vermont student assistance corporation

VERMONT STUDENT ASSISTANCE CORPORATION
FISCAL YEAR 2014 BUDGET REQUEST
December 2012
A PUBLIC, NONPROFIT CORPORATION CREATED BY THE LEGISLATURE IN 1965
VSAC
Board of Directors
Dorothy R. Mitchell, Chair
Worcester, Vermont
Martha Heath, Vice-Chair
Member, Vermont Ho;ise ofRepresentatives.
Ann K Cummings
Member, Vermont Senate
David Larsen, Secretary
Wilmington, Vermont
G. Dennis O'Brien
President Emeritus, University of Rochester
Pamela A. Chishoim
Associate Dean for Enrollment Services, CCV
Michael K. Smith
President, Fairpoint Gomoninications of Vermont
Virginia Cole-Levesque
Bethel, Vermont
Beth Pearce
Treasurer, State of Vermont
David R. Coates
Colchester, Vermont
Katharine Hutchinson
Director of Guidance, BFA St. Albans, Vermont
Donald R. Vickers, President/CEO
Leslie Purple, Executive Assistant to the President
Scott Giles, Vice President Operations, Social Marketing, & Strategy
Mike Stuart, Vice President & CFO
Thomas Little, Vice President & General Counsel
Table of Contents
Executive
Summary.
1
Mission Statement, Description of Services, and Organizational Chart.....................................................................................................................2-3
VSAC Grant Programs, FY12...........................................................................................................................................................................
2
FY14 - Student Needs for Academic Year 2013-14................................................................................................................................................... 4
The Need ....................................................................................................................................................................................................................4
Budget Request for FY14........................................................................................................................................................................................... 5
The Challenge Facing Vermont Students.......................................................................................................................................................................
6
Aspiration and Continuation Rates................................................................................................................................................................... 7
Why Invest in Career and Education Planning and in Student Aid .............................................................................................................................. 8
FY12 - Summary of Activities and Outcomes for Academic Year 2011-12................................................................................................................. 9
Services to Non-traditional Students.................................................................................................................................................................9
College Investment Options...................................................................................................................................................................................... 10
College Pathways............................................................................................................................................................................................ 10
FY13 - Status of Developments in Academic Year 2012-13 ...................................................................................................................................... 11
Federal Outreach Grants........................................................................................................................................................................................... Ii
Federal and Private Lending .................................................................................................................................................................................... 11
Fiscal Year 2014 Budget Request: State Grants & Other Programs Detail ................................................................................................................. 13
Executive Summary
VSAC was created by the Vermont Legislature in 1965 as a public nonprofit corporation and is overseen by an 11-member board of
directors. Its mission is to ensure that all Vermonters have the necessary financial and information resources to pursue their education
goals beyond high school.
State-appropriated dollars are the only source of funding for three forms of grant and scholarship assistance VSAC provides eligible
Vermonters: need-based grants for full-time, part-time, or non-degree study; the Vermont Opportunity Scholarship, for foster youth;
and the Vermont Honor Scholarship, for a high-achieving graduate from each participating Vermont high school. VSAC has
administered these programs at no cost to the state since FY97. In addition, VSAC administers the Vermont Higher Education
Investment Plan, Vermont's 529 college savings plan, also at no cost to the state.
In distributing state grant dollars, VSAC strives to provide needy students with enough aid to
cover 100 percent of tuition and fees at Vermont's public colleges, a goal not met since FY08.
To maintain current service levels and cover the same percentage of tuition and fees as in FY13
(80 percent), VSAC is requesting an FY14 state appropriation of $20,584,873.
Agency: Vermont Student Assistance Corporation
Chief Executive Officer's Signature:
Mission Statement, Description of Services, and
Organizational Chart
Mission Statement
VSAC was created by the Vermont Legislature in 1965 as a public nonprofit
corporation and is overseen by an 11-member board of directors. Its mission is
to ensure that all Vermonters have the necessary financial and information
resources to pursue their education goals beyond high school.
