide financial aid professionals explain as follows: “Checking a student’s pace of completion allows for variations of enrollment status since you look at the percentage of classes successfully completed rather than the number” (U.S. Department of Education, 2014).  Students who fail, withdraw, or drop their classes are particularly at risk of losing federal aid eligibility for the subsequent semester.

SAP standards include a qualitative as well as a quantitative component.  For the qualitative component, one law specifies that by the end of the second academic year, regardless of how many credits the student has accrued, the student must have a C average or its equivalent or have an academic standing consistent with the requirement for graduation from the program.  For the quantitative component, an institution must set a maximum time frame in which a student is expected to complete the program.  For an undergraduate program, the time frame cannot exceed 150% of the published length of the program measured in academic years or terms, credit hours attempted, or clock hours completed, as determined by the institution (Code of Federal Regulations 668.34 SAP).

For students that are low-income, first-generation, or of color, these standards of academic progress can be especially impactful.  Community college students often face significant financial and socioeconomic constraints. In many cases, first generation college students  may have little external support when working through the financial aid process, leading to confusion about the options available to them. In addition, students may also come from families who speak languages other than English at home or from cultures outside the United States with different education systems.

Goldrick-Rab (2013) argues that with a far greater number of students entering higher education without the support of college-educated parents, facing more significant constraints and higher costs, an effective financial aid office must do more than distribute financial aid and apply rules and regulations.  It is the shared responsibility of the college as a whole to make sure these students understand the rules and regulations of the financial aid process that could ultimately affect whether or not the student registers for class the following semester.

As college professionals, it is important to educate students facing financial restrictions of what actions to take to increase their grades.  It is of paramount importance that students recognize potential repercussions of their actions when it comes to dropping, failing and withdrawing from their classes and the disbursement of their financial aid.  Without the help of a professional, a student might make the wrong choice of taking too many or too few classes.  These decisions could academically jeopardize the student even more, or could impact the amount of grant/loan money received.  For example, a student withdraws from their classes for the semester in hopes to salvage their grade point average, but now faces an academic restriction for not meeting satisfactory academic progress for the semester.  Even though the student withdrew, the financial aid office looks at credit hours attempted versus credit hours completed.  Occasionally, unbeknownst to the student, they will need to provide evidence of mitigating circumstances to explain the withdrawal from those classes.

A concern regarding the 150% completion rate rule arises when students choose to take classes outside their major.  As practitioners, we tend to see this happen when a student is looking to receive full financial aid money, needing full-time status, but has only been advised to take certain classes.  While taking classes outside their major seemed relatively profitable initially, sooner or later students may run into the problem of exhausting their available financial aid funds because too many classes were taken outside of their major.  In order to continue receiving federal financial aid, students must complete their first associate degree or certificate program within 150% of the published length of the program, as measured by credit hours attempted.  Once a student reaches the 150% maximum time frame limit, federal financial aid eligibility will be terminated (Columbus State Community College, 2013).  It is important to note that this policy is not just limited to associate degrees.

In addition to adhering to the satisfactory academic policies of an institution, a student is responsible for the regular attendance of classes.  Federal regulations are in place stating that attendance data must be regularly collected, and faculty members are now required to take attendance on each day the class meets.  Institutions that are required to take attendance are expected to have a procedure in place for routinely monitoring attendance records to immediately identify when a student withdraws (U.S. Department of Education, 2013).  Again, for students who already face many obstacles, this is just another topic of which to be cognizant.

How Community Colleges Are Helping

Increasingly, community colleges have begun to promote responsible borrowing and timely degree completion, as well as to help students understand eligibility requirements related to federal financial aid.  However, shifting the mindset from short- to long-term thinking is often difficult to attain among first-generation, low-income populations.  Without exposure to family members, friends, and mentors for whom education has returned an investment, students may struggle to see how today’s financial sacrifice can promote future security.

