The Economics of LRAPs in Your Financial Aid Arsenal

ABOUT THIS EPISODE

Peter Samuelson, President at Ardeo Education Solutions, joins the podcast to walk through the economics and enrollment impact of loan repayment assistance programs (LRAPs).

Our promise really helps them betemptable. We just say if our gear in comes low, we will help you repay yourloans. They get to go to the college. They want to go to the college. Kidsseen priest involvement. The student goes to their preferred college. It'sjust a great win: You're, listening to enrolment growth,university from helic education, the best professional development podcastfor higher education leaders looking to grow in Roman at their college oruniversity, whether you're looking for fresh and Roman growth techniques andstrategies or tools and resources. You've come to the right place. Let'sget into the show, welcome back to enrolment growthuniversity, a proud member of the connect Edu podcast network, I'mmericles on with helic education and we're here today with Peter Samuelsonpresident at Ardea Education Solutions, Peter Welcome to the show Eri. Thanksfor having me, we had it really excited to talk with you today aboutincorporating loan repayment assistant...

...programs in your institutions,financial aid arsenal. Before we dig in, can you get the listeners a littlebackground on our day, O education solutions? Sure we help students go tocollege by making a really powerful promise that if the students incomeafter graduations low will help them make their loan payments and the reasonthis is so powerful is there are so many students and families too, werereally worried about student ones. These days they get admitted to acollege, they want to go to, they get excited when they get that admiseletter and then they get the financial lad award and we look at the loans theyhave to borrow and they say wow. I just not sure I want to borrow that much instudent debt and our promise really helps them get tumpties. We just say ifor if hearing comes low, we will help you repay your loans, they get to go tothe college. They want to go to the college. Kids EEN, rest involentem. Thestudent goes to their preferred college. It's just a great wind. I love thecreativity, that's happening in the financial. It's based right now, PeterBefore we get in the details. Maybe to kick us off. Can you just give us ahigh level overview and origin story of...

...loan repayment, desistant programs, lraps, happy to I- also love encratites financial, lead right now, there's alot going on. I wish I could take credit for all raps, but the storystarts with sevendy several day cades ago and Yale was taking a challengethat they didn't have enough money to keep up with all the other top wall,schools right. They wanted to better leverage, their limited, SIENTAresources. They wanted students to feel comfortable with the increasing amountof student loans they were taking out and so Steve Handel came up with thisconcept of an l rap. A Loner gave assistance program that yield theycalled something else, but most law schools now offer l raps and they callthem generally l raps, so I went to a law school back in the S. I love theprogram it took bl instead of to a different school. Really, let me go tomy first choice: law school, which is fantastic right, so I personally feltthat freedom to cave need to just pursue my passions to go where I wantit and not make a choice that we've driven out of fear driven out ofconcerns excessively about debts and then, after law school, I had thefreedom to Buil to human rights work...

...over in China over Sudan, because Yeall was making my own payments, which was fantastic before I came back towall streets and just at a traditional legal career before becoming aconsultant. That's why I had the idea that I should take this and make itavailable to ungranted students. My Mom thought it a small college. You knowvery different student profiles and Yeo Law School, but I thought they have thesame challenge. They work so hard to get students to apply, and then theyadmit them everyone's happy. At that point, the financial later words go out,and so many students just decide. I just can't afford it and that'sunfortunate because usually they can afford it. They just don't want toborrow the loans Yeah Peter. We mentioned the the hyper creativityhappening right now in the financial ates base, so much so that is oftenhard to understand. Wait. What are the difference between these things? Thatcan you help us understand how l raps differ from income care agreements,income insurance programs, other alts, like that sure happy too. So, there's alot of creativity and some know a lot of the different ideas. The incomeshare agreement seem come insurance,...

...just like you mention all raps as wellall come back to the idea of an income based repeats. So traditionally youbase ore Davent, just like any other loan, like your mortgage, like your carloan, all the amount you borrowed. What happens with an income based retaen isthat the amount of pay back varies and changes based on what your income isafter graduation. So if you're lucky can have a great income, you pay alittle more and it's your unfortunate have a lower income or if you choosethe AUTORISTA line up working in the public sector, doing non profit work.You think, that's a little less! So I think the really big difference betweenincome share agreements and what we do with l raps the tank there almostapples and oranges in the way they affect students is l, raps helpstudents take advantage of loans that are already widely available. There area group of students who truly can't get enough loans to cover the cost ofattendance and income share agreements. Isa's can be very helpful to fill thatlast dollar. So really, when we look at it, studentsuse them in Qite different ways and we...

...think of them as being quite different,even though they're both originating for the same idea of insommary ingideas. God, it's Super Super Helpful. Can you walk through an example, so wecan understand how the numbers work here. So, let's say a partneruniversity. You work with, let's say fifty thousand dollar income bar for acertain degree program. Where does the out rap come into play? If the studentsnext job post degree only pays forty senor a year or, if they're out of workaltogether sure? So, let's start with the students who's applying the college,their hesitant come. The college gives them the all rap for three and theCollege: Peas, US and it's an insurance back programs, so we're going tocollect a little bit of money from a lot of different students and then helpthose few students who really need tell so when the student graduate there'sonly three key conditions for the students, they have to attend thecollege who gives our up to them. They have to graduate, and then they have tobe working. So if they're unemployed, this is not unemployment insurance,they need to go work at starbucks or...

