MIT - Inspired Financial Aid Innovation
Posted by Nina Flood, M.B.A. on Mon, May 18, 2009
The Answer Is: $60/hour. What is the question?
What is the hourly rate of classroom instruction based on the $52k price tag of attendance at Massachusetts Institute of Technology?
Though not likely to be heard on the real TV show "Jeopardy", it is the kind of unforgettable lesson that Daniel Barkowitz, MIT's Director of Financial Aid, (and professor of a seminar on personal finance) teaches. Daniel has always had a unique ability to take complex financial aid and financing concepts and make them into something more widely accessible. Because of the economic downturn and resulting higher stress put on college students and their families, I recently met with Daniel to get his perspective on what is needed now.
He offered up with two "Stress Less" solutions (not stressless, but stress reducing) that we are considering here at The Goldberg Center:
1. One of the problems needing a solution is the lack of timely, accurate information available to families. Because most financial aid offices are completely swamped with calls and emails from January through May, (for first years) and May through August, (for the continuing students), many families turn to each other. In person or online, they often inadvertently receive or share misinformation. We are contemplating an online forum that would enable a family to pose a question, get the real regulatory language answer, and then allow its discussion. Most importantly, this forum would be monitored by professionals within the industry to assure that only accurate information remained posted.
2. Another problem is the lack of holistic planning that goes into a family's game plan. There seems to be two schools of thought: either you make financing as painful as possible by paying more than you can afford in an effort to minimize financing costs or remain in denial by deferring payments with expensive financing vehicles. The neglect of a middle ground, however, leads to both shattered dreams and finances. There is a need for a tool that enables a family to see the long and short term benefits of, say, putting half of the balance in a payment plan and assuming a loan for the remainder. The tool we envision would also provide the total and immediate costs of the options for a minimum of four years of the employed strategy.
Which of these two solutions do you feel would be more valuable and merit higher priority for us? Let us know in your comments to this post - thanks in advance!