Technology to the rescue: as Financial Aid officers grapple with growing challenges, complexities, and demand, they turn--sometimes gratefully, sometimes uneasily--to today's technology solutions.

At Central Washington University, the amount of financial aid given to students was up by more than 50 percent in 2002 (over 1995)--from $39 million to $60 million. At the University of Minnesota, six times the size of Central Washington, the dollars dispersed grew $128 million to $222 million over the same seven-yea period. At Furman University, a private 2,700-student school in Greenville, SC, the amount of aid dispersed jumped from about $12 million to $37.5 million during that time. Of course, behind those steeply climbing aid figures are dramatic increases in the number of students requesting assistance.

Greater demand. "What we're finding is that more people are applying for aid, even people without need, and we're also seeing a significant increase in families having problems--either losing their jobs, or taking a cut in pay and then asking for special consideration," says Agnes Canedo, director of Financial Aid at CWU. But keeping up with the financial demands of the student population is only half the battle.

Increased complexity, limited supped. "There are so many reports, regulations, and so forth that schools need to be on top of," says Billie Hyde, director of Marketing at nonprofit electronic loan technology provider and consortium ELM Resources (www.elmresources.com). "With the complexity of the laws, financial aid departments are almost being forced into adopting and adapting to technology. It's the only way they can keep up with the industry." Truth is, the troubled U.S. economy, stressed state budgets, and rising university costs have been coupled with the increased technological complexities of financial aid application and disbursement, and the changes required to handle all of the applications and Loan products, and meet all of the regulations. This, say financial aid pundits, has created conditions for the nearly perfect storm threatening so many IHE financial aid offices in recent years. Coping in the throes of that storm often comes down to wrestling with student finance technology--frequently without any bona fide IT support from the university.

"IT support is always a challenge for a financial aid office," Canedo sighs. "It has to do with the constant changes in rules implementations."

ALTERNATIVE LOAN HEADACHES

Yet, while the complexity of federal regulations associated with the Federal Family Education Loan Program (FFELP) Loans may be one of the biggest headaches for financial aid directors, not far down the list are the caps on federally guaranteed Loans. A variety of economic conditions--from decreasing family contributions to rising tuition costs--have made students needier than ever, but stagnant loan caps have forced many students and their families to turn to alternative loans to fill the gap. At CWU, where the annual cost of attendance is a relatively modest $15,000, the number of alternative Loans certified went from nine (among 8,500 students) in 2001 for a total of $61,000, to 169 in 2003 for a total of nearly $1 million.

Needless to say, there are plenty of banks and credit unions that are eager to grab a piece of this business, generating thousands of products ('or financial aid officers to weed through in order to find those that best meet the needs of students, parents, and the university. (Banks and credit unions are also quick to appeal directly to students and parents, further complicating the issue.)

Short list requirements. At Furman, and years earlier at the University of Miami (FL), Financial Aid Director Martin Carney went through a request for proposal (RFP) process to select a preferred alternative Lender for his school. And while the most important criteria were service-related issues such as repayment terms, discounts, and the availability of monthly payment plans, being able to easily process the loans electronically quickly became a critical issue.

"Technology was the other important component," Carney says. "We needed an alternative lender that was ELM compliant and a zero-day lender." (Zero day refers to same-day electronic funds transfer.) Furman's Financial Aid office is part of a university-wide student information system from Datatel (www.datatel.com), but student loans are processed through Electronic Loan Management--ELM--a free software technology offered by ELM Resources.

TECHNOLOGY: STANDALONE OR ERP?

In navigating the use of both specialized student finance software (ELM) and an all-encompassing IHE administration system (Datatel), Furman faced the biggest issue in student finance processing today, says Linda Fleit, head of Edutech International, independent consultants (www.eductech.com). "Is the office going to use a standalone technology, or be part of the overall administration system?" she posits. In many cases, the intensive data and regulatory requirements of the Financial Aid office required that department to move ahead with technology purchases before the university as a whole was ready, Fleit says. But unfortunately, she goes on to explain, when the university is ready to invest in an integrated ERP (enterprise resource planning) system for the institution, and replace departmental standalones, financial aid officers often protest, "You'll have to take my standalone system out of my cold dead hands! This new financial aid module just doesn't do it for me!" Fleit is not altogether kidding.

Conversion aversion. Still, in many financial aid offices around the country, employees rely on a patchwork of technology to do their jobs. They may have a legacy system that interfaces with the registrar and bursar, a separate loan processing system from Sallie Mae or Nelnet, and use the federal government's myriad systems for handling applications, direct loans, and Pell grants. In addition, university programmers often handle school-specific Web applications. For those working with this kind of homegrown environment, managing all the inflows of information--from students, the government, and lenders--is becoming increasingly impossible with the IT support generally available.