In many instances, community colleges are challenged to anticipate the needs of prospective students before they even enroll.  One strategy includes partnering with local school districts and companies to forge both academic and career partnerships.  These pathway programs provide many low-income students an opportunity to earn free college credit prior to graduating from high school.  As many as seven percent of all community college students are currently under the age of 18 and earning college credit in dual-enrollment programs while still enrolled in high school (Mullin, 2012).  Through community college partnerships with major corporations, such as the Honda Corporation, high achieving students are introduced to co-op educational opportunities prior to high school graduation.  These programs offer low-income students the opportunity to attend college via scholarship, but offer highly sought after job security upon graduation.  These tangible results help reinforce the idea that an investment in education can lead to tangible long-term goal attainment.

Studies have also shown that a lack of financial understanding represents a significant problem among low-income, first-generation students’ completion of the Federal Application for Federal Student Aid (FAFSA).  Additionally, a 2005 Advisory Committee on Student Financial Assistance study indicated that invasive questions often confuse families, leading to a general aversion to completing the form.  With these statistics in mind, FAFSA workshops offered by community colleges provide a guided environment in which students can complete the form with the assistance of a college employee.  These sessions not only provide reassurance to the student, but also allow an opportunity for students to learn and understand eligibility requirements and deadlines at an earlier juncture.

Recognizing the need to fill the gap between financial aid and the cost of attendance, Columbus State Community College has partnered with Ohio Benefit Bank to provide training to staff and student advocates.  Once trained and certified by Ohio Benefit Bank, student advocates are able to begin the process of enrolling qualified students in public aid programs, assist in obtaining free tax completion waivers, utilities assistance, and other types of assistance to ease the gap. These services external to the college help to ease the burden while students endure a short-term financial sacrifice to obtain an education.

Even in combination with public assistance, the general need to work while enrolled in courses leaves many low-income students enrolled on a part-time basis, able to dedicate less time to studying. Mortenson’s (2011) study analyzing the American Time Use Survey found that students aged 18 to 24 in the lowest income bracket dedicated only twenty-four to thirty-six minutes each day to homework or scholarly activity.  These figures represent a drastic difference from the study time of students in much higher income brackets.  Such little time spent towards studying could potentially lead to slower completion rates, which conflict with current legislation focused on timely completion of two-year degree programs, now calculated in the Standards of Satisfactory Academic Progress.

Achieving a balance between satisfactory and timely completion of a degree and the financial needs of the student presents yet another challenge.  Various objectives are utilized at Columbus State Community College in an effort to present well-rounded assistance beginning with flexible scheduling options.  By offering classes in more accessible mediums (hybrid and web) combined with evening, weekend and term in-class options, working students have the availability to schedule courses around work schedules instead of choosing between furthering their education and earning an income.  Furthermore, anticipating student difficulty in a variety of content areas can be addressed through no-cost Blueprint Student Success Workshops, offering practical advice on topics pertinent to student needs.

Despite the fact that as many as 62 percent of these students will not attend courses in consecutive semesters, often needing to “stop-out,” 55 percent of students earn a career and technical credential or degree, while eight percent return to complete a bachelor’s degree at a later date (American Association of Community Colleges, 2011).  Through the utilization of transfer agreements with partner institutions known as the Preferred Pathway, students are presented with a clearly organized roadmap, leading from the associate degree through completion of the bachelor’s degree.  Combined with state agreements, such as the Ohio Transfer Module, students can more easily map the best pathway to complete both an associate and bachelor’s degree in a personalized and concise manner.

Through the use of personalized approaches, community colleges can not only achieve the standard of satisfactory academic completion, but also provide a comprehensive approach that is truly reflective of the community and the needs of the student population.

Discussion Questions

1. What do you see as the financial advantages of beginning at a community college? Are there any disadvantages? Why or why not?

2. In your experience working with students, have you noticed variations in attitudes towards student loan debt among diverse socioeconomic groups?