Description of Services
VSAC is unique among state-based agencies of its kind in that it provides, under
one roof, a full range of services aimed at helping residents save for education,
explore careers, and plan and pay for education or training beyond high school.
VSAC Grant Programs,
FY12
VSAC awarded 13,920 need-based education
grants to students attending school full- or parttime, or enrolled in non-degree courses of study.
Each of the programs has grown during the last
Services supported by state funds and administered on behalf of the state:
State-appropriated dollars are the only source of funding for three forms of grant
and scholarship assistance VSAC provides eligible Vermonters: need based
grants for full-time, part-time, or non-degree study; the Vermont Opportunity
Scholarship, for foster youth; and the Vermont Honor Scholarship, for a highachieving graduate from each participating Vermont high school. VSAC has
administered these programs at no cost to the state since FY97. In addition,
VSAC administers the Vermont Higher Education Investment Plan, Vermont's
529 college savings plan, also at no cost to the state.
Services supported by private funds and education loan revenues:
VSAC administers or assists with 163 mostly private scholarships, and finances,
originates, and services a non-federal student loan, the Vermont Advantage
decade, but the non-degree grant program has led
the way with a 74 percent increase in students
receiving funds.
Pigram
$ Awarded
Grant Awards
Full-time
$16.3 M
9,190
Part-time
$1.5M
3,109
Non-degree
$2.7 M
1,621
2
loan. VSAC continues to service about $1.66 billion in federal student and parent loans made under the now-defunct Federal Family
Education Loan (FFEL) program. Prior to 2010, when FFEL was replaced with federal direct lending, VSAC was able to pay for
many services, including state programs, with loan revenues.
Services supported by federal grants, loan revenues, and other VSAC resources:
VSAC has outreach counselors available in middle schools, high schools, and agencies serving adult learners throughout the state.
Counselors work with low-income and first-generation college-bound individuals through caseload or whole class models, and also
provide career and education planning services to the general population of Vermonters. In addition, VSAC offers a wealth of online
resources; hosts workshops and events for students and parents; and provides professional development for those who work with
students, including school administrators, guidance counselors, and teachers. One of VSAC's federal grants, GEAR UP, supports a
number of partnerships in the state (see page 11). Another grant, the College Access Challenge Grant, supports V SAC's awardwinning Start Where You Are college access program. VSAC supports a variety of education initiatives and addresses Vermont's
education and workforce development goals through myriad collaborations with agencies of state government and many public and
private organizations.
Organizational Chart (to the department level):
EOARD OF
DIRECTORS
Executive Assistani
to the President
Eoard Audit
Con. mitte.
PRESIDENT/CEO
VICE PRE SIENT
Operation..
Social p.qarketinu
VICE
PRESIDENTCFO
VICE PRESIOENT/
3en.raI CounSel
Claims S
CollectIonS
Corn plian cc
Finance and
Controller
Risk MonaQemont
& Internal Audit
& Strateqy
F
Human R..ourcoe
H
H
1
FInSnciaI Aid Servic..
Team (FAST)
Ra*ourco Center
information
T.ehnoloçjy
S Project MansOemont
Career S EdL.catifl 0 .Jtrefloh
ociol Marketina
& VHEIP
Public Affairs
Research
3
FY14 - Student Needs for Academic Year 2013-14
The Need
It is widely acknowledged that Vermonters need
opportunities for postsecondary education or
training in order to earn a livable wage and reach
life goals. Likewise, the state needs an educated
workforce in order to remain competitive in a
global economy and to provide Vermonters with
an acceptable standard of living. Even in the face
of the recession and burdensome education loans,
long-term trends show that college graduates'
incomes are on the rise. In contrast, real incomes
are declining for those with only a high school
education.