According to Todd Eicher, executive director of Nelnet (a vertically integrated financial services company that provides everything from bond issuance and loan financing, to loan origination and origination technology), "Every school has some type of financial aid management system. Some are packaged systems, some are legacy systems. But we're seeing more and more people moving toward those vendor-provided packages. My speculation is that it's expensive and time-consuming to maintain legacy systems. It simplifies life for the schools to get a vendor-provided product."

That's exactly the situation CWU finds itself in, says Canedo. Right now, the Financial Aid office is pretty much humming along on a combination of an old Information Associates (now owned by SCT Corp www.sct.com) student information system; PowerHouse (Cognos; www.cognos.com); the five DOE applications--EdExpress, EdConnect, Student Aid Internet Gateway (SAIG), Common Origination and Disbursement System, and the National Student Loan Data System. These work together with a Web interface known as Wildcat Information System (WIN), built in-house. Beginning in February, though, the office will be part of a university-wide implementation of PeopleSoft's SIS that will be used to process all 2004-2005 applications. Handling regulatory updates and new requirements has been tough enough with just one programmer assigned full-time to Financial Aid, Canedo says. But with that programmer also working closely with the conversion team, IT support is an even bigger issue this year than it has been in the past.

"It becomes a constant challenge to get your system up-to-date, because the changes come very quickly," she says.

When the conversion is complete, the regulatory changes will come in an easily implemented quarterly package from PeopleSoft, but getting to that point is often a lot hairier than schools anticipate, says Kristine Wright, interim director of the Office of Student Finance at the University of Minnesota.

"Our conversion two years ago was painful, as many conversions are," she says, adding, "All conversions are tough. It doesn't matter how well things work or how well you think you've trained people, conversions are a shock." (Happily, the PeopleSoft system works well, she reports.) One of the most important conversion issues that comes up in financial aid offices is whether to convert all the old data, or to simply rely on both systems for a period of time.

"The decision to convert or not convert has a profound effect on operating staff," Wright says. "It's a real tough decision, and it's important for the person making the decision to put him- or herself in the position of the people who will have to work with the data every day."

VENDOR VALUE

The decision to go with a new student finance technology product--particularly an all-encompassing system such as one from PeopleSoft or Datatel--usually brings with it the promise that IT support "won't be your headache any more."

Vendor support. And indeed, when it comes to support of the financial aid technology, "our goal is to take on the responsibility," says Susan Beidler, PeopleSoft's director of Product Strategy for Student Administration and Contributor Relations.

Either, at Nelnet, echoes the promise. "That's where we feel we can provide value. With our product, [financial aid offices] don't need to rely on a wealth of internal resources."

Internet architecture. Aiding in this environment is the movement of most student finance systems to an Internet-based architecture. With its new OpenNet loan delivery product, Sallie Mae, for one, is able to provide training to its school, customers right over the telephone.

"It's not a product that normally involves having someone from [the school's] IT department engaged in the process," says Kim Glass, vice president of Loan Delivery Product Development for Sallie Mae. What's more, says Glass, Sallie Mae utilizes system-monitoring technology that actually detects when a school, may be having a problem--before the Financial Aid office even notices. "We've invested a lot of energy in what we call 'proactive' support: monitoring and tracking tools that watch what's going on with all of our customers," she explains. For example, "in file management, if it appears that there is data that the school is attempting to send to another provider, and we're not seeing that there are acknowledgements coming back in a timeframe they ordinarily would, we begin to investigate the situation."

The Web-based financial aid system architecture also facilitates the real-time, self-service model that most schools embrace today. With Internet architecture, everything from FAFSAs to aid package delivery, acceptance, promissory note signing, and fund delivery can be transacted electronically. The next demand from schools: Online integration with registrar and bursar functions--processes even schools with enterprise systems are negotiating with difficulty.

"Schools would like us to look at more real-time integration between enrollment and financial aid, so they can dynamically adjust financial aid as enrollment status changes," says PeopleSoft's Beidler.

Integration. Whether schools choose a standalone system for the Financial Aid office, or an enterprise-wide system that handles everything from recruitment, applications, registration, financial aid, and alumni development, the most pressing issue at hand is integration.

"The number one issue--one that has all kinds of subtopics to it--is integration," says Fleit, at Edutech. "You can't do without integration. The question is: Who is going to supply it to you? When you have a standalone application, your own in-house IT people are going to make integration happen. When you have an integrated system, a single vendor is going to do it."

Shrinking pocketbooks. All of this demand for integration, real-time data, and self-service technology comes in light of the other reality of student finance: Students and their families aren't the only ones strapped for cash these days.

"The biggest issue facing financial aid offices? They have to do better with less, and provide better student services at lower cost," Wright says. But then again, what's a financial aid office, without a challenge?

RELATED ARTICLE: Minnesota's one-stop.