...wherever they need to work and thenthey'll get the assistance. So there's two income threshold to come into play.If their income is below a lower threshold, usually twenty and dollars,we would reimburse them every quarter for one hundred percent of the wonteams, so they make the long Daens re reimburse and it works that way to justto make everything simpler, and we also don't want to be chasing down peoplewho we paid in advance, and they, you know, spent the money somewhere else ona fancy TV or something right and then, as their income goes up from thattwenty thousand to the upper thousand upper threshold. Fifty Thousand andexample, you gave the benefit phases out. So if their income was at fortythousand, they would be two thirds of the way up to the threshold. They wouldbe paying two thirds of a Volantes and we would be paying one third of the onpayments for reimbursing them, one third to their on PMS and that willcontinue forward until their income goes above that fifty thousand up ringsand thresholds for a full year or until their loans are repaved. I love itmakes total sense. So, let's talk about the economics here. The outcomes herein the students success. The hide on...

...the institutional success side as welland in terms of being a really impactful and and powerful part of theperspective student sales pitch. As you mentioned, what are some of the resultsthat you've seen from your partner institutions? We've worked with abouttwo hundred schools across the US they put about twenty five send studentsthrough and over all. The result is that this really changes no t s. Itchanges that hesitancy to borrow to you know very on someone's very excited yesto come to the school, and so we see schools who increase their freshmenenrollments. We also see colleges university to use it in a very targetedway, just to rebuild a major that they wanted to rebuild to start a new majornew program to increase out of state students. Really, when you think aboutthe university strategy for enrollment, they have a lot of different segmentsof respective students are reaching out to and some of those segments they havevery low yield, so any segment where they have low yield. They can use l rapto increase that ye if they give a rep to every incoming freshman. We seenschools increasing Rome boor twenty...

...percent, often over ten percent, so itcan be a really big boost to their enrollment overall or they can use itmore narrowly just to target certain segments where they really like realyield. It's really interesting. You mentioned that two hundred institutions,you partner with how do you choose with institutions to partner with or whichindividual programs at those institutions makes economic sense foryou to insure and for them on their side as well. We look at every schoolindividually, we underwrite them. We've got an underwriting team built a youknow, proprietary complex model here that projects. What all this is, howhow the numbers are going to work right and so we're happy to work with anyinstitution that is accredited, that's in good standing. That is title foreligible now, the pricing is going to vary. Some schools with really low.Graduation rates are going to say more other schools that are more successfulwith higher graduations are going to be a little less where we said that otherup, Rann threshold is really a marketing question for the college.What do their students and families...

...expect in order to be excited by thesending to college so well work with any traditional accredit to collegeacross the US? We work in publics. We re in private universities and we look.We can work with any major. They have an program. They have some schools. Wework across every program. Every barely have some stools, Dero just down to one.We engage in the discussion with that college with a DP enrolment, usually,although sometimes also the director financial lay the CFO about what aretheir targets, what are their strategic priorities? How can we help them growyield in a way that is going to strengthen their role and strengthentheir finances and really strengthen that promise they're making to the studand prestino their value proposition to bring those students in Peters,fastening stuff? Finally, leave us with some next steps: Advice, Prince Tution,listening to this excited about the creativity coming out of out of thespace right now, especially in the L rap. How do they think aboutincorporating this is part of their financial at strategy? The first thingthey should do is contact us. My email is Peter at our Dale Education, Dot Org.They can also go to our website or Dale...

Education, Dot, Org and really whatmost institutions do when they first use us as they pilot us. You can pilotus with a small number of students and they can talk to those families andthey can go the first, he and taste their really first and experience ofhow powerful this promise is and how it really changes the feeling in thethinking of families, and we move that anxiety to student loans. It makes itpossible for them to an roll at their institution and we welcome the chanceto tack to any school per thanks. So much four time today- and you mentionedyour email any other best place for listeners to reach out to you or yourteam. If they have any follow up questions yeah, I'm happy to feel theemails at all directed to someone else on the team and of course they can seeall the information they want on our website. Eric really delightful to beon your T, podcast thanks for having awesome Peter thanks. So much forjoining us today. Thank you that was fun attracting today's new post,traditional learners means adopting new enrolment strategies. Keelek educationsdata driven enterprise, wide approach to enrollment growth is uniquelyhelping colleges and universities...

...thrive in this new education landscape,and he lock has just published the second edition of their enrollmentgrowth playbook, with fifty percent brand new content on how institutionscan solve today's most pressing and Roman growth challenges download ittoday for free at hillocks education, com, playbook, you've been listening to enrolmentgrowth university from helic education to ensure that you never missed anepisode subscribe to the show in Itunes were your favorite podcast player.Thank you so much for listening until next time. I.

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