Nonprofit Resources
Margin for Mission Podcast S1:E14 – What New Federal Aid Rules Could Mean for Student Cash Flow – Transcript
Ken Tan:
Welcome to Margin For Mission: The CRI CapinCrouse Podcast where two friends, Ken and Chris, bring you real talk about creating space for what matters most because when your organization has financial and operational margin, you can focus on your mission with confidence.
Chris Purnell:
We’re professionals who’ve spent years helping churches, higher education institutions, and other mission-focused nonprofit organizations manage their accounting, tax, compliance, and other challenges. We understand the complexities you face, and we’re here to make it simpler.
Ken Tan:
In each episode, we’ll dive into practical insights on leadership, operations, and the everyday challenges of running a nonprofit without the jargon.
Chris Purnell:
And we’ll talk about life too, family, faith, quite a bit of football, and finding balance in a world that rarely slows down.
Ken Tan:
So whether you’re managing budgets, leading teams, or just trying to keep your mission moving forward, you’re in the right place.
Chris Purnell:
This is Margin For Mission. Let’s get started.
Ken Tan:
Well, welcome back to another episode of Margin For Mission. It’s one of those things where I always enjoy these types of episodes, and what’s even better is that Chris and I get to continue connecting not just with each other, but with some awesome folks too, as well, on the screen. So I would say I try to be objective about this, but these are some of our favorite folks too, as well at the firm, don’t you think, Chris?
Chris Purnell:
That’s right. That’s right. Yeah. It’s like trying to pick your favorite book, movie, or child, which I can easily do in my family. I’m just kidding if my children are listening. But absolutely right, these are wonderful opportunities to share the expertise and the personalities that we have here at CapinCrouse. So it’s a wonderful privilege. And this is a first time for us, Ken, in two different ways. Number one, we’ve got two special guests instead of just one.
Ken Tan:
That’s right.
Chris Purnell:
So it’s jam-packed already as it is. And number two, this is probably one of the more technical subjects that we’ll be tackling here on Margin For Mission, but we’re going to do our best to keep this lively and informative and entertaining and informal. So that way our listeners can be benefited by the important stuff that we’ll be talking about today.
Ken Tan:
Exactly, exactly. Well, I guess one of the things that we have to do is, of course, introduce the two guests that are on this podcast with us too as well. Fellow colleagues, Lisa Saul and Patricia Willhite. Hi, Patricia. Hi, Lisa. How are y’all doing?
Lisa Saul:
Doing well. Thank you.
Patricia Willhite:
Doing well. Thanks for having us.
Ken Tan:
Oh, the pleasures are ours, especially because the fact that you all are the ones that know very much about these topics more than Chris and I. And this is one of the things where I would even just say in this case, the benefits of being at Capin here has been the fact that in that nonprofit world, it’s not just churches, it’s not just denominations and not just nonprofits in general. Actually, even higher ed is a large factor in this area too, because this is where part of it is there’s so many venues here and having folks that have that kind of knowledge in those particular areas is so key.
Because one of the things I think about is it could be very easy for us to think about the figurative of a river. It could be very wide but very shallow in terms of our experience. We may only be about a foot wide, but many, many, many feet deep because of the fact that we have some great folks like Patricia and Lisa here that know things day in, day out about higher ed too as well. So again, Patricia, Lisa, so glad that you’re here too. Now, can I just say something just to get it off my chest?
Chris Purnell:
Please.
Ken Tan:
Because it’s been a grievance of mine… I’m not going to say how old I am, but for many years. I know we’re going to be talking about college, and again, this may be an unpopular opinion, but I think a lot of us that did go to college may have the same kind of grievance because it still wakes me up inside and it just eats me up inside. I still remember every time when the semester starts, I have to go to the bookstore and I have to buy that 9th Edition textbook or math book or science book for $350.
And then at the end of the semester, I may have opened that a couple times, then sell it back for 30 bucks. And it’s just one of the things I’m just like, “Boy, that return was very different.” Now, grateful that I did go to college, grateful for everything that is. I know that probably still is relevant in the college side world, I’m sure, right, Patricia, Lisa? But that’s where part of it is even just knowing that college is not cheap and college has its costs too, right? And that’s where part of this-
Patricia Willhite:
The good news is you can just do it online now.
Chris Purnell:
That’s right.
Patricia Willhite:
You don’t have to actually go to the bookstore. So it’s only $300 instead of 350 now, Ken.
Ken Tan:
You know what?
Chris Purnell:
For the eBook.
Ken Tan:
Hey, that is the eBook. See, eBooks are real. Okay. Okay. I’m going to do another preface as well as a part of this conversation. Patricia, Lisa, here’s an important question. Do you consider eBooks and audiobooks books or do you consider that it has to be actually paper bound and in the back of your shelf?
Patricia Willhite:
I never really thought about that.
Lisa Saul:
I am an audiobook listener day in and day out. I don’t think you have to have a paper copy. However, I still, if it’s something that I want to learn from, I need the paper copy because I’m a very visual learner. And I still love the library. I will go to the library, just to feel a book.
Chris Purnell:
Amen, sister. Amen.
Lisa Saul:
That’s the camp I’m in. I’m both.
Patricia Willhite:
Yeah, I think they’re books. I hadn’t really thought about the question before. So that’s a good question, and I guess a good start that should be ready for the rest of the conversation here that you’re going to ask all sorts of great questions [inaudible 00:05:46].
Chris Purnell:
And Ken is inviting you guys into a longstanding now beef that he and I have, which is are audiobooks books or are they things that you can put on the background? And you might pick up a few things when you’re doing the dishes and mowing the lawn and doing your CrossFit workout. Or is it like you need a book? And by the way, eBooks and physical books, you’re right, Ken, I think there is a difference between those two.
