PACKAGING FINANCIAL AID based on a “grid” that considers both need and quality is becoming more and more common as higher ed institutions attempt to target grants efficiently and effectively to achieve goals. Past “Money Matters” columns have covered using historical yield data to properly calibrate the “grid.” But by focusing only on the “grid,” leaders can miss opportunities to use financial aid to open new markets, build demand from existing markets, launch new academic programs, and influence the mix of the incoming student class.
Schools have begun advertising some aspects of their “grid” as guarantees based on easily understood criteria. Some of the highest-priced (and best-endowed) IHEs in the country, for example, have begun guaranteeing need-based aid to cover a defined portion of costs based on income alone. If yours doesn’t have the resources to match this, it is time to get creative as well as analytical in order to identify “microtargets” with opportunities to use aid strategically.
Some IHEs saw applicant pools shrink when contiguous states began offering scholarships (e.g., Georgia Hope, Florida Bright Futures, etc.). They began to guarantee “state scholarship replacement grants.” After studying the funding already provided to those students, administrators realized that they could make the guarantee without having to commit significant additional resources. Thus, they were able to regain their market share in those states without a huge investment of aid dollars.
The key to identifying such opportunities is to look at external and internal trends in new ways—to think “outside the grid.” Developing strategic aid programs first requires a deep understanding of the competitive environment. A new aid program may otherwise only provide a fleeting advantage. A clear understanding of institutional mission and goals is also critical.
In addition, internal data must be configured in new ways to identify subpopulations (like students from Georgia in the example above) that are small, have been shrinking, or have very low yield rates, and are already receiving significant but “unmarketed” funding. Such groups might include students from particular religious denominations, high school types, or socioeconomic backgrounds, or those with particular academic or cocurricular interests.
But administrators must beware of overlapping initiatives. We’ve seen guarantees backfire when they all stack on top of one another, resulting in significant expenditures on students who were more likely to enroll anyway.
Administrators must also avoid programs that could alienate the excluded. For example, if an institution affiliated with one religious denomination guarantees a scholarship to members of a different denomination, there could be pressure to include the primary denomination even though demand and yield from that group may already be very strong.
Finally, it is important to recognize that messages about guaranteed discounts can’t be the only messages, or even the lead messages. They are a tool to attract attention and build interest. Messages that demonstrate the value of the education must take the lead.
The following case studies provide real-life examples of success with building demand through targeted guarantees.
After studying historical funding patterns and yield rates among high-need applicants, enrollment and financial aid administrators at this institution found that with a relatively modest investment of institutional funds they could guarantee to cover the cost of tuition and fees for Texas freshmen coming from families with incomes below $40,000.
This “Red Raider Guarantee” was broadly marketed and resulted in a 12 percent increase in the enrollment of eligible students. Stephanie Anderson, the associate vice president who oversaw the implementation, says, “As institutions of higher education, we have not taken advantage of marketing what we are already doing in regards to financial aid and packaging. No wonder there are some students who feel they cannot afford college.”
The guarantee program has been very well received. She adds, “In an evaluation of the first year of the program, we were surprised to realize that the program did not increase the yield of students (from admit to enroll) but in fact increased the applicant pool, thus resulting in a net increase in enrolled students. Clearly this emphasizes the fact that marketing must be an integral part of the program.”
Inquiries and applications from Ohio to this institution had declined substantially between fall 2003 and fall 2006. To address this trend, the university began to advertise a “Buckeye Grant” for students from Ohio. Although it was too late in the cycle to impact the inquiry pool, applications from Ohio increased by 31 percent compared to the prior year.
As Mary Piccoli, assistant vice president for institutional research and planning, notes, “The growth in applications and doubling of Ohio matriculants compared to 2006 puts us on a positive path. Although we are only a three-hour drive from the Cleveland area, our awareness factor in Ohio is not what we would like it to be. The Buckeye Grant is assisting us in raising the level of awareness.”
At both Texas Tech and St. Bonaventure, the benefits of introducing the program far outweighed the costs, either because there were only a few students who would meet the criteria in previous admit pools, or because the targeted students were already receiving at least as much aid as was being “guaranteed” to them.
In addition to using data to identify the right populations, however, both case studies demonstrate the importance of effectively executing “microtarget” programs. Often, the success of the program is dependent on how well it helps the institution build or recapture target market demand—so messages about the program need to be crisp, compelling, and timely.
For example, the criteria and the value of the award need to be clearly marketed both on the web and in written materials. Marketing ranges for awards or subjective criteria won’t be sufficient.
There may also be political hurtles to overcome. Providing an additional discount to launch a new academic program or to bolster an old program that’s losing market visibility has the potential to create internal political challenges if the rational is not communicated effectively, for example. However, the benefits of thinking outside the “grid” can be well worth the analysis and planning involved.
Kathy Kurz and Jim Scannell are partners in the enrollment management consulting firm Scannell & Kurz. Samantha Veeder, formerly the director of Financial Aid at Hobart and William Smith Colleges (N.Y.), is the firm’s senior consultant. They can be reached via their website, www.scannellkurz.com.