For some students, the college application process can be just as difficult as college itself. That’s where CommunityAmerica Credit Union comes in.
As millions of students investigate their student loan options through the Free Application for Federal Student Aid (FAFSA) application, the Lenexa, Kan. credit union has unveiled a new chatbot aimed at easing the process. Known as FAFSAhelp and FAFSAchat, CACU claims the service is “the first and only FAFSA support site using a chatbot to address student's top pain point entering college – the FAFSA form."
The service is CommunityAmerica’s latest foray into helping with college students. Last year the credit union rolled out a
Nearly 20 million students fill out FAFSA forms each year, and according to Anita Newton, chief innovation officer at CommunityAmerica, 9.6 million of those students are the first in their families to attend college, and may not have the resources at home to help with the process. With that in mind, the CU hired a team of young adults as it built the chatbot in order to test out different beta options in order to measure responses. The subjects responded to the bot in part because it was able to easily deliver results on specific concerns, Newton explained.
“We watched them look for something on Google and it took them 30 minutes...and they didn’t even know if it was the right information to use,” she said.
The chatbot can answer approximately 400 questions, but Newton said CACU adds new questions each day, along with tweaking existing questions.
According to Scott Wortman, a partner at Blank Rome who works with financial institutions on compliance and fintech-related issues, features like chatbots can help make a difficult process easier for people while creating a bond between the consumer and their financial institution.
“The concept, for my clients at least, usually digs into the psychological aspect of the application where there’s tremendous anxiety and trepidation for students going into significant debt for a four-year degree that could take 20 years to pay off,” he said.
But, he cautioned, such services might also be best paired with some sort of financial education component.
“While the application may be free, taking out a loan is certainly not,” he added.
Not the only game in town
CommunityAmerica’s service may be high-tech, but it’s far from the only source available to help prospective students navigate the student loan process – and the credit union has some big name competition.
More than 99 percent of all FAFSA forms are submitted online, according to a U.S. Department of Education representative. With that in mind, DOE’s myStudentAid mobile app officially launched last month after debuting in a beta version during the summer. It includes an IRS data-retrieval tool which is expected to improve the user experience and speed up the application process.
The College Board, the not-for-profit organization most known for authoring and administering the Scholastic Assessment Test (SAT) is now offering a new scholarship program for prospective college attendees, a $25 million project that will span the next five years, starting with the graduating high school class of 2020. Students who complete the six-step process are eligible for a $40,000 scholarship.
“This isn’t your typical scholarship program,” Maria Eugenia Alcón-Heraux, College Board’s director of media relations, said in an e-mail. “It doesn’t require an essay or an application, and it doesn’t have a minimum GPA or SAT score requirement. Instead, it rewards all students’ efforts and actions on their way to college. The more effort that students put in and actions they complete, the more chances they have to earn a scholarship.”
Measures like the scholarship and the chatbot are hoped to improve FAFSA submission rates in regions that don’t fill out the application, such as rural areas – including, potentially, some not far from CommunityAmerica’s home base.
An estimated 2.1 million high school seniors completed a FAFSA within the 2017-2018 cycle, which pools a 60.9 percent completion rate since the National Center for Education Statistics estimates that the national 2018 graduating high school class was around 3.5 million students. The government’s student aid office estimates 18.7 million students applied for student loans in 2016, 1.9 million of whom were age 18 or younger. Another 9 million were between the ages of 18 and 24, while 7.8 million were over 25. Those figures indicate FAFSA isn’t just for recent high school grads, and could potentially spell an even larger pool of users for CommunityAmerica’s chatbot.
Expanding lending
Blank Rome’s Wortman said services like CommunityAmerica’s chatbot could help boost student lending and help get more students to college.
“What matters most is increasing those applications among those that are likely eligible for financial aid,” he said. “We see in school districts where there are higher rates of poverty, there are lower completion rates of the FAFSA and they don’t have the necessarily same access to one-on-one access that more affluent districts have.”
CommunityAmerica launched its chatbot Oct. 1 after a four-month development process and it has already drawn a user response in the low thousands, said Newton. The bot is expected to boost lending and will deliver other benefits as well.
For one, the AI infrastructure can be applied to other arenas of the credit union, such as with applying for a mortgage loan and other areas of customer care. The chatbot also expands CommunityAmerica’s relevance to a younger demographic and can even appeal to future younger membership, especially given that the average credit union member is between 46-years-old to 48-years-old.
“Generation Y and Generation Z is a new kind of customer that does not understand what a credit union does,” Newton said. “This is a meaningful way to engage with them on something that they care about and they are going to be much more likely to engage with us as a credit union because we’ve addressed a pain point.”