Because if you look at an ebook, unless you’re like Kindle E-reader or something like that, you’re on a device that can do an almost unlimited number of things. Whereas if you’re holding a physical book in your hand, it can do one thing, literally one thing. And I think your brain’s doing something different there. So you guys are stepping into a stream of a longstanding grievance between Ken and I.
Lisa Saul:
Good philosophical discussions.
Ken Tan:
This is why Patricia and Lisa are my favorite too now, Chris. Yeah. I got ganged up on at a previous episode, Patricia, Lisa, just so you know.
Chris Purnell:
That’s true.
Ken Tan:
Just so you know. And as you can tell, my shelf is a little bit more bare compared to Chris’s, but I do still read. I am still learned in terms of what I think, but enough of this-
Lisa Saul:
There’s place for both.
Ken Tan:
There is a place for both.
Chris Purnell:
That’s true. That’s true.
Ken Tan:
And we still ended up at CapinCrouse, didn’t we, Chris? Didn’t we? Anyway.
Chris Purnell:
We did. We did.
Ken Tan:
Well, enough about Chris and Ken. Of course, we want to have the audience know more about you, Patricia and Lisa. And I think part of it is just to even talk about the story because this is what’s been so interesting is for a lot of the folks at CapinCrouse that have been on this episode or on this podcast itself, the stories of where they first started and what ultimately brought them to CapinCrouse was really pivotal because it really shows and gets even deeper into why we are here too as well.
Because again, I think for us, we’re all great professionals. We probably could have had careers elsewhere, but also there’s something that brought us to CapinCrouse. And so maybe with that, I’ll let Patricia or Lisa, whoever wants to get started, tell us about your story of where you started and ultimately what brought you to CapinCrouse too.
Patricia Willhite:
Go ahead, Lisa.
Lisa Saul:
Do you want me to go first, Patricia?
Patricia Willhite:
Yeah.
Lisa Saul:
Well, my journey to Capin actually started after college when I had worked for a nonprofit. I had gotten my degree in accounting from a faith-based institution and wanted to work for the Lord in a missional setting. So I had gone to a nonprofit relief and development and was there for nine years that in my time at that organization, I had met a gal from CapinCrouse, Sarah. It was a nonprofit seminar actually, and we had just hit it off. We were in the same stage of life, et cetera.
And that had started me thinking, “Wow, I could use my accounting, I could use my CPA,” because I had gotten that during my time at the nonprofit, “and have a broader impact in the nonprofit arena.” And so 27 years later, I’m still at Capin doing audits, compliance audits. That’s what I was really hired for because that was what I had been doing at the nonprofit. And so now I get to audit not just faith-based higher eds, but nonprofits like the one I was at. So that was my journey.
Chris Purnell:
Yeah. Yeah. I love that story. And it mirrors the story that I had too, where I started off in the nonprofit world and eventually made my way over to Capin because I sat on the board of directors with my now boss for a couple of months and got to know Capin a little bit through that. But I just love that journey of vocation and calling and wanting to do something that matters with your accounting degree, that matters in a bigger way. So it’s a beautiful story, Lisa.
Patricia Willhite:
That’s great, Lisa. Thank you for sharing. I had spent a lot of time in Mexico throughout my middle school and high school years. And I had gone and lived with some missionaries there and I thought that I was going to go and be a missionary after college, but I needed to have something on a piece of paper that I could show and people could pay me if I needed to support myself.
And so I went to college, and in college I did some mock interview with the career resource professionals and was telling them about how much I loved going overseas and just connecting with people and making a difference. And she looked at me and she goes, “Oh, I have the perfect company for you with accounting and with mission. Let me see if I can get an interview set up for you.”
And so I got an interview with CapinCrouse, and that was a little over 20 years ago. And I started as an intern with CapinCrouse 20 years ago this summer. So that is how I ended up here. And she was absolutely right. She had an excellent place for me to combine accounting and being able to serve people in the process.
Lisa Saul:
And the first time I met Patricia was on an audit. Had you just started or were you still…
Patricia Willhite:
Yeah, I was very new when I met Lisa. And you know how they do at audit firms, they just assign you tasks when you first start. So I got assigned to go and help with student financial aid because somebody needed to go and do it. And so I met Lisa and had some one-on-one training with her at that institution and she didn’t know I was going to be with her for the next 20 years and going forwards.
Chris Purnell:
Surprise.
Patricia Willhite:
Surprise. I’m coming with you, Lisa.
Chris Purnell:
Can’t shake her.
Patricia Willhite:
Yes.
Ken Tan:
Well, that’s awesome. And that’s what’s awesome about this is just even hearing that for myself and Chris, I guess you could say we’re fairly new to CapinCrouse in comparison, but this is what’s awesome is that we get to work with such wonderful folks like Patricia and Lisa. And this is where part of it is knowing that one of the things we talk about here is going to be some of the things that are impacting higher eds.
I guess for you, Patricia and Lisa, what do you think was the biggest draw when it came to even just serving higher ed clients and things like that? What are some of the things that you feel like, “Hey, this is what I wake up excited about”? Because again, I know this is a job. We don’t always wake up on Monday mornings, we’re like, “Oh, I can’t wait to go do audits. I can’t wait to go do consultings.”
But at the same time, there are certain things that I feel like we get to do that we’re really like, “Hey, it’s awesome that this is a part of our job.” And so what are some of the things that you feel, Patricia and Lisa, that essentially spark joy as a part of what you do with serving higher ed and other… of our clients here at CapinCrouse?