To provide postsecondary access for all, Vermont
must ensure that no one is shut out due to lack of
information or inability to pay. Student grants
and scholarships - whether state, federal, or
private - are essential elements in motivating
Vermonters to pursue education beyond high
school, in making college more affordable by
reducing debt burdens, and in guaranteeing that
Vermont has the skilled workforee it needs.
Average Tuition and Fees and Full-time VSAC Grant Awarded
at Vermont 4-year Public Colleges
-+-Average TF at
VT 4-yr publics
--Average FT Grant
at VT 4-yr publics
$1,886
$1,971
FY03
FY04
FY05
FY07
FY03
FY11
FY12
FY23
4
Budget Request for FY14
VSAC's goal is always to provide a level of aid comprising the family contribution, the federal Pell
grant, and the state grant administered by VSAC that covers 100 percent of tuition and fees for eligible
students attending Vermont's state colleges. (This
does not take into account charges other than tuition
and fees, such as room and board, books, computers,
supplies, and other expenses.)
General Fund Appropriations to VSAC
FY2005 - FY2013 (in millions)
• One-time Appropriation
• VSAC Base Appropriation
To maintain current service levels and
cover the same percentage of tuition and
fees as in FY13 (80 percent) would require
an FY14 state appropriation to VSAC of
$20,584,873.
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
5
The Challenge Facing Vermont Students
The potential for loss of state grant support is not the only financial challenge facing Vermont students in FY14. Among the factors
that will add to the stresses families will encounter:
•
The recession continues to affect households in which a family member is unemployed or underemployed. As of early
December 2012, long-term unemployment benefits were set to expire. In addition, the looming "fiscal cliff' is likely to result
in cuts to federal programs that aid students (TRiO counseling for low-income/first-generation students, Supplemental
Educational Opportunity Grants, and work-study funding), as well as increases in origination fees on federal education loans.
•
College charges are expected to continue rising at a rate higher than the rate of inflation, resulting in a higher percentage of
students choosing to enroll part time rather than full time. Less than full-time enrollment places students at a higher risk of
failing to complete their studies, which in turn makes it more difficult for students to repay education debt.
•
Last year, the federal government dealt with increasing demand for Pell grants by eliminating year-round funding (mostly used
by non-traditional students); dropping the household income that qualifies for zero family contribution (and, thus, a higher Pell
grant) from $30,000 to $23,000; reducing the number of semesters in which a student can receive Pell; and barring students
without a high school credential from applying.
•
Increases in state (VSAC) and federal (Pell) grants have not kept pace with increases in charges, resulting in heavier education
loan burdens for students and their families. As of 2010, the most recent year for which VSAC data are available, Vermont
grant recipients attending four-year schools had average total debt of more than $41,000 (federal and private student loans, and
parent loans) after four years of borrowing.
•
Annual and cumulative limits on federal student loans - the most prudent borrowing options for students
have not
increased in proportion to the need. Students are increasingly turning to more expensive, credit-based private loans.
6
Aspiration and Continuation Rates
Unfortunately, for seniors graduating in 2012, the aspiration remained unchanged since 2010. For the Class of 2010, the continuation rate
declined by 0.4 percentage points from the previous survey.
Vermont Postsecondary Aspiration and Continuation Rates
of Recent High School Graduates
(includes 4-year, 2-year, less than 2-year programs)
76.3%
748%
731%
748%
71.2%
7%
67.5
65.0%
63.8%
-.-Aspiration Rate (Planned to continue)
--Continuation Rate (Actually continued)
1997
1999
2001
2003
2005
2008
2010
2012
Aspiration and continuation rates are two measures of how well the state is doing in its efforts to support higher education access
and affordability. The aspiration rate represents the percentage of high school students who indicate in the spring of their senior
year that they plan to continue their education in the fall. The continuation rate, determined a year after graduation, represents the
percentage who actually continued their education. VSAC determines the rates through surveys given to students in their senior
year and again a year after graduation. These rates are based in self-reported data.
7
Why Invest in Career and Education Planning and in Student Aid?
