A recent heavy rainstorm flooded an apartment complex near Central Michigan University, displacing a number of students. Several had nowhere else to stay.
To the rescue: Central Michigan’s Student Emergency Fund, a financial reserve provided by private donors to help students manage unexpected emergencies such as illness, death of relatives, eviction or medical bills.
“The Student Emergency Fund provides grants to students in need, and all the funds are donated just for that reason,” says Kirk Yats, director of scholarships and financial aid. “More and more students seem to need help, and there’s a groundswell of schools trying to be compassionate and offer services like this.”
Sidebar: 3 options for using technology to better manage the emergency financial aid process
In fact, more than 500 colleges and universities provide some type of resource to help students address unexpected financial emergencies, according to a 2016 study by NASPA, the association of students affairs professionals.
Emergency financial aid programs provide critical support that in some cases may allow students to stay enrolled and continue their education, says Amelia Parnell, NASPA’s vice president for research and policy.
Following are four key action areas related to offering such a program.
1. Recognizing types of emergency aid
Offering an emergency student loan is the most common institutional response to unexpected financial needs.
At the University of Michigan in Ann Arbor, students can obtain a $500 short-term loan online as long as they don’t have an outstanding short-term loan already.
“We assist all students with a legitimate need,” says Pamela Fowler, executive director of the Office of Financial Aid. “We get everything: a senior whose dad decided not to pay for schooling anymore, a nearby apartment had a fire, a pipe burst in one of our residence halls and destroyed everything, and a broken arm with no insurance.”
Michigan also offers grant funds to assist students who have larger emergency financial needs.
Nationally, other popular types of aid available to students in crisis are vouchers for the campus store or dining hall, as well as completion scholarships, which cover outstanding balances for students to graduate or continue to the next semester, NASPA research has found. Also, more than half of institutions surveyed offer food pantries.
2. Funding for emergencies
Providing cash to students with financial emergencies requires locating or developing funding. More than three-quarters of colleges surveyed by NASPA reported the lack of financial resources as a barrier to providing emergency aid to greater numbers of students.
At Michigan, emergency assistance comes from need-based grants or from unrestricted scholarship funds, Fowler says. Emergency short-term loans are made from endowed loan funds.
Nearby, Michigan State University’s “Adverse Economic Circumstances Fund” receives an annual allocation from the university’s general fund, says Rick Shipman, executive director of financial aid. Emergency aid may also come from endowments, or from Michigan State departments such as Student Affairs and Services.
In addition, an institutional loan fund—created with a portion of campus parking fines—has become self-supporting through repayments of principal and interest from previous borrowers. Shipman advises other universities to do the same.
“Set aside grant dollars each year that are specifically intended for these emergency situations,” he says. “These situations have always arisen and will always pop up in the course of an education, and it just makes sense to plan for that.”
A short-term loan fund can start with some initial seed money or a donation, and then run on repayments and interest. This assistance, Shipman says, can “become a lifeline for students and parents, but cost the institution very little in new expenditures.”
3. Managing the process
Because most institutions can’t provide emergency aid to every student who requests it, implementing an effective application-and-approval process is crucial. To best help students in emergencies, the process should be swift.
Central Michigan students can submit an online emergency grant application to financial aid staff, who may request documentation. They reward the grant if the request is legitimate, Yats says.
“When necessary, we can get money to students within a few hours. For instance, recently a student needed money to pay a medical bill so he could get crutches for a broken ankle, and we got the money to him that day.”
While regular financial aid may be granted based on a computer algorithm, emergency assistance aid, at Central Michigan and elsewhere, is often granted on a manual, case-by-case basis.
“We really do not have any hard and fast rules about what constitutes an emergency but try to look at each request on its own merits,” says Shipman of Michigan State.
Say there’s a really needy student who lost hours at work and is short $100 for monthly expenses. Such a situation can be a major emergency “if that student has absolutely nowhere else to turn for assistance,” he says.
Financial aid advisors make the initial determination and then consult with a manager if they’re uncertain or want to request endowment dollars. When a need appears to be more than short-term, some institutions try to increase federal, state or institutional grant aid.
“We have had students who need emergency funding for a couple of months and others who need that funding for a couple of years,” Shipman adds. “We don’t have a time limit but try to understand when they first appeal to us how likely it is that the situation will extend beyond the current semester.”
In those cases, the team will discuss longer-term strategies, making the additional funding part of a financial plan rather than a semester-by-semester need.
Should an institution set limits on the amount of emergency aid students can access? Some do.
At Central Michigan, students with a documented need can use up to $2,000 per year from the emergency fund.
“We don’t get a lot of repeat customers,” Yats says. “However, if we can spend $1,000 to help someone continue in school, that’s money well spent.”
4. Spreading the word
Most colleges don’t actively market their emergency aid programs, since the available funds may not be enough to cover all needs. Some do explain on the financial aid office webpage that such assistance exists. Word of mouth, however, is the most common method of informing students about these programs.
At Michigan, Fowler’s office receives about five inquiries per week for emergency funds. Most are referrals from the Dean of Students office or the Center for the Education of Women, where students go for emotional support.
On some campuses, offices other than financial aid can also approve and administer emergency funds. These multiple sources of emergency aid should coordinate with each other, says Karen McCarthy, director of policy analysis at the National Association of Student Financial Aid Administrators.
That communication, she adds, ensures that “efforts are not duplicated and that students are getting the exact type of aid they need—instead of just the type of aid that happens to be administered by the office they visited.”
Nancy Mann Jackson is an Alabama-based writer.