Lisa Saul:
Well, my joy is in the ability to help. So our approach to a compliance audit is we’re going in assuming that the institution knows what they are doing and we’re there to just confirm it. But in that process, there may be things because we do have a large client base of nonprofits that we can draw helpful scenarios, like if they have a specific question that they’re struggling with, we have a pool of other like institutions that we can draw from and bring a solution to them. That’s what brings me joy.
And I was telling Patricia this the other day, I said, “If I didn’t have that aspect of my job, I don’t think I would have stayed in public accounting, because just reviewing, et cetera, is not what brings me joy. It’s a requirement of the job, but if I can draw from helping clients, that is what keeps me here.
“And knowing that the end result of that is I’m helping their mission and their desire to serve students in the best way possible in maintaining compliance so that they don’t lose potentially that Title IV aid.” So that’s what brings me joy. And researching. I love to research, as Patricia knows. I love it. And now with AI, it’s actually easier for me now. It doesn’t take me nearly as long as it used to. So that’s one technology I’m learning to embrace. Patricia?
Patricia Willhite:
That’s great. I think for me, it’s always about people, whether it’s internal team people, clients, people that aren’t clients that just want to talk through, “What are some of the gotchas? What are some ways we could get in trouble? What are some of the things that are going to distract us from being able to accomplish our mission that if we put a few policies, procedures in place here, we can focus on creating time and space for conversations?” I’ve told a few different folks, but yeah, auditors and accountants have their spreadsheets and they love their spreadsheets, but spreadsheets generally don’t change lives. It’s almost always in a conversation with somebody else.
Ken Tan:
Absolutely.
Patricia Willhite:
And so being able to have those conversations, that’s why I keep doing what I’m doing.
Chris Purnell:
That’s good. That’s good. Yeah. As you were talking, both Lisa and Patricia, realizing that we’re in the service profession and so we’re here to help our clients. We’re here to guide them through choppy waters, which I’m sure we’ll get to in our discussion over the course of the next few minutes, but also it’s a relational endeavor.
Yes, there are spreadsheets. Yes, Microsoft Suite does a lot of legwork here. And yes, there are plenty of other platforms I get to use, but at the end of the day, it’s about people and people are the ones that we have to interact with and they’re the ones that are actually going to change lives and do the work. So we’re rehabilitating the image of lawyers and accountants from-
Ken Tan:
That’s right.
Chris Purnell:
… being seen as just [inaudible 00:16:15].
Patricia Willhite:
Introverts like people too.
Ken Tan:
One audit or engagement at a time.
Chris Purnell:
One episode at a time. That’s right.
Ken Tan:
That’s right. Well, I guess just to hit things off in terms of this, and this is where part of it is, I think, even just saying to preface this, a lot of times when we think about higher ed, we think about those big universities and all. Of course, I had the honor of being able to go to some great schools that had some, I’m sure, substantial endowments and all, but that’s not every single university. That’s not every single higher ed client.
And so one of the things I’m curious about this for, especially our audience here, is how the state of the faith-based higher ed field is looking, right? And so I don’t know, Lisa and Patricia, any thoughts about some of the things that you’re seeing right now? Because of course, Chris and I, we don’t see it on a daily basis.
But I think it’s just as important because we know that impacts not just church leaders, but even potential for their kids. And a lot of them are having kids that are starting to go into that next level of making decisions and all. I’m sure you all have some insights on some of the things you’re seeing right now too. So if you don’t mind, share a little about what you’re seeing as the state of the faith-based higher ed field.
Lisa Saul:
Well, my word would be stressed. A lot of them are financially stressed. It’s interesting I was Googling because it had come up at a seminar as that, but what is that enrollment number that will keep a institution financially viable just as a general look? And anything less than 1,000, unless the institution has a very strong endowment, a very specific revenue base, say denominational support or very, very high giving alumni group, that those are the ones that are more likely to not be sustainable for the future. And then basically closing their doors would be the ultimate result of that.
Patricia Willhite:
Yeah. I would add to that. So I agree, the current state is stressed. And if I can be bold enough to draw a biblical correlation with it, they’re probably like those that have come out of Egypt and they’re approaching the Red Sea and Pharaoh’s chasing them and they’re starting to feel the crunch. A lot of them have a substantial amount of cash flow that’s tied into the federal funding, and that comes with a very large compliance burden attached to it, can be a great effective tool for accomplishing the mission, but there’s strings attached with that funding as well.
And so they’re feeling scrunched between the mission, which is driving them and the calling of being able to educate the next generation in a particular way for a life of service and a life of following the Lord and the pressures of the particulars of federal compliance, concerns about affordability, concerns about whether it really makes sense to do it in this way.
And I think my encouragement would be anytime you get to that spot where it’s really pressed, there’s typically innovation and creativity that comes out and flourishes. So my encouragement is I think we’re going to see some of that. Not the most creative. Usually, our creative accountants end up in jail. So it’s probably good that I’m not that creative, but we’re going to see some really creative stuff that is birthed out of this as a way to be able to continue accomplishing the mission.
It might not look the same. It probably won’t, but I think it’s going to be a really exciting time for higher ed to be navigating. It will be stressed. There’s going to be a lot of feelings attached to it, I probably should say. But I think there’s a lot of really neat opportunity and I’ve yet to see the Lord give up on His people. And so I just think whether it’s in a higher education format or a different format, that there will still be an opportunity to educate the next generation. So that’s where I’m at with it.
Chris Purnell:
That’s a really good-
Lisa Saul:
And really on-
Chris Purnell:
Yeah, go ahead, Lisa.
Lisa Saul:
… that line too is, we all know about the demographic cliff and that just the number of college students is decreasing. So one of the things I was thinking of is how do you make your institution unique in being able to market that? What makes you stand out? With smaller students, more colleges that they can look at, what identifies you and draws people to you? I think it’s going to be critical in that it’s just becoming unique as best I can.
