WGU’s Responsible Borrowing Initiatives

Abstract

Excessive student loan debt is a serious problem for students and the economy. To provide students with information that will help them understand the impact of their borrowing, Western Governors University (WGU) has launched its Responsible Borrowing Initiatives.

As part of the initiatives, WGU developed a modified version of the federal financial aid shopping sheet. WGU students who complete a Free Application for Federal Student Aid (FAFSA) receive a personalized “My Financial Aid Plan.” The plan provides each student with a breakout of tuition and fees for their chosen program of study as well as grants, scholarships, and student loan eligibility.

The plan recommends students only borrow unmet direct costs—tuition and fees minus grants and scholarships. Students may borrow more (up to annual and aggregate limits) or less than the recommended amount. This simple innovation is in stark contrast to other institutions in higher education, where it is common to tell students the maximum amount they’re eligible to borrow—a focus on how much they can borrow rather than how little they should.

While students may borrow up to their eligible amount, two-thirds of students have chosen to borrow only the recommended amount. The result has been a significant reduction in student borrowing.

Since the initiatives, the average borrowing per student at WGU has decreased by $3,250 per year—a 41% reduction—which overall, has reduced student borrowing by more than $400 million at WGU. Debt at graduation for WGU undergraduate students is also decreasing each year.