One-stop shopping has been a retail trend for the past decade--think of the Super Wal-Marts that sell everything from jeans to lima beans, or banks that offer checking, savings, credit cards, brokerage, and insurance services. Not surprisingly, the one-stop trend has taken hold on many campuses as well, as schools seek to adopt a more customer-centric approach to their mission.

At the 60,000-student, four-campus University of Minnesota, one-stop shopping has arrived with the integration of the school's student registration, financial aid, and receivables systems, which lets students with special circumstances wait on a single line to resolve what usually amounts to a web of inter-related issues.

"We have a single counter manned by staffers who can serve students with problems in any of these areas, says Kris Wright, interim director of the Office of Student Finance (and a CPA with an MBA who used to lead the national accounting operations for the U.S. Postal Service). "As a result, we're a little different than a lot of other universities."

Minnesota was able to adopt this one-stop philosophy when it converted from a number of disparate legacy systems to a PeopleSoft technology suite which includes Human Resources, Student Administration, End User Training, and Training Administration applications. With its conversion to PeopleSoft, the school began to stipulate that all routine transactions be completed on the Web, with e-mail the official form of communication with students.

The results have been dramatic. In 2001, the school prepared financial aid Packages for 18,162 students. About 4,000 of those were executed directly by the PeopleSoft system, and about 10 percent of students submitted paper Financial Aid Award Notification applications (FAANs). Last year, the school had roughly the same number of students' applications to package, but more than 12,000 went directly through the PeopleSoft system, and paper FAANs were reduced to about 3 percent.

"Essentially, we've gone from six weeks of processing to four days for the FAANs, and we've continually reduced staff as a result," Wright says. "What's more, we've saved a significant amount OF money as a result of not hiring temporary staff to come in and process FAANs during the summer."

The school has also been able to offer better service to its customers. In the fall of 2001. The Financial Aid office sent out 5,600 refund checks to the tune of about $10 million; the following year it sent out 6,500 worth about $16 million.

"The difference is, we were able to stay current on processing loans and scholarships. Even with reduced staff, we were able to get more OF the money to more students earlier," Wright says.

Still, the conversion to PeepleSoft was by no means a seamless transition, and Wright doesn't allow her staff to rest on its laurels now that the integration is complete. Instead, her group systematically tracks errors made, and works to attribute them to a source or sources, and learn from the mistakes.

"Through business process reviews, we look at where our staff is spending time where errors are occurring," she says. By studying these issues, "we've been able to void a whole lot of time spent and a whole lot of annoyance on the part of the student."

RELATED ARTICLE: Structuring in-house support for FA.

The financial aid directors happiest with the support they receive for their information technology seem to be those who have wrangled one or more dedicated IT staffers for their departments.

"When I was hired as director of Financial Aid, I convinced the administration that we needed to have one staff member in Financial Aid dedicated to the systems area," says Financial Aid Director Martin Carney at Furman University (SC). "We get good support from the university when programming issues come up, but having the person here in our office is a huge advantage."

At larger schools, such as the University of Minnesota, IT support for the Financial Aid office comes from a handful of departments and physical locations. The key to UM's success, though, is the constant and consistent interaction between all groups, says Kris Wright, interim director of the Office of Student Finance at Minnesota.

Then too, "functional users and technical staff meet on a regular basis, both on a management level and staff level, to talk about design, development, testing, project management, and how we're doing those things," she says. "These things have really helped us. It's easy to say it's somebody else's problem when something goes bump in the night, but problems, as we know, usually don't have one source."

RELATED ARTICLE: 6 tips for choosing your IT vendor.

Schools can choose from a handful of prominent technology vendors when selecting either best-of-breed standalone systems or enterprise-wide systems with financial aid modules. But, say college IT pros, there are a number of critical factors to consider when searching for the provider that best meets your needs:

1 Customize, or adapt? Decide whether you want a solution customized to your existing process, or whether you're willing to adapt to the way the software works. Many technology and process experts now suggest that--after a, yes, somewhat bumpy initial learning curve--approach number two is often a wiser choice. Among other things, you will do less customizing of your system, saving time, money--and most importantly--the often endless support(and financial drain) that accompanies multiple customizations. Whichever option you choose, however, make sure your vendor choice meshes with your decision.

2 Support. What kind of technology support does the vendor offer? Is there a single point of contact? How often will updates be available?

3 Integration. How easily can the product be integrated with enrollment and other university systems?

4 Open system, or limited partners? Some solutions are open systems that are vendor neutral, others limit the banks and other partners that you can use in conjunction with their system. Check carefully.

5 Small or scalable? Large schools need to ensure that the application is scalable to their needs; on the other hand, some solutions work best for smaller schools. Check product reviews and recommendations for the real lowdown; vendors have been known to paint a one-size-fits-all picture when it suits.

6 Are real-time and self-service capabilities built in?

Rebecca Sausner is a freelance writer based in Brooklyn, NY.