Sierra M. Jiminez was on track to borrow more than $44,000—some $32,000 of it in private loans—just to pay for her first two years of college. Then, last winter, she got some surprising news. Syracuse University had canceled her $8,119 private loan for the spring semester and replaced it, not with another type of loan, but with a simple grant. And she could get similar aid for the rest of her time there.
The catch: She has to attend financial-literacy training each semester until she graduates.
Now a junior, Ms. Jiminez plans to borrow no more than $12,500 this year, all in federal loans, which have better terms.
Financial-literacy programs are popping up on many campuses, and the federal credit-card law passed in the spring encourages colleges to provide education about credit cards and debt as part of their orientations for new students. At the same time, colleges are concerned about how much debt some students have to take on. But Syracuse is unusual, if not unique, in the way it has tied those concerns together.
Syracuse’s new Money Awareness Program, or MAP, is aimed at students with a high debt burden. It’s a way for the university to make sure upperclassmen who are struggling with their finances are able to make it to graduation. Ms. Jiminez received significant grants before getting money from the new program, but she still stands to graduate with far more debt than the typical Syracuse student. Sixty-three percent of Syracuse students have loan debt, with an average amount of $28,500 at graduation. Barring any big change in her senior year, Ms. Jiminez will end up borrowing $60,000.
Still, the program has reduced her borrowing—and more than that, she says, it has helped her manage her money. Ms. Jiminez, a newspaper-journalism major, now writes down every purchase she makes, saves her receipts, and has started to think about life after living on loans.
Syracuse’s loan-replacement program officially began last year, though a more informal arrangement started several years ago. Back then, financial-aid staff members contacted students they felt were in danger of overborrowing and discussed budgeting and other financial topics with them. The university also gave those students grants to rein in their future borrowing and help them stay enrolled.
As financial-aid professionals have seen an increasing need to teach students about their finances, the question has been whose job it is to do that, says Becky Rose, a loan-education specialist on Syracuse’s financial-aid staff who helped design the program. “We’ve stopped saying it should be someone else.”
The financial-aid staff at Syracuse handpicks students for the program. Staff members look for undergraduates in their sophomore year or beyond who have borrowed from multiple sources, whether that includes private loans or all possible federal programs. They also consider family income and what other aid the student has, says Kaye M. DeVesty, director of financial aid.
After selecting students, they return part of what the students have borrowed to the lenders, replacing that money with university grants. The staff then e-mails the students and sends a letter to their parents outlining how the program works. There is no cap on the grant amount, but students usually get about $5,000 to $7,000 per year. Syracuse put $572,000 of its more than $160-million financial-aid budget toward the program this year, awarding grants to 77 students.
In return, the students sign an agreement that they will attend a financial-literacy training session each semester. As long as they meet that requirement, the students continue to get grants through the program.
Patrick L. Ebo took out a private loan to help pay for his freshman year. As a sophomore, he made a worse decision: taking out a direct-to-consumer loan, a type of private loan students can get without telling the financial-aid office. Syracuse canceled part of that loan and gave Mr. Ebo a grant.
Through the program, he also learned about better borrowing options. Mr. Ebo had his father take out a parent PLUS loan, a federal loan with a fixed rate, to help pay for college this year. And he has warned his little sister, a college freshman, to make careful borrowing decisions.
The students can meet their financial-literacy requirement in a one-on-one session with Ms. Rose, in a group session with her, or, if they are away from the campus, online. Each semester’s training examines a different topic. The first meeting covered budgeting, something Ms. Rose says students need to understand even if parents manage their money. The next session, held this fall, covered credit reports and credit scores.
Ms. Rose gives the students a homework assignment each time. She had them pull their credit reports after the most recent session, and says two of them found misinformation she helped them correct. Mr. Ebo was relieved to see that everything on his credit report looked familiar when he got it for the homework assignment.
The sessions are designed to be relevant to students during college. That means Ms. Rose won’t create a training session about getting a mortgage. Topics are based on current events and student requests.
While teaching financial literacy is not the main component of her job, “it’s the most exciting for me,” Ms. Rose says. “My heart is in it.” Teaching basic money management is part of the financial-aid office’s attempt to show students that it is more than a place to get a grant or loan, she says.
Now that the program is in its second year, the financial-aid staff is looking at ways to evaluate its effectiveness. Students’ debt level and graduation rates could provide good measures of the program’s value, Ms. DeVesty says. As long as the results are there, Syracuse plans to continue the program indefinitely.
And the university plans to expand its financial-literacy offerings to the whole student body this spring. That training will be optional. Then again, it won’t come with a grant.
