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.
Messages that demonstrate
the value of the education
at a particular institution
must take the lead.
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.
Case Study 1: Texas Tech University
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.”
