Aid Like A Paycheck –
Project Overview
North Carolina Association of Community College Presidents
July 24, 2014
Michelle Ware, Operations Associate, MDRC
Kim Sepich, VP of Student Affairs, Davidson County Community College
Kevin Lineberry, Associate Dean Student Success, Davidson County Community College
Overview
I.
Who is MDRC?
II. Aid Like A Paycheck – Overview, Pilot Findings,
MDRC’s Large Scale Evaluation
III. Davidson County Community College
IV. Next Steps in North Carolina
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Who is MDRC?
• MDRC is a national education and social policy
research firm with 40 years of experience designing
and testing programs and policies to improve the
lives of low-income people
• Ten years of partnerships and rigorous research
with community colleges across the nation
www.mdrc.org
MDRC
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What is Aid Like A Paycheck?
Aid Like A Paycheck:
• Program
– Delivers existing financial aid – after tuition and
fees – in a new way to help students balance
work and school
– Changes the frequency of financial aid
disbursement to every two weeks, like a
paycheck
• Research project
MDRC
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Aid Like A Paycheck
vs. Standard Disbursements
• Aid Like A Paycheck provides 8 biweekly payments
Possible
payments for
full time
(12+ credits)
Aid Like A
Paycheck
Standard
Estimate
for books
& supplies
Week 2
Week 4
Week 6
Week 8
Week 10
Week 12
Week 14
Week 16
Total
$400
$297
$297
$297
$297
$297
$297
$297
$296
$2,775
$400
--
$2,375
--
--
--
--
--
--
$2,775
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Why Deliver Aid Like A Paycheck?
• The goal of the program is to help students succeed
in college and better manage their money.
• Aid Like A Paycheck may also make financial aid
more efficient, distributing aid to students while
they maintain enrollment.
• Can influence policy, and ultimately may impact
millions of students.
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Potential Benefits for Students
Standard Disbursement:
Aid Like A Paycheck:
Financial Aid Money
Decreases and Work
Increases Throughout the
Semester
Financial Aid Money
and Work Stay the
Same Throughout
the Semester
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Potential Benefits for Colleges
• Make financial aid programs more cost-effective by
ensuring aid is distributed while students maintain
enrollment
• Limit Returns to Title IV
• Potential fit with your student success agenda
• Potential to help reduce the college’s default rate
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Important Aspects of Aid Like A Paycheck
• Incorporates all sources of aid
• Applicable to all students (full and part-time) if
they receive a financial aid refund
• Falls with current federal regulations
• Financial Literacy inclusion varies across colleges
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Original Pilot Sites
• Mt. San Antonio College, started in fall 2010
– Walnut, California (Los Angeles area)
– 200+ students volunteered for Aid Like A Paycheck
• Triton College, started in spring 2012
– River Grove, Illinois (Chicago area)
– About 100 students volunteered for Aid Like A
Paycheck
– Another 100 were randomly selected to receive
MDRC
biweekly disbursements
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Current Pilot Site
• San Jacinto College, started pilot in spring 2014
– Houston area, TX
– About 60 students randomly selected to receive
biweekly disbursements
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Lessons from the Pilot
• Positive responses from students
• Financial Aid Advisors provided good input during
planning phase.
• Valuable data was collected to prepare for full
implementation.
• Important lessons learned regarding implementation
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Lessons from the Pilot - Challenges
• Management Information Systems (MIS) changes
– MDRC and Texas colleges working on short-term
and long-term solutions
• Different types of aid
– Pilot included primarily Pell Grant
– Evaluation will include loans and other aid
(depending on site)
• Multiple starts in a term
• Others challenges specific to North Carolina?
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Lessons from the Pilot (continued)
Debt Reduction – One College’s Story:
• The pilot project demonstrated that students can
save money.
• The 3 students who either stopped attending or
withdrew created a lower debt.
• Payments were stopped when the Financial Aid
Office received attendance tracking data.
• Students can return for future semesters without
having to repay a large debt before reenrolling.
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Next Step: A Large Scale Evaluation
Important Questions and Issues Remain:
• Can Aid Like A Paycheck be implemented at a larger
scale? What facilitates successful implementation?