Ken Tan:
Sure.
Chris Purnell:
And Lisa, it’s interesting. I want to double click on that in just a second, but first to go back to what Patricia mentioned, that great biblical example of standing at the shores of the Red Sea, Pharaoh behind you, sea in front of you, chaos, what do you do? And what’s the watch word? Well, the Lord says to Moses, “You have only to be silent and wait.” So there certainly is a mandate here for our faith-based institutions to lean into their spiritual practices, their faith in the Lord to provide.
And so I think that’s a good and sound and timely word. Lisa, to your point, it’s a little counterintuitive for many institutions, when it feels like their world is circling the drain and they don’t know what’s going to happen next. Well, what do you do? Well, you scramble. You throw a bunch of spaghetti at the wall and you just try to see what sticks and you try to have the broadest base of applicability as you can just to see we can draw in.
But what you’re saying is the opposite of that: lean into what makes you unique, lean into your unique value proposition. I don’t know if you can give us just a little bit more thought on that? And Patricia, you as well, what are you seeing institutions do, faith-based higher ed institutions to lean into to maybe even get back to some of those foundational elements that made them unique in the first place?
Lisa Saul:
I think of a school, as my example, is they ended up doing a master’s in architect program, and they were the first faith-based institution to have that program. That set them apart in the faith-based arena. So that’s what I was thinking of. If you have a certain program or a certain niche in that, focus on that as well as maybe some of the broader… And of course, there’s denominational schools.
I have seen though that even in that arena, the denominational, the dollars from the denominational support has been decreasing because they have more missional too. But just again, even in your denominational school, there’s other denominational schools. What sets you apart from those other denominational schools? Find that one thing that can be a pool of students that want to come to you versus the other competing like schools.
Ken Tan:
So in essence, find your niche, right?
Patricia Willhite:
I think along with that-
Ken Tan:
Oh, go ahead.
Patricia Willhite:
Yeah. No, you’re fine. I think along with that, whether it’s a niche or whether you’re able to see what a need is going to be, we can see in the country that the trades are growing in a huge need right now. So what opportunities does a faith-based institution have to step into that space that maybe it’s been segregated from faith-based?
Maybe there hasn’t been electrical, welding, plumbing, automotive, those things where maybe there’s a way to combine the theological component and that skill component and that meets the need in the community and it prepares people for that. So I see that as a very large opportunity for faith-based-
Lisa Saul:
Exactly.
Patricia Willhite:
… institutions right now.
Lisa Saul:
And rethinking, are we only going to offer a four-year degree or a master’s student, right? Rethinking just even the length of your programs, like Patricia was saying, so that you provide another avenue that’s a felt need in the country itself. But providing that faith-based, because again, any profession is important, but when you can align your faith with your profession, that’s where the kingdom of God grows.
Ken Tan:
Yeah. Well, I think about even just some of our clients that technically aren’t higher ed, but what they’re trying to do as well is they’re trying to help folks with a tarnished past get some reputable jobs as well as some training, right? Things that they can do to be a contributing member of society while also be able to have some faith-based approach of conversations. And that’s where part of it is, I think, this is where you start thinking about some of the conversations we had that were focused on churches before. I think the term agile is still going to have to be very relevant even right now.
As a higher ed, as you can tell, we’ve seen some doors close. At least I’ve seen just in the news of some schools that have closed before, not just for faith-based ones, but even some of the non-faith-based, the secular ones too, as well. There’ve been doors closed as well. There’ve been some mergers, things like that. In essence, what’s happening, they’re saying is we can’t stay status quo, right? As a school, as an institution, we have to think about the what’s next, what makes us different, and is there a niche there for us just to be able to focus on that really allows us to stand out?
Well, I know even just as you start thinking about this, as we start thinking internally, that was one of the things that the schools do, but I know there’s also external factors, right? And so I know one of the things that this is why this topic came up as a special episode this time was around the One Big Beautiful Bill Act. I think I said the right number of B’s on that.
Chris Purnell:
Got it, man. Good work.
Ken Tan:
I did, right? I did great. Yes.
Chris Purnell:
One big, bold, beautiful…
Ken Tan:
Yes, yes. I could’ve added that one too.
Lisa Saul:
I had to stop and count three fingers.
Ken Tan:
Yeah. I had to count how many that was. And this isn’t meant to be at all political. It’s essentially just trying to talk about what could have been things that may be impacting the higher ed side. And so that’s where part of it is when that came out and we were looking at that, we were like, “I think Lisa and Patricia will have some thoughts on that too as well on what impacts that are for schools as well.” So maybe with that, maybe Lisa, Patricia, you want to preface some of the things about that bill and what are some of the impacts that’s going to have on not just a school, but even students?
Patricia Willhite:
Yeah. Lisa, I can go first here. I guess as the overarching comment, this bill is signed into law. So it’s not like this is going to change, and it is effective July 1, 2026. Now, typically what happens is the Department of Education will take the pieces out of something that gets signed into law after Congress has approved it and go through a rulemaking process and then issue more specific guidance related to that. That’s not done yet. So we are 45 days away from effective dates.
Chris Purnell:
Tick tock.
Patricia Willhite:
And we don’t have that official, “Here’s the definitive guidance on what’s coming.” And I like to use sports analogies. So if you use a sports analogy, this is like, “We’ve got new rules that have come out and we’re going to go play the game, and then we’re going to see what we trip across and then we’re going to create rules that go with that so that we can address those particular scenarios that, ‘Oh, wait, that harmed him and we didn’t mean for that. So we’re going to add another layer in here and there.'” Just know we’re about to play the new game, but we don’t have all the rules yet.