Traditionally, researchers have identified a number of benefits, both to individuals and to society, of having an educated populace.
Those with higher levels of education are found to:
• earn more, pay more in federal and state taxes, and accumulate more retirement savings than those with less education
• have lower rates of unemployment and be less likely to require public assistance
• have better health outcomes and be more involved in the community
• have children who do better in school and are more motivated to pursue higher education themselves
In the last few years, however, some news stories have cast a shadow on the value of higher education by highlighting recent college
grads carrying excessive amounts of education debt or experiencing difficulty finding suitable employment. Now, the pendulum may
have begun to swing back in favor of higher education:
• A recent study released by Georgetown University acknowledges that recent college grads do face a higher unemployment rate
(6.8 percent) than the rate for all four-year graduates (4.5 percent). But it also notes that students with only a high school
credential are faring much worse, with a rate of 24 percent. When underemployment rates are compared, they show the same
pattern: 8.4 percent for recent college grads versus 17.3 percent for recent high school grads.
• The Bill and Melinda Gates Foundation cites studies showing that the U.S. lags behind a number of countries in producing
college graduates and now ranks below average internationally - a situation that will suppress U.S. job creation. The
foundation not only thinks more students should be encouraged to attend college but that efforts must be made to help more
students complete college in a timely fashion.
VSAC remains a steadfast proponent of encouraging as many students as possible to pursue some form of education or training
beyond high school. To that end, VSAC continues to:
• encourage college savings through the VSAC-administered 529 plan and other savings options
• invest heavily in career and education planning resources, including online tools and personal intervention, so that students can
identify their interests and skills and connect them with available careers
• promote a range of college options, including apprenticeship programs and one- and two-year degrees as well as traditional
four-year degrees
• encourage students to access all available "gift aid" (federal and state grants, public and private scholarships, and college aid)
before using education loans
• provide competitively priced private education loans for those who need them
8
FY12 - Summary of Activities and Outcomes for Academic Year 2 011-12
In accordance with its mission, VSAC in FY12:
• provided 13,920 need-based, state-funded grants to students. (See box,
page 3.)
• administered or assisted with the administration of 163 scholarships,
disbursing 2,797 scholarship awards worth more than $5.6 million.
• administered the Federal Chafee Education and Training Voucher
program on behalf of the Vermont Department for Children and Families.
• served 84,123 borrowers, representing $1.66 billion in outstanding loans.
• saved borrowers more than $5.6 million through borrower benefit
A non-traditional student is defined as any part-time
programs that have totaled $160.1 million since 1995.
or non-degree grant recipient, regardless of age, and
• attracted 659,238 unique visitors to its Web site, www.vsac.org .
• conducted "Paying for College" workshops at 69 high schools, reaching
any full-time grant recipient age 23 or older.
more than 2,500 high school students and parents, and held work sessions
Vermont was the first state in the nation with a grant
to assist 942 individuals in completing financial aid forms.
program available to students seeking to improve
• motivated 84 percent of Talent Search and 76 percent of GEAR UP
participants graduating high school in FY12 to enroll in a postsecondary
their workforce skills and overall employability
program in the fall of 2012.
through education channels other than traditional
• sponsored workshops and events for professionals who work with
students and families on the topics of career exploration, college
degree or certificate programs. Seventy-six percent
planning, and applying for financial aid, attracting 546 attendees.
of non-traditional grant recipients pursue degrees,
• had nearly 1,500 visits to the Start Where You Are Pro Web site
and 24 percent are engaged in non-degree
(www.startwhereyouarevtpro.org), a portal for professionals who work
with students on career planning.
coursework or workforce training programs.
• reached 7,729 Vermont students directly through Start Where You Are
sessions at middle schools, high schools, and teen centers throughout
Vermont and recorded more than 8,782 visits to the program's interactive Web site for teens (www.startwhereyouarevt.org ).
