Opportunities to Improve Service and Outcomes 1 Don’t stop BELIEVING

Opportunities to Improve Service and Outcomes Presenters:  Robert Sommers: Regional Director, Midwest; Edfinancial Services  Al Hermsen: Director of Financial Aid; Wayne State University Learning Objectives:  State of the union  Understanding your options  Elements of a good evaluation  Outsourcing considerations  Practical Experience 2

State of the Union Where are we now?:  Increased volume at our institutions: o FAFSA Application Processing Statistics Data obtained from Department of Education Data Center on IFAP 3

State of the Union Where are we now?:  Increased volume at our institutions: o Pell Grant Disbursements * 2010 – 2011 data as of 3 rd Quarter Data obtained from Department of Education Data Center on IFAP 4

State of the Union Where are we now?:  Increased volume at our institutions: o FAFSA Application Processing Statistics o Pell Grant Disbursements  Decrease in Budgets o State Funding Reduced o Operating Budgets Decreasing or Stagnant  Increased Regulatory Burden 5

2010 NASFAA Administrative Burden Survey Executive Summary  Two-Thirds indicate financial aid office facing a moderate or severe resource shortage o 80% identify shortage as permanent in nature o 88% impact their obligation to assist and counsel students  Major Cause: o Greater regulatory compliance workload 6

2010 NASFAA Administrative Burden Survey Executive Summary  Major Shortage Areas Identified o Operating Budgets o Staffing Levels (include Counseling, Administrative, and Support) o Insufficient Technology and Lack of Technology Training 7

2010 NASFAA Administrative Burden Survey How much additional productivity may be extracted from an industry that has seen remarkable increases in demand? 8

Regulatory Requirement  Administrative Capability o 34 C.F.R. §668.16(b)(2) - administration o 34 C.F.R. §668.16(h) - counseling  Provided as a guide for responses to certain questions in the 2010 NASFAA Administrative Burden Survey  Referenced in a letter to College and University Presidents by Federal Student Aid COO, William J. Taggart (electronic announcement dated 4/6/11) 9

Regulatory Requirement  34 C.F.R. §668.16(b)(2) (2) Uses an adequate number of qualified persons to administer the Title IV, HEA programs in which the institution participates. The Secretary considers the following factors to determine whether an institution uses an adequate number of qualified persons— (i) The number and types of programs in which the institution participates; (ii) The number of applications evaluated; (iii) The number of students who receive any student financial assistance at the institution and the amount of funds administered; (iv) The financial aid delivery system used by the institution; (v) The degree of office automation used by the institution in the administration of the Title IV, HEA programs; (vi) The number and distribution of financial aid staff; and (vii) The use of third-party servicers to aid in the administration of the Title IV, HEA programs; 10

Understanding Your Options 3 Basic Options  Status Quo Do nothing, continue business as usual  Add to internal operations Increase staff and automate processes  Outsource Partner with third-party service provider to increase process efficiency and staff effectiveness 11

Weighing the Options  Determine the scope of work o Pinpoint Issue  Peak Processing vs. Everyday Processing o Automation an option?  If yes, do you have access to IT resources?  How quickly can system be changed and tested o Specialized knowledge base situation? o Timing – How quickly does a solution need to be implemented? 12

Weighing the Options  Identify Costs – Internal Operations o Quantitative Costs  Salaries & benefits  Initial training & continual training  Impact of staff turnover  Space, equipment and supplies needed o Qualitative Costs  Staff morale  Service levels impacts  Institutional knowledge base 13

Internal Operations Cost Example Internal Operations Staff $15,200 Salaries and benefits equal to $19,000 80% of time spent on processing verifications Training 1,000 Staff person training time and quality control review Initial training, anticipated update training, additional training due to staff turnover Equipment/Supplies/Space 1400 Equipment (computer, phone) Office Supplies Office Space build out Allocated at 80% of cost Estimated Cost per FT Equivalent Employee$17,600 Estimated FTE2.0 Total Estimated Cost$35,200 # of Verifications1800 Cost per verification file$20 Opportunity Costs Service level impacts with additional employees and shifting responsibilities toward walk-in/phone traffic Impact on audit findings Turnaround time on verification and awarding processes Impact on enrollment goals and decision timelines Staff morale with responsibility changes, reduced or eliminated overtime, and overall job satisfaction 14

Weighing the Options  Identify Costs - Outsourcing o Quantitative Costs  Fees for services  RFP creation and evaluation time  Initial training & continual training o Qualitative Costs  Staff morale  Service levels impacts  Experience and knowledge base 15

Outsourcing Cost Example 16 Outsourcing Staff $2,500 Allocation of staff for creation and review of RFP Training 500 Staff person training time and quality control review Initial training, anticipated update training, additional training due to staff turnover Total internal costs $3,000 # of Verifications 1800 Estimated internal costs per verification $2 Outsourcing fee per verification $11 Cost per verification file $13 Opportunity Costs Service level impacts with additional employees and shifting responsibilities toward walk-in/phone traffic Impact on audit findings Turnaround time on verification and awarding processes Impact on enrollment goals and decision timelines Staff morale with responsibility changes, reduced or eliminated overtime, and overall job satisfaction

Elements of a Good Evaluation  Clearly defined scope  Regulatory requirements outlined  Mandatory elements defined  Costs identified and measured o Actual and Opportunity  Realistic timeline determined  Mechanism for analysis and evaluation 17

Outsourcing Considerations  Improve or maintain service levels o Possibility of immediate impact  Knowledge-base o Higher education experience  Reputation/References o Current and previous client references o Talk with your colleagues  Capacity o Appropriate staffing levels o Systems and technology 18

Outsourcing Considerations  Flexibility o Adaptive to institutional requests o Multi-service opportunities  Institutional match o Partner should match goals/mission  Write a good contract o Outlined expectations o Accountability and performance measures o Clearly stated contract length and renewability criteria 19

Outsourcing Considerations  Request for Proposal (RFP) o Don’t recreate the wheel o Set clear expectations/timelines o Don’t ask for more than you need o Know the rules/regulations for your state and institution o Develop evaluation team o Interviews for finalists 20

Outsourcing Considerations  Manage the relationship o Ensure communication flows continually o Review/monitor established standards o Monitor billing activity and payments  Successful partnership o Treat partners as part of your team o Manage expectations within the office o Communication flow 21

Practical Experience 22

Questions 23