3. What is a college’s obligation, role, and scope related to educating students on financial literacy?


Buschman Vasel, K. (2014, February 5). Why students have no idea how much college costs. Fox Business. Retrieved from http://www.foxbusiness.com/personal-finance/2014/02/05/why-students-have…

Cheng ,D., Freeman, H., & Leopold, D. (2013, November 23). Helping students make cents of college cost, financial aid and net price. National Association of Student Financial Aid Administrators. Retrieved from http://www.nasfaa.org/advocacy/perspectives/articles/Helping_Students_Ma…

Columbus State Community College. (2013). High finance: A guide to financing your education at Columbus State Community College. Retrieved from http://www.cscc.edu/services/financial-aid/pdf/HIGH.Finance1314.pdf

Goldrick-Rab, S. (2013, September 21). Rethinking financial aid’s role in student retention. The education optimists. Retrieved from http://eduoptimists.blogspot.com/2013/09/rethinking-financial-aids-role-…

The Institute for College Access & Success. (2009). Quick facts about financial aid and community colleges, 2007-08. Retrieved from http://projectonstudentdebt.org/files/pub/cc_fact_sheet.pdf

Mortenson, T. (2011) Time use of full-time college students ages 18 to 24 years 2003 to 2009. Postsecondary Education Opportunity. Retrieved from http://www.postsecondary.org/last12/223_111pg1_16.pdf

Mullin, C. M. (2012). It’s a matter of time: Low-income students and community colleges. American Association of Community Colleges. Retrieved from http://www.aacc.nche.edu/Publications/Briefs/Pages/pb04162012.aspx

Stratford, M. (2014, October 21). Student loans and political ads. Inside Higher Ed. Retrieved from https://www.insidehighered.com/news/2014/10/21/democrats-tout-student-lo…

Stratford, M., & Fain, P. (2014, September 25). Default rates dip (slightly). Inside Higher Ed, Retrieved from https://www.insidehighered.com/news/2014/09/25/default-rate-federal-loan…

U.S. Department of Education. (2013). Federal student aid handbook, 2013–2014. Washington, DC: Information for Financial Aid Professionals. Retrieved from http://ifap.ed.gov/ifap/byAwardYear.jsp?type=fsahandbook&awardyear=2013-…

About the Authors

Lauren Merante joined Columbus State Community College in 2011 after relocating from New York.  She has nine years of higher education experience including admissions, institutional research, and academic advising.  Her most recent position is as an Advisor in the Financial Aid department at Columbus State Community College.

Beth Stanley serves as an Academic Advisor at Columbus State Community College, where she has the opportunity to connect with a diverse student population and utilize her skills to assist students in achieving their goals. Beth has been working in higher education for nine years and one of her main areas of passion is around financial literacy and money management for students. Before coming to Columbus State, Beth worked in Housing and Residence Life at Ohio Dominican University.

Stephanie Pfeifer serves as an Academic Advisor in the Center for Advising, Support and Exploration at Columbus State Community College in Columbus Ohio. Stephanie has four years of higher education experience at open enrollment institutions specializing in new student enrollment and transfer programming. Before joining Columbus State Community College, she worked with the University of Toledo in the Department of History and Athletics.

Marisa Vernon serves as the Assistant Director in the Center for Advising, Support and Exploration at Columbus State Community College in Columbus, Ohio, where she leads a large team of professional Academic Advisors and serves as the project co-manager for the College’s intergrated student services initiative. Marisa has seven years of higher education administrative experience at open enrollment institutions specializing in two- and four-year degree programs and transfer preparation. Before joining Columbus State Community College, she was the Assistant Director for First Year Experience at Kent State University’s Stark Campus in North Canton, Ohio, and has also worked at the Northeast Ohio Council on Higher Education.

Please e-mail inquiries to Marisa Vernon.


The ideas expressed in this article are not necessarily those of the Developments editorial board or those of ACPA members or the ACPA Governing Board, Leadership, or International Office Staff.

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