Services to Non-traditional
Students
9
College Investment Options
The Vermont Higher Education Investment Plan (VHEIP), Vermont's qualified 529
college savings plan, celebrated its 13th anniversary in 2012. VHEIP was designed
to encourage Vermont families at all income levels to invest for college and thereby
reduce their need for borrowing. VHEIP provides state and federal tax benefits,
including a 10 percent state income tax credit on annual contributions of up to
$2,500 per beneficiary, tax-deferred earnings, and tax-free withdrawals as long as
funds are used for qualified higher education expenses. VHEIP assets crossed the
$177 million threshold in October of 2012. Additional details are available at
www.vheip.org .
VHEIP Cumulative Asset and Account Summary
14,003
11,99
Dollar Amount (in millions)
10,47
-.-
Number of Accounts
______
917
7,85
5,96
5,037
____
During the last decade, nearly 11,500
Vermonters have attended this free, day-long
conference. VSAC has always partnered with
Vermont colleges to host the events on their
campuses, providing many first-generation
students the opportunity to visit a college
campus for the first time. The event offers
high school sophomores, juniors, and parents
a wide range of workshops led by experts on
a variety of college planning topics. Recent
topics included college costs and financial
aid; strategies for the SAT & ACT; creating a
college list that fits; writing an essay that
stands out; and exploring resources for
students with learning disabilities.
In FY12, three College Pathways events
were hosted at college campuses in
Chittenden, Rutland, and Caledonia counties,
providing access to Vermonters statewide.
3,230
2473
1,519
Jan01
VSAC's College Pathways program, the
state's largest college planning event,
celebrated its 11th anniversary in 2012.
_____
4,200
675
College Pathways
______
J,n 02
Jan'03
Jan04
Jar, '05
J,r,'06
Jar, 07
Jar, 03
Jar, 09
Jan'10
Jan'11
Jan'12
Oct'12
10
FY13 - Status of Developments in Academic Year 2012-13
VSAC continues to offer the services enumerated in the FY12 summary above. Several additional developments are worth noting for
FY13.
Federal Outreach Grants
With the help of four federal grants, VSAC provides targeted information and counseling services to low-income and first-generation
college-bound Vermonters as well as a range of college and career planning services for all Vermonters.
Three of the federal grants
Talent Search, GEAR UP, and Educational Opportunity Center (EOC) - were last renewed in FY12
for multi-year periods. The fourth, the College Access Challenge Grant, is an annual award renewed in FY13. EOC serves adult
learners, and the other three programs serve middle and high school students and their families.
The most significant funding is provided by the GEAR UP grant, which enables VSAC to partner with Vermont colleges and
organizations to serve students and families. In FY12, VSAC shared its GEAR UP funding with the following partners:
• Vermont State College system, $350,000 for Intro to College Studies classes and dual enrollment vouchers for high school
students statewide
• Vermont Department of Education, $165,000 for school improvement and teacher training
• University of Vermont, $121,000 for professional development for middle school teachers and a youth leadership summit for
middle school students and teachers
• Linking Learning to Life, Inc., $63,000 for Learn to Earn presentations in schools throughout Vermont
• Vermont Principals Association, $50,000 for leadership training for principals
• The DREAM program, $33,000 for teen mentorship programs
• The Vermont Center for Afterschool Excellence, $7,500 for training and professional development
In addition to helping low-income and first-generation students prepare and apply for college, VSAC in FY13 launched a program to
help these students adjust to their first year of college. By focusing on "retention," GUIDE (Giving Undergraduates Important
Direction in their Education) builds on the college aspiration and continuation work VSAC does prior to students' enrollment. Funded
through the GEAR UP grant, GUIDE uses social media and campus events to enable VSAC staff to stay in touch with students and
keep them on track to reach their goals.