So what Lisa and I share is our understanding at this point is subject to change because something will change. We just don’t know exactly what it’s going to be, but some of the conceptual pieces that were signed into law were done that way. And I got to pick a little bit on lawyers, Chris, just because a lot of Congress is lawyers. They’re not the accountants. So when they use the words and they write the bills, it’s not done with the math examples that the accountants need to go put it into practice at the colleges. So just got to throw that out there.
Chris Purnell:
Yeah. No, it’s all fair. That’s why we went to law school because we don’t do well with the numbers. We can do words, some magical things, but as far as the numbers-
Patricia Willhite:
For place of arguments.
Chris Purnell:
… we struggle. That’s right.
Lisa Saul:
And a lot of times in theory, it sounds good, right? It’s the practical… Trying to follow with a practical aspect-
Ken Tan:
Application of it may be a different one.
Lisa Saul:
… that can be a little bit more challenging. One thing on the topic that we’ll talk about is loan limits and Grad PLUS Loan. Those have gone through the negotiated rulemaking and the public comment period is over. It was May 2nd, 2026. I did just hear today that hopefully by the end of April, those specific regulations will be in the federal registrar and solidified. We shall see. So far, nothing has ever happened on the timeframe I think it should. But that’s the hope, especially because these rules are going to be effective for what they’re already awarding, making awards to students for the next financial aid year.
Ken Tan:
And so for that, I guess give us an example of that type of impact. If you can give an example of a student that is about to go through this enrollment process, what ends up happening with what was put into place? And ultimately, what all does that affect them as they’re going through that, as let’s say they’re enrolling for this current year for their college? Y’all have an example like that?
Lisa Saul:
There’s two pieces. There’s the loan limits that are now statutory or will be. And then there’s what hasn’t happened in the past, but will be happening now is loan proration if they’re less than full-time. So those are the two big components for ’26, ’27. Now, there’s grandfathered-in things, et cetera.
But when you look at the loan limits, just in general, the main impact is on the graduate level. There isn’t any change for the undergraduate except for a dependent student whose parent is borrowing in the Parent PLUS Loan program. That one now is capped. So it’s really, the impact is going to be at the graduate level primarily.
Chris Purnell:
And that is for both the loan limit and the loan proration. So like Michael Scott in The Office said, “Explain it to me like I’m a five-year-old.” That would be awesome.
Lisa Saul:
Let me give a little background on the loan proration. I don’t disagree with that rule in theory because what we have seen again over my 27 years, and basically it really relates to the change in modality of how higher ed is being done in terms of the modular programs, online programs, et cetera. So you have a student that is progressing part-time. They were allowed to borrow the max loan limits regardless of what the institutional costs are because it’s supposed to be for living expenses, et cetera.
So they’re going part-time, they’re borrowing at the full loan level, but then they meet their aggregate loan limit and have no more loan eligibility before they even are a third, or maybe three-fourths of the way through. And if you look at statistically, that’s where they may not complete the program. The likelihood is less that they’re going to complete the program when they have no more loan eligibility or Pell eligibility for an undergraduate student. So this gives them that loan eligibility for the length of the program at the pace that they’re going. So I think in theory, that makes sense to me, just again, from a practical aspect from what we’ve seen.
Chris Purnell:
So if we take the most charitable way of viewing this, it really was meant to deal with that phenomenon, which we see time and time again, where a person has just a bonanza of student loans, but no degree to show for it.
Lisa Saul:
They have no degree.
Patricia Willhite:
And because of that-
Lisa Saul:
And they might have an associate’s. At that point, they better at least have an associate’s, but not necessarily a bachelor’s or at least in the program that they are in.
Patricia Willhite:
Yeah. And because of that, we’ve also seen there has been more of an interest in fraudulent students, students that are faking it just in order to get those loan refund checks. And so I’ll be curious to see if backing off on the availability of the cash changes the incentive enough to potentially reduce some of those more sophisticated identity theft and then taking the cash and running.
Ken Tan:
And I think in this higher ed side, even I think about it from a church side, “Well, how does this apply a lot?” Well, I think about it, a lot of pastors, a lot of folks going through seminary, they’re trying to get their master’s or even their doctorate. And so my dad got his, they always use that abbreviation, his MDivs, his Master’s of Divinity.
And then he got his DMin. I always have to be very clear when I say DMin, a Doctoral in Ministry. Sounds like it’s going to be a lot tougher than to even fund that too as well with some of these considerations, just because of the fact that there are a lot more stipulations. Am I translating that correctly too, as well as a part of this consideration?
Lisa Saul:
Yeah. Because one thing I see as a potential to follow the rules is changing the definition for grad level of what’s full-time versus half-time versus part-time. Right now, you’ve got a range of definitions, and it’s very program-specific based. So an MDiv might have full-time at 12 credits, a Master’s of Education might have it at six credits. I can see some of those definitions changing to where then you wouldn’t end up with a proration.
But again, mathematically, there’s a certain number of credits that you need to graduate, and how you take that and the timeframe also plays into this too. So while you might have more loan availability, does it mean you’re going to progress and finish your degree in a timeframe that’s expected? So I see how you can play it a little bit. I don’t want to say play it. Modify your programs and the definitions to comply, to get more upfront. But in the end, it’s not going to change the fact that there’s still going to be an aggregate loan limit that you’ve got to comply with.
Chris Purnell:
So one of the things I really appreciate about what you and Patricia did here is you guys have a really solid article that walks through some of these implications, and I’m going to say his name, Dustin, our producer. Maybe we can put this in the show notes. I don’t know if we have that capability, but we’ll check in on that. We’re moving on up in the world here, Margin For Mission, but that’d be great.
