Campus CFO News Briefs

Campus CFO News Briefs

Financial Services News for October 2011

Student Loan Default Rates on the Rise

New figures released last month by the U.S. Department of Education show a sharp increase in the rate at which student loan borrowers are defaulting at colleges and universities across the country. According to the report, “two-year cohort default rates” show that 8.8 percent of student loan borrowers who entered repayment in 2009 had defaulted by the end of 2010, up from 7 percent over 2008.

But the numbers don’t tell the full story, says Debbie Cochrane, program director at the Institute for College Access & Success. “Research indicates that most student loan borrowers who default do so after the two-year window is over.”

More than half the increase is attributable to for-profit colleges, which also had the greatest number (92 percent) of students borrowing money. That compares with 27 percent of students at public colleges and 60 percent of students at private non-profit colleges. The full report is available for download from www.projectonstudentdebt.org.

Higher Ed Inflation Rate Doubles Over Last Year

The inflation rate for colleges and universities has doubled since 2010, according to the latest Higher Education Price Index (HEPI) for fiscal 2011, released by Commonfund. The inflation rate was 2.3 percent, compared with 0.9 percent for FY2010.

The rise was not unexpected, considering that nearly every cost factor associated with operating a higher education institution also rose dramatically during that period. However, it does reverse what had been a trend in decelerating rates since 2008.

Utilities costs increased dramatically, from a deflation rate of -9.5 percent in FY2010 to an inflation rate of 4 percent, according to the report. Supplies and materials costs went from a deflationary -1.3 percent in FY2010 to an inflation rate of 8.1 percent. Administrative salaries rose just 1.7 percent, a decrease from the previous year’s 2 percent. Faculty salaries were up 1.4 percent, slightly higher than last year’s 1.2 percent.

HEPI measures eight factors in its calculations: administrative, faculty, and clerical salaries, service employee salaries, fringe benefits, miscellaneous services, supplies and materials, and utilities.

It is considered a more accurate indicator of changes in costs for colleges and universities than the Consumer Price Index, because it measures the average relative level of prices in a fixed basket of goods and services purchased by colleges and universities each year. The full report is available at www.commonfund.org.

Financial Services Briefs

TouchNet and Western Union have partnered to allow students around the world to pay tuition in local currencies directly from a bank account through wire transfer, or in cash at Western Union Agent locations. ... SunGard Higher Education’s new Banner Travel and Expense Management Solution can help institutions improve the speed and accuracy of travel expense reimbursements. ...Wayne State University (Mich.) has joined Higher One’s OneAccount Debit Card program. Financial aid refunds can be direct-deposited to student accounts or mailed as a check. ... Nelnet Business Solutions has teamed with PaperCut Software to help higher ed insitutions streamline business operations. ... Arizona State University is using Campus Management’s Talisma CRM software for all its undergraduate recruitment efforts.


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