Name: William Hastings
Position: President, Academic Management Services, Swansea, Massachusetts.
Background: Joined AMS in 1991 after a 22-year career in corporate and consumer banking, both domestic and overseas. Hastings had a long association with Chase Manhattan Bank, serving as chief financial officer of the Chase London operations, vice president of consumer banking and vice president of strategic planning for the international department. Hastings was also executive vice president of strategic planning of MNC Financial.
Education: Trinity College (1969)
Age: 53
WILLIAM HASTINGS: ‘We’re helping families inves in education.’
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PBN: AMS is the largest provider of “integrated educational financial services” in the country. What exactly are those services?
HASTINGS: We’re in the business of helping people pay for school. Put another way, we’re helping families invest in education. We do this with products that work directly for schools and others that work for families and students. For the schools, we provide outsourcing services. We do loan servicing, particularly for Perkins Loans, which are needs-based loans. They are made available through the schools in concert with the government. We are also the largest providers of interest-free monthly payment plans – to about 11,000 schools around the country. For the schools we are doing the billing, collecting the cash, dealing with parents and students on the telephone
Is there a real need from the school’s side to get help in providing these kinds of services?
Like anything else, if they want to focus on the things they do really well – to educate — then they often turn to someone like us to outsource what is not part of their core competencies.
How long has AMS been in existence?
We started in 1972, although because of an acquisition it actually goes as far back as 1970. Originally, we had an office in Pawtucket and then moved to East Providence. We came to Swansea three years ago.
How many employees does the company have?
Across the country we have just under 500, with about 225 here and another 150 in Winston-Salem, North Carolina. We have a number of salespeople around the country and then a small office in San Diego, but we are in the process of closing that and moving it here.
Is there a standard percentage of college students that need financial assistance in order to go to college?
Of course, every family believes that they do. One of the recommendations we make to everybody is that they always apply for financial aid, because they might be pleasantly surprised. It really depends on the school. Certainly, 50 percent and above will get some kind of financial aid. But unlike 20 years ago, when financial aid meant grants, today it means predominantly loans. Loans now make up 60 to 70 percent of the financial aid rewards. Years ago, it was the opposite.
What percentages of those students who take out loans have a difficult time repaying them?
Students that are graduating these days have a much higher loan obligation than they did when I graduated. Adjusted for the rate of inflation, I’m not sure how it works out. Through a federal program there are a series of procedures one can go though to get forbearance to deal with payment difficulties.
Is that fairly common?
I’m sure it’s common, but I don’t know the percentages. These loans are great for the kids and for parents because the interest rates are low compared to anything else. The Stafford Loan rate, for example, is around 7 percent. The Plus Loan, which is for parents, is at about 9 percent. The repayment periods are long. For the student-based loans, you have 10 years from the time you graduate, so it’s about a 14-year loan. For the parents it starts right away, so it’s about 10 years. You can’t get that in the normal marketplace. They’re great loans for both groups.
Can young people from poor backgrounds find a way to get into college? I guess what I’m asking is whether the American Dream is possible for everyone?
It’s interesting. You can read statistics about how expensive it is to go to schoolIf you are going to an Ivy League school it may be $30,000-plus per year. For a four-year private school, the average cost is around $25,000, all included. For a state school it is about $11,000, all included. That’s a huge spread. And there are some great schools that are not as expensive as Harvard or Yale or Dartmouth. One of the things people have to do is spend some time shopping for what is out there. There are magazines available. The Web is a terrific place to track down a school. It’s like buying a house. We would all like to live in a mansion, but if you can’t afford it you have to decide what house makes the most sense for your pocketbook. Is the American Dream possible? Absolutely. You have to pick the right school and apply for financial aid. Need-based financial aid is available. Loans are available. Analogous, to a mortgage on a house – where you are paying for a house over a long period of timethere really is no reason you wouldn’t pay for education over your earning years.
Do you see people craving higher education?
The numbers continue to increase. There are more women going to school than ever before. There are a lot of adult learners going back to school. The returns on a college education – the lifetime earnings are roughly double that of a high school graduate. It makes a lot of sense.
Ernst & Young recently honored you as New England Entrepreneur of the Year in Financial Services. Why do you think you were singled out for such an honor?
I have been here since 1991. We have nearly doubled our payment plan business. We started a loan business that has grown dramatically since we started it in 1994. The number of people that work here in Swansea has more than doubled during that time frame. We’re an interesting company that is doing something worthwhile for society in general – and having good financial success.
What does it mean to you personally?
I appreciated it, but clearly it was about the company as a whole. We’re in a market that cries out for good product, good information. Families are just not prepared to pay for school. Our research shows that half of them plan to pay out of savings, yet the U.S. savings rate is less than 1 percent.
Does it surprise you that people who are educated about the importance of saving money and planning for financial responsibilities still run into the trouble of not having enough money available when they need it most?
Some people have great intentions. And then a family crisis or urgency comes up – which may or may not be real. Is getting the new car really that important? Or stretching for a more expensive house? Invariably, people end up with the savings they had hoped to have being a lot less.
Colleges and universities today are highly competitive – trying to draw students with the best in new facilities, such as dormitories and recreation centers. Does the competition for students include tuition and payment structures?
There is a phenomenon called Tuition Discounting, where a parent may pit one school against another. A parent may say that one school has offered my child a $5,000 grant and if you offer the same, he or she will come to your school. Schools will respond to that kind of bargaining. That was not heard of 10 or 15 years ago.
So your advice to parents of college bound students is to do their homework?
Absolutely. Increasingly, they should be looking on the Web. Information is available. Every school has a Web page. Our Web site, ams.com, changing soon to tuitionpay.com, will give you some great information on how to pay for school. The Web is a great source. Once you have identified the four or five schools you are interested in, their financial aid people would be very helpful. What we are trying to do with our TuitionPay branding is to make this a little clearer – the how to pay part of the exercise. Our research has shown that while people may not save, they are very concerned about how they are going to pay and where they are going to get their information. We’re trying to make it easier to understand how to pay for school and make products available to people easily. The great thing about a payment plan for a family is that it gives them a chance to generate capital to pay for school out of current income. And to the extent that you use a payment plan instead of borrowing, the cost of education is less. You have less interest cost. Once you graduate, you don’t have the same capital repayment tale.