• Does Aid Like A Paycheck improve students’ academic
outcomes, such as credits earned or persistence in
school?
• Does the policy affect economic outcomes, such as
total aid received or debt accumulated?
• What are the benefits and costs to students, colleges,
states, and the federal government?
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Randomized Control Trial
• Only “new” students included in sample
• 5000 Students randomly assigned to two groups
– Aid Like a Paycheck – “Program group”
– Normal college disbursement – “Control group”
• Difference in students’ outcomes = impact of the
program
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Colleges in the Evaluation
• Up to two sites in two states
– Texas
-
San Jacinto College, evaluation start in spring 2014
-
Houston Community College System, pilot start in fall
2014
Large system in Houston, TX
Approximately 75 students will be randomly selected
to receive biweekly disbursements
– Second state TBD
- Conversations with colleges going on now
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Full Evaluation Timeline
Spring 2014 –
Spring 2015
Spring 2015 –
Spring 2016
Spring 2016 –
Spring 2017
2018
Pilot study
Enrollment of sample for a
random assignment evaluation
Tracking of student outcomes and
dissemination of findings
Final Report
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What Does it Mean to be an Evaluation site?
Influence:
• Positive influence on students, policy, and practice
Support:
• Technical assistance and financial support for
participation in evaluation
• Lessons learned from the pilot will be utilized during
the evaluation
• MDRC will work with colleges and external partners to
find solutions to implementation challenges.
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What is Required of an Evaluation site?
• Site must collaborate with MDRC to implement the
Random Assignment research design
• Site will be required to share data with MDRC
• Site must designate a liaison/project lead to work
closely with MDRC
• Administrative support to facilitate the effective
implementation of Aid Like A Paycheck
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Aid Like A Paycheck and Policy
• What policy changes are needed to implement Aid
Like A Paycheck?
– Federal?
– State?
– Institutional?
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Discussion
Evaluation Questions – What else should we be asking?
• Can Aid Like A Paycheck be implemented at a larger
scale? What facilitates successful implementation?
• Does Aid Like A Paycheck improve students’ academic
outcomes, such as credits earned or persistence in
school?
• Does the policy affect economic outcomes, such as
total aid received or debt accumulated?
• What are the benefits and costs to students, colleges,
states, and the federal government?
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Aid Like A Paycheck
Davidson County Community College
Kim Sepich, Vice President of Student Affairs
Kevin Lineberry, Associate Dean, Student Success
Davidson County Community College
Why we are interested Aid Like a Paycheck
• Benefits to students
•
•
•
Consistent aid disbursement over time
Not just incentive to enroll; also incentive to complete
courses
May mitigate financial crisis and reduce reliance on onetime emergency aid
• Benefits to the College
•
•
•
Completion initiative
Data source to increase understanding of relationship
between financial aid and completion
Reduce Return to Title IV amounts and loan default rates
Davidson County Community College
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Davidson County Community College
As a pilot site, we want to learn:
• Important psycho-social planning mechanisms
• Specific financial literacy needs of students
• Institutional policy changes
• Value of Aid Like a Paycheck related to student
completion
Davidson County Community College
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Aid Like A Paycheck’s Impact on
Return to Title IV – R2T4
• Currently, financial aid is awarded and disbursed to
students at the beginning of the semester under the
assumption that they will attend for the entire
semester.
• When a student completely withdraws (before the
60% point), the student is no longer eligible for the
full amount of Title IV financial aid funds s/he
received.
Davidson County Community College
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Benefit: Reduction in R2T4 School Liability
Current (DCCC):
Semester
R2T4 School Liability
Number of Complete Withdrawals
Fall 2013
$111,404.84
178
Spring 2014
$107,642.40
188
Total
$219,047.24
366
Hypothetical Aid Like A Paycheck Impact (DCCC):
• If complete withdrawals were reduced by 15%, the resulting impact would be 55
fewer R2T4 calculations for the period above and a reduction of school liability in the
range of $28,500 – $35,000.
• GTCC, is currently disbursing loans in three equal payments throughout the semester.
R2T4 calculations for students receiving loans decreased 37% between Spring 2013
and Fall 2014.