But you guys walk through a couple of different examples of what loan proration might mean for a couple of different types of student, just to give us a flavor for maybe this was an intended consequence, maybe it was one of those many unintended consequences, you don’t really know. But can you walk us through what this might mean for a half-time student, a half-time grad student? Just give us a flavor for that.
Lisa Saul:
So right now the rules are, at least through ’25, ’26, is that your cost of attendance component is the main driver in what… loan eligibility, like for Grad PLUS and Parent PLUS, is the ceiling, right? So in that cost of attendance, you have tuition and fees, room and board, you have books, you’ve got transportation, you’ve got living expenses, that type of thing, all that make this cost of attendance, for example, 50,000. So that’s for that dependent student to go.
And then you start taking what are the institutional aid, if they’re eligible for Pell, some of the Title IV grant programs, those would come into factor. And then you’re left with a net difference. And say it’s $20,000, just for example. The parent of a dependent, they do have to still have credit worthiness to qualify in that one, they could borrow up to that cost of attendance with the Parent PLUS Loan.
So that was unlimited as long as it didn’t exceed the cost of attendance. That was the statutory cap. Now, they’re only allowed $20,000. So if it was 30 and 50, that student, it’s no impact on that student. Say it ended up being 20, and that 30,000 differential, now the parent can only borrow 20,000 for that.
Chris Purnell:
Got it.
Lisa Saul:
So there’s still a $10,000 gap that says they have to be covered some way for the students. So that’s the scenario there, just a basic amount that’s not covered.
Patricia Willhite:
And they could go to a private lending. You could go to a bank to try to do that. That is an option. And along with that, it does crack me up that the limit is 20,000 a year, but the actual limit total is 65,000. So given that most of our programs have four-year degrees, that whole math problem and it not being the primary skillset, you just go back to-
Lisa Saul:
Yeah. That’s why I was saying [inaudible 00:40:17].
Ken Tan:
Probably an accountant was not involved with this.
Chris Purnell:
Dude, 20 times four is 65. You all know that.
Patricia Willhite:
Well, I made a math error. There’s 75 days until the effective date because we got two months and about 15. So I made my own math mistake too, but I’ll correct it for us on the podcast here. But no, with that, I think there’s an opportunity then as schools are working with students and with parents to try to do a four-year map of what that’s going to cost and provide clear enough information that students and parents can make an informed decision.
Because I do think it costs an institution a fair amount of money. If a student comes and doesn’t stay for very long, whether it’s one semester or two semesters and they don’t graduate or they don’t pursue, there’s a fair number of sunk costs for an institution that they have in the recruiting side if they’re not able to make it all the way through. So I do think it’s helpful for admissions counselors and those beyond the financial aid department to talk through that together about what is that strategy that as an institution, here’s how we want to set things up and educate students into making the best decision for them, and then also for the institution’s cash flow.
So that was one example on that. I think if we go to the next one, we’ll just say, if you’re a graduate student and you’ve had a cost of attendance of say 23,000 and you’ve been going, that’s a halftime cost of attendance. And you’ve taken the unsub loan of 20,500. You have a few thousand that you work, maybe it’s helped cover through federal work study or a little bit of institutional scholarships, if you’re going halftime, that’s going to cap at 10,250 for you instead.
But if that cost of attendance is still the same amount, now you’re going to have that gap of over $10,000 that’s going to need to be covered in order to continue in that program. So like Lisa had said earlier of graduate programs are really going to feel the impact of that simply because the loan dollars allowed is over 20,000 at the max amount compared to 5,500 to 7,500 roughly, depending on the student in the undergrad. So it’s a more magnified amplification of the proration side and what that means in terms of cash flow.
Ken Tan:
And again, there’s nothing political on this part here, but I remember before there was always a consideration that there was just skyrocketing student debt and things like that. And now the whole thing is trying to figure out how do we reduce costs. Is that why this portion of that bill came in was because there was so much excessive debt for student loans?
I think for a lot of folks that were going to, whether it was a private university or some of that, loans were essentially a necessity. Do you think this is to try and have a change in approach of saying, “Okay, as a student, now I need to think a little bit more intentionally about which direction I’m going, not just for my own, am I being bivocational as well, but even which school”? Because let’s say, for example, I always think about in-state. Public universities tend to be cheaper if you’re living there as opposed to out-of-state.
Now, I don’t know if a faith-based seminary can afford that same situation. So that’s where part of it is, I’m just curious, as you say, do you feel like that part of this is making students have to make a tougher decision as to, do I stay with a seminary in state if that offers me something lower because this is also impacting what I could potentially borrow?
Patricia Willhite:
I think there’s a couple factors, and I’ll go first here, Lisa, then you can jump in too. One is the student loan debt load for the United States is huge and economically, that is a problem for our country. And so to ignore that is unwise, to not do anything about that. There are about 25% of those borrowers right now that are in default on student loans.
So you have a large portfolio and then you have a lot of default that creates an impetus for needing to look at it, and maybe just needing to try something different to see if it makes a change and for the economy, and just being able to function as a society and people be able to continue to pay taxes and all of that. So I think it’s been pretty clear that there is intentional pressure being put on higher education, and that’s not just faith-based. That’s higher education in general to adapt a business model and to be financially viable without as much reliance on federal dollars for doing that.
Now, some of that was an intentional push to states. It shouldn’t be at the federal level that the country was designed that the states would try different things and you can take the best of that and use that at the federal level. So some of this is an intentional push back to the states. And we’ve seen a few states already proactively respond, Texas, South Carolina, Florida being three that come to mind real quick here where they’ve adjusted state funding, they’ve adjusted requirements for religious majors and minors and allowed students pursuing those where there’s a value with that to receive the funding where previously they had been excluded from receiving any of those state dollars.