11
Federal and Private Lending
VSAC lost the ability to finance and issue new federal education loans in 2010, when the government switched to a system of 100percent direct lending. However, as a result of efforts by Vermont's congressional delegation, the government is required to allow
nonprofit, state-based agencies like VSAC to compete alongside private corporations for direct loan servicing contracts. Servicing
involves issuing loan bills, helping borrowers select a payment plan, collecting payments, and assisting borrowers at risk of default.
After nearly two years of ramp-up to become a federal loan servicer, VSAC in the fall of 2012 received its formal "authority to
operate" from the U.S. Department of Education (ED). Shortly thereafter, the government began transferring loan accounts from
another servicer to VSAC, for a total allocation of approximately 100,000 accounts. Most of the accounts were transferred to VSAC
by early December 2012, and a small portion will be transferred in late January of 2013.
In order to make federal servicing viable in the long-term, and to generate needed revenues for mission-critical services, VSAC hopes
to compete in coming years for additional federal loan accounts. Awarding will depend on an evaluation by the ED based primarily on
customer satisfaction and default rates.
In addition to managing new federal loan accounts, VSAC continues to service an outstanding loan portfolio of $1.7 billion consisting
of federal loans made prior to 2010 and VSAC's own private loans for students. VSAC issued $19.7 million in private student loans in
FY12 with highly competitive rates and terms. This type of loan is used mostly by students whose parents cannot or will not borrow to
pay for their education or whose programs are not eligible for federal Title IV aid such as federal loans.
12
FISCAL YEAR 2014 BUDGET REQUEST:
STATE GRANTS & OTHER PROGRAMS DETAIL
Agency: Vermont Student Assistance Corporation
Name of Program Administered
General Funds
Full-time, Part-time, and Non-degree Grants
Chief Executive Officer's Signature:_______________________
Fiscal Year 2012
Program Funds
Received
Narrative
Payments (grants) to individual eligiblestudents for
education expenses promoting access to poetsecondary
education.
Honor Scholarships
Emily Lester Scholarship
$
18,238,607
FIscal Year 2013
Program Funds
Received
Fiscal Year 2012
Actual Expenditure
$
19,941,817
$
18.238,607
Fiscal Year 2013
Estimate
$
20094428
Fiscal Year 2014
Requested
$
20,584,873
$
100,000
$
85500
$
100000
$
100,000
$
100,000
$
25,000
$
24674
$
25.000
$
25000
$
25 000
Next Generation Non-Degree Grants
$
494,500
Next Generation Scholarships
$
500,000
Next Generation NGEAP Scholarship
$
150,000
$
100,000
Next Generation NGEAP Scholarship
Interdepartmental transfer from Dept of Military
Other State Funds
Armed Services Scholarship
Interdepartmental transfer from Treasurer's Office
$
4,358
$
7,388
$
18,338
$
18,338
$
-
Higher Education Trust Scholarship
Per 16 V.S.A. § 2885(c)
$
304,105
$
233,117
339000
$
-
InterdepartmentaltransferfromDeptof Health
377,409
100,000
$
HealthlncentiveScbolarships
$
$
$
10000()
$
$
100,000
$
70500
Next Generation Non-Degree Grants
$
494,500
$
494,500
$
494,500
$
494,500
Next Generation Scholarships
$
500,000
$
611,475
$
500,000
$
500,000
Next Generation NGEAP Scholarship
$
150,000
$
153,828
$
150,000
$
137,000
$
100,000
$
100,000
$
100,000
$
100,000
Next Generation NGEAP Scholarship
Interdepartmental transfer from Dept of Military
100,000
Each Next Generation Scholarship is funded by a single fiscal year appropriation (i.e., Next (lien Scholarship 1 was funded by a $1,666,667 appropriation in FY2007) and is dedicated to a cohort
of students who are promised scholarships of up to $4,000, which are disbursed $1,000 per year for up to four years. Based on this, approximately one-fourth of the appropriated amount is spent
each year, thcaigh some attrition exists. Funds accrued through attrition are recycled into hoIarships to benefit additional Vennontstudents.
13