Davidson County Community College
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Benefit: Reduction in R2T4 Student Liability
Current Disbursement Method Fall Semester:
• Lillie stopped attending on the 28th day of the fall
semester, making her eligible for only 25% of the
$7,819 financial aid disbursed to her. She’s earned
$1,954.75 (25%), leaving $5,864.25 (75%) to be
returned.
Davidson County Community College
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Benefit: Reduction in R2T4 Student Liability
Aid Like A Paycheck Disbursement Method Fall
Semester:
•
Lillie stopped attending on the 28th day of the fall semester. With the Aid Like A
Paycheck disbursement method, on the 28th day, only $1,944 of her $7,819 award
had been disbursed. She’s earned $486 (25% of the $1,944), leaving $1,458 (75%)
to be returned.
Impact: Lillie’s liability
for the complete withdrawal has been reduced by Aid Like A
Paycheck. Loans were a significant part of the financial aid award, so Lillie will carry
substantially less debt for the complete withdrawal from school.
Fall 2013 and Spring 2014 student R2T4 loan debts for non-completers (completed 0
credits) = $564,561.31.
Davidson County Community College
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Benefit: Increase Money Management
Skills/Financial Literacy
Current Disbursement Method Fall Semester:
Federal Pell Grant
$2,865
Federal Direct Subsidized Loan
$2,250
Federal Direct Unsubsidized Loan
$2,704
Total Financial Aid Awarded
$7,819
Tuition, Fees, Books, Supplies Paid
($1,144)
Financial Aid Disbursement (4th week of class)
$6,675
• Financial aid “windfall” check. Many students don’t have the skills or discipline to use
a large financial aid disbursement wisely.
Davidson County Community College
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Benefit: Increase Money Management
Skills/Financial Literacy
Aid Like A Paycheck Disbursement Method Fall Semester:
Total Financial Aid Awarded
$7,819
Tuition, Fees, Books, Supplies Paid
($1,144)
First Aid Like a Paycheck Disbursement
($800)
Remaining Aid to be Disbursed
$5,875
$5,875 / 6 Bi Weekly Payments
$979.16 every two weeks
• Provides stable, recurring payments throughout the semester, rewarding progression
and completion
• Reduces fraudulent enrollments; Pell/Loan surfing.
• Financial Aid Office of the Future: Focus on Access and Financial Literacy. Opportunity to
positively influence student’s money management skills with financial education/outreach
throughout their enrollment. Excellent compliment to current SALT and Ex$el initiatives.
Davidson County Community College
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Potential Benefit: Reduce Cohort
Default Rate
 Borrowers who
graduate (or who earn
a degree or who do not
withdraw) have a much
lower probability of
defaulting on their
loans
(Dynarksi, 1994; Kanpp & Seaks, 1990; Meyer, 1998;
Podgursky et. Al., 2000; Volkwein & Szelest, 1995;
Volkwein et. Al, 1995: Wilms, Moore & Bolus, 1987;
Woo, 2002).
• DCCC’s FY 2011 3 year default rate is 22%.
50 students defaulted in a three year
period out of the 227 students who
entered repayment.
• Aid Like A Paycheck will limit loan debt for
non-completers, which could have an
impact on reducing a college’s overall
default rate.
• Removing 5 students off the default list
would reduce the default rate by 2%.
• 36 of the 50 students in default withdrew
completely or successfully completed 0
credits.
Davidson County Community College
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Questions for Consideration
• How might the incentive structure of Aid Like A
Paycheck align with other student success efforts
at your college?
• Could your college implement Aid Like A Paycheck?
Why or why not?
• What additional areas should be explored when
implementing Aid Like A Paycheck?
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Contact Information
Kim Sepich, David County Community College
Vice President of Student Affairs
kwsepich@davidsonccc.edu
336-249-8186, ext. 6311
Kevin Lineberry, Davidson County Community
College
Associate Dean, Student Success
kjlinebe@davidsonccc.edu
336.249.8186 x6466
Michelle Ware, MDRC
Operations Associate, MDRC
michelle.ware@mdrc.org
(510) 844-2237
For more information and downloads to our publications, visit: www.mdrc.org.
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