So I think we’re going to see some adjustments. Obviously market adjustments take a little bit of time and it’s not instantaneous, but I think we’re going to see some adjustments as things get pushed to the states. So Ken, that goes to your comment on the states and in state pieces. Possibly. I think it’s definitely an option. I think it’s definitely a possibility for dual enrollment while still in high school and you’re not eligible for federal funding there. But maybe you can have some credits that are done prior to graduating high school and that leaves the pathway to the official degree shorter than what it would have been and therefore not needing as much of the cost side. So those are my thoughts. And Lisa, feel free to add in your thoughts too.
Lisa Saul:
Yeah. I was going to mention too, I think some of the talk around the affordability has been because the federal dollars are this, the cost has gone up here. I think when I look at our faith-based institutions, that’s not the case. They haven’t inflated their costs because there’s federal dollars there. So I think you have to put it in perspective there.
When I look at our faith-based schools, what has driven the higher cost, besides inflation, et cetera? Just compliance, trying to be compliant with all the state rules, the federal rules, not just for Title IV, but for HR, for accreditation, for this, that, the other thing. Compliance itself has a huge cost, which has also driven it. There’s other factors too.
I say that has been one of those factors. How do you keep the cost down when the federal government’s telling you, “You have to do this, this, and this”? GLBA, the Gramm-Leach-Bliley Act and protecting consumer information and putting higher ed into that category, which technically started out with banks. And so now you’ve got all these other layers of compliance that are just adding cost to it.
So I think, in my mind, while there might have been some grad schools that just raised the cost because they had extra dollars, that’s not a true reason for it. I think it also comes back to just the debt levels and looking at what can you reasonably pay back after your degree, right? But again, just bringing it back to our faith-based schools. When we look at default rates, our faith-based schools have some of the lowest default rates, because again, there is that worldview that we have that you borrow, you pay it back.
Ken Tan:
Pay them back. Yep.
Lisa Saul:
And so I think that’s one factor that isn’t looked into this whole equation. They lump everybody together instead of siphoning it out, looking at sectoring it out, I guess would be a better word, to see where it really truly is the bigger problems with institutions. But that’s [inaudible 00:50:01].
Chris Purnell:
I think for me, it was really enlightening, Lisa, to your point about how we’re not seeing inflated expenses and we’re not seeing really large margins for these institutions. That was enlightening to me just realizing, “Gosh, the margins are really modest on an annual basis for what these institutions are bringing in.” Your normal, not your Harvards and that kind of stuff, which have the gigantic endowments, but the kind of institutions that we walk alongside of here at CapinCrouse.
The other thing regarding the student loan debt bubble, the fact of the matter is that it’s treated as a preferential debt. If you go to file bankruptcy, the likelihood of you being able to discharge a student loan in bankruptcy is darn near zero.
Lisa Saul:
Exactly.
Chris Purnell:
And it’s only in cases of extreme misfortune that you might have a chance of getting some of it discharged in bankruptcy. And that’s even in cases where the debt load for the particular degree that a person got can be just wildly outsized for the degree. So to your guys’ point, there are several different outside factors, some institutions that took advantage and have just tried to get disadvantaged groups into institutions and get them as high a debt load as possible and graduating, or maybe even not graduating with a significant debt load. So there’s all these different factors that I think the chickens are coming home to roost, as it were.
Lisa Saul:
And the federal government was part of that problem.
Chris Purnell:
They were.
Lisa Saul:
Until the OBBA, they were not allowed to limit a student’s borrowing if they had eligibility.
Chris Purnell:
That’s right.
Patricia Willhite:
They were required to offer the full amount.
Lisa Saul:
They were pushed into offering them the whole amount, whether they actually needed it or not.
Chris Purnell:
Who’s going to say no?
Lisa Saul:
And so back to the bankruptcy, I think that came about because before people were borrowing max loans and then they were filing bankruptcy and getting them discharged. So they changed that rule.
Chris Purnell:
That’s right.
Lisa Saul:
I don’t even remember how many years ago.
Chris Purnell:
Many.
Lisa Saul:
But that was exactly what people were doing, borrowing and then claiming bankruptcy and getting a discharge. And they decided that’s not a good use of taxpayer money.
Ken Tan:
Well, if I’m trying to at least summarize this, I think the goal of this was to add that level of stewardship of saying, “Look, we have to be good stewards in terms of not just the time, but even the funds as well.” In this case, again, this is where part of it is just learning from what you all had been doing so much research on.
It’s essentially saying, “Look, we want to make sure we’re putting some proper boundaries on this because if not, that’s where people will take advantage of it.” Sure, this makes it then a little bit tougher for other folks on the decisions, but this is hopefully making it that this is a big decision for anyone when it comes to going to higher ed, whether it’s going to seminary of saying, “Okay, it’s not just that we have a blank check, but we really have to be intentional about what is the purpose of going here, the why, and will that ultimately allow me then to pay it back and all that?”
I think part of this is essentially it’s causing people to have to think a little bit more and think actually a lot more intentional about their actions about what’s going on. Is that a safe assumption if I try to at least translate some of the reasons?
Lisa Saul:
That is a very good synopsis. One of the things, I’m pulling it into the Grad PLUS Loan, that had no, and it still has no statutory caps, except for you can’t exceed the cost of attendance in that year. So you would see students… I think I had this one student, this was at a theological school, had a half a million dollars in loans. And I’m looking at it, thinking the government has allowed this. They’ve allowed this. How that person’s ever going to pay it back. I think they were a-
Chris Purnell:
For a theological degree.
