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The Challenge: Maintaining Student Financial Aid during Financial Uncertainty

During the 2008-2009 academic year, 46,000 Penn State students borrowed $466 million in federal loans to help finance their education. On February 27, 2008 the Pennsylvania Higher Education Assistance Agency (PHEAA), which provided loans for 38,000 of those Penn State students at 23 campuses, announced it would no longer serve as a lender for federal loans. The financial turmoil of early 2008, reflected in PHEAA’s action, raised concerns about the future of other sources of funding. Without loans, many students would not be able to continue their education.

The Solution: Participating in the Direct Loan Program

On March 10, 2008, after meetings at the executive level including Enrollment Management, Finance and Business, and Information Technology Services (ITS), Penn State announced that it would become a Federal Direct Student Loan Program participant. President Spanier committed the resources needed to make the change. The University had four months to make the conversion in time to provide funds for the summer 2008 semester starting July 1.

On March 11, a team of 20 people charged with implementing the change held their first meeting and reviewed their task list. The team included staff from Student Aid, the Bursar’s office, and Administrative Information Services (a unit of ITS), as well as Anna Griswold, the Assistant Vice President for Undergraduate Education and Executive Director, Office of Student Aid and Roseann Sieminski, Assistant Controller and Bursar. Actions and items on the task list were divided into those that were core and those that could be later enhancements. The team then met weekly on Mondays to review progress. Schedules for routine work that usually involves all in Student Aid, such as responding to calls and e-mails from students and families, was redistributed to allow those deeply involved in the Direct Loan change to focus their time there. Technical staff met during the week as needed to develop the programs and procedures for data transfer between Penn State and the U.S. Department of Education. At the same time, Student Aid staff developed and implemented a communication plan, with most of the information provided online. What would students and their families need to know about the changes to the process, and when would they need to know various items? The 38,000 students with loans from PHEAA would need to sign a new promissory note.

Anna Griswold and Roseann Sieminski met monthly with the Senior Vice President for Finance and Business/Treasurer, the Vice President and Dean for Undergraduate Education and others to inform them of the progress both on the task list and on the communications with students and families. One measure of progress and effectiveness was the number of the 38,000 students who had signed new promissory notes.

"A number of efficiencies in managing loan disbursements and improved cashflow resulted from our moving to Direct Lending. This greatly benefited both students and the University."

Jackie Babcock
Director, Loans and Scholarships
Office of the Bursar

Mark Proper
Financial Analyst
Office of Loans and Scholarships/Bursar

Team leaders and members celebrated major milestones. The transition was completed in time for the summer 2008 semester. Following the full conversion in the fall, the accomplishment was recognized with a luncheon hosted by Anna Griswold and Roseann Sieminski and the group was joined by Dr. Spanier.

What made it possible? Adjusting to new programs and procedural changes is a fact of life for the staff at Student Aid. Student Aid is organized in a team structure, and has for a long time embraced the spirit of Continuous Quality Improvement and the related process analysis and change management. All of those who would be impacted by the change, including all of the units within Student Aid, were at the table for the weekly meetings. Student Aid also has a long collaborative relationship with the Bursar's office staff. Additionally, communication, both within the University and to students, was a part of the change from the beginning. Finally, Penn State’s automated student aid system was developed and is maintained by Office of Student Aid staff and programmers and supported by Administrative Information Services (AIS) so they were not dependent on the availability of external programmers to make the changes.

The most obvious benefit of the change was that student loans continued without interruption. But there were also operational benefits for the students and Penn State. With the Direct Loan Program as a single lender, there is just one process for Student Aid to manage for all students. Penn State has more control over the loans, and can more easily adjust the amount of loans, within prescribed limits, and can more easily reconcile disbursement. Time for the University to actually receive the funds is two days less than with individual lenders. As Anna Griswold stated, “What benefits students also makes Student Aid more effective.”

GAO Report

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For more information about Direct Student Loans, visit http://www.psu.edu/studentaid/aidprog/loans.shtml?reload . For more information about how Penn State made the change, contact Anna Griswold, Assistant Vice President for Undergraduate Education and Executive Director, Office of Student Aid, amg5@psu.edu.

March 2010

 
 
Sandy Coyle
Sandy Coyle,
Director, Programs and Operations Team, Office of Student Aid
"We avoided the perfect storm ..."more
 



Sponsors:
   Al Horvath
   Robert Pangborn
   Gary Schultz
   

Team Leaders:
   Anna Griswold
   Roseann Sieminski

Core Group Members:
    Jackie Babcock
    Scott Bitner
    Susan Bogart
    Dawn Boyer
    Joetta Bradica
    Sandy Coyle
    Amy Edmonds
    Giovanna Genard
    Ralph Hosterman
    Shari Howell
    Melissa Kunes
    Evelyn Nordberg
    Mark Proper
    Bob Quinn
    Rick Ramsey
    Anita Sather
    Paul Simenson
    Rod Smith
    Bob Snyder

Ad Hoc Members:
   Laura Garver
   Ed Hinkle
   Jane Kone
   Carol Lewis
   Nancy Meyer
   Todd Moss
   Marty Nordberg
   Maggie Smith
  

 
© 2010. Office of Planning and Institutional Assessment   502 Rider University Park, PA 16802-4819   (814) 863-8721   fax (814) 863-7031
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