Lisa Saul:
… [inaudible 00:54:02] major or something, which is one of the professional degrees that has a higher aggregate limit. But I was like, “I see where this…” Back to your comment, Ken, is rethinking just personal finance, understanding debt and that it’s not just the principal that you’re going to owe.
Ken Tan:
No.
Lisa Saul:
It’s the principal plus interest. And that it can be garnished from your paycheck.
Chris Purnell:
They can get it.
Lisa Saul:
Yeah. Kind of comes back to my theory on just education in general, whether it be at the high school level, at the college level. To graduate from anything, there should be a personal finance class requirement just to understand money.
Ken Tan:
True.
Lisa Saul:
We’ve lost a lot of that in our society where “I want it now and I’m going to pay for it later” mentality. And I think that’s definitely catching up to people. And even the Parent PLUS Loan, one of the things about a Parent PLUS Loan is there is not a deferment on that one. They start paying that as soon as the student starts taking it. And just even understanding what we’ve seen, looking at a transcript of a student, dependent student, their parent borrowed $35,000 PLUS Loan for the year and they failed out. They have this many zero credit and you’re like-
Chris Purnell:
And nothing to show for it.
Lisa Saul:
… “Something didn’t go right there.” That was not a prudent financial decision, but yet they’re stuck with the debt for nothing. So I think, again, back to your… that was a perfect comment, Ken, I think this is hopefully… And I’m hoping schools can, as Patricia said, map it out and help them understand the true cost of borrowing and maybe making some other decisions. Maybe you take a gap year. School might not be promoting a gap year, but take a gap year, work, save up money, just different things that would just help in that conversation of affordability.
And what do you want to do after your degree? Is my borrowing now going to keep me from other priorities I have after school? Maybe I want to buy a house, but if I’m saddled with this debt, I’m going to have to make a decision. Do I keep renting because I can’t afford a down payment on a house? So I think, yeah, I would love for personal finance to be a requirement for any degree.
Patricia Willhite:
And I think looking at the market too, the higher ed market and overall pieces, we know there’s about to be a massive wealth transfer that is occurring and there is a desire for the money to be used for things that make a difference. So an institution that can tell a story of why or have a unique value, a proposition that they can articulate, has an opportunity to be part of those conversations where maybe that hasn’t been.
So it’s thinking beyond that. Or maybe there’s somebody that is now retired and was really gifted in that career field and wants to teach at a reduced rate. And instead of paying a full professor salary, there could be a reduced cost or a stipend. There’s all sorts of creative ways that I think we’re going to see those things. So look at the market more broadly rather than just a fairly narrow approach to what we’ve always done.
Chris Purnell:
Yeah. Yeah. Well, as we get close to the finish line on this particular podcast episode, which it has flown by, and it usually does, you guys have been killing it. I’m curious, what are the things that you feel like schools need to be doing either in the now term, the near term, as far as how to communicate these changes, what they need to be doing as far as planning for the future?
We’ve mentioned one near the top, i.e. leaning into some niche things, leaning into your unique value proposition. I think that’s always very sound for organizations, it sounds like, especially so for higher ed now. But what are some things that you’re hearing out there in the wild, things that you’re telling clients and things that you just wanted to share on the podcast for them?
Lisa Saul:
My one thing right now is, again, because they’re awarding for ’26, ’27 school year, make sure the student knows this isn’t final, this is estimated because of the regulation changes. I think that’s super important. Again, the whole consumer information disclosures, making sure you’re updating your information that’s on the website for these changes so that students can’t claim a borrower defense regulation like, “He didn’t tell me, and so I don’t have to pay his debt,” those kinds of claims. But yeah, making sure that we understand-
Chris Purnell:
That’s true.
Lisa Saul:
… making sure that there’s a conversation about what are some alternative funding sources or loan opportunities, et cetera. Yeah, consumer [inaudible 00:59:46] just making sure that the students understand what it is right now and what it might be when they start in the fall of ’26.
Patricia Willhite:
Yeah. I would just add to that, if you don’t already have a cross-functional team at the institution between admissions, financial aid, finance, leadership, that there are so many things that have changed really since COVID and guidance that comes out piecemeal and you’re trying to respond and just set up a standing cadence of you’re going to meet once a month or once every couple weeks to be able to share what you see and have other people share what they see.
Because when you put three, four, five people together, you’re going to get a lot better ideas on how to do that. So that would be my suggestion. If that’s not already part of the cadence, to add that into your cadence and just have everybody share, “Here’s what I’m seeing, here’s what it might affect,” and be able to talk about it so you can be somewhat more proactive versus fully reactive to regulation changes.
Ken Tan:
Well, Patricia, Lisa, it was an honor to have y’all on the episode with us. And it’s one of those things, again, this is where part of it is, I know Chris and I, we don’t get to interact as much in the higher ed side. And so this was a special podcast episode for us just to be able to glean, especially a lot of these things that are happening.
It’s one of those things where for leaders, being able to know what’s going on and how to best navigate it, it’s great to have resources. And that’s what our biggest goal has been for part of this podcast. So it was such a great honor to have you both on this episode, and we’re so glad that you were able to do it and join us too.
Lisa Saul:
Thank you for having us.
Patricia Willhite:
Thank you. Yeah. If we can help in any way, please reach out. We are happy to do whatever we can to be of assistance.
Ken Tan:
You’re only a Teams call, phone call, or a text message away, right?
Lisa Saul:
Absolutely. Yeah.
Ken Tan:
Awesome.
Chris Purnell:
Bat signal.
Ken Tan:
Teamwork makes the dream work. Ain’t that right, Chris?
Chris Purnell:
That’s right, man.
Ken Tan:
Awesome. Awesome. Well, I appreciate y’all again. I can’t wait for the next episode as well. Take care, y’all.
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