IN ITS SIMPLEST FORM, ENSURING the linkage between financial aid and enrollment projections is about two things: solid data analysis and communication. How many new and returning students will there be, and how much institutional grant aid will they require? Who needs to be informed of the projections, and when? Of course, the devil is always in the details. So let us break it down into the basic components.
Enrollment Projections
All segments of an institution of higher ed should be accounted for in enrollment projections, given the nature of the particular institution. For many IHEs, this would begin with projecting the retention of returning students, both graduate and undergraduate.
The projection of returning students is typically derived using historical information—for example, a three-year or four-year average of the percentage of freshmen who return as sophomores, sophomores who return as juniors, etc. Graduate student retention should be calculated separately, because enrollment patterns of graduate students are often quite different from those of undergraduates.
And then, of course, new students must be included in the mix, both freshmen and transfer students, as well as new graduate students. It is not unusual for a registrar or institutional research officer to be involved in developing the returning student projection. The chief admissions or enrollment officer is typically the most well-informed regarding the number of new students that should be included in the projection.
To illustrate the planning process for the full-time undergraduate portion of the population, consider the chart Step One, in which a hypothetical enrollment projection has been calculated. In this example, the new freshman and new transfer numbers were supplied by the admissions office, and the returning student counts were provided by the institutional research office. Returning student counts were projected by applying a three-year average retention percentage to the previous year’s class size. (Many institutions prefer to separate out the number of previous-year freshmen who returned but did not advance to sophomore status. These are the “returning” freshmen.)
Financial Aid Projections
For Step Two (see chart), it is important to know not only how many students are expected to return but also how much institutional grant aid the returning students are expected to retain. Again, historical percentages are typically the best guide to projecting the change in aid from class to class and the percentage of the class receiving aid, both of which factor in to the total projected expenditure of institutional aid dollars. By separating out the previous year’s returning freshmen who did not advance (and their associated institutional grant aid), the new freshman count and the new freshman aid picture are not muddied by including those students who did not advance to sophomore status. (The new transfer students from Step One have been allocated to their appropriate class years for the financial aid calculations. Institutions that enroll a significant number of transfer students may wish to do a completely separate analysis for freshmen and transfer students.)
Finally, for Step 3, net tuition revenue and discount rate can be estimated. In the example provided here, if tuition is $8,500, gross tuition revenue would be $8,500 x 4,273 = $36,320,500. Net tuition revenue would then be $36,320,500 - $3,830,614 = $32,489,886. (Note: If you are projecting from fall to fall, rather than from year end to year end, you would need to adjust for expected mid-year attrition in students and recovery of aid dollars. Again, this adjustment should be based on historical trends.)
Analysis Ready
Remember that both the enrollment projections and the associated projections for institutional grant aid should be repeated for other segments of the student population (e.g., graduate students, part-time undergraduates).
Most colleges and universities have some amount of endowed scholarships and grants to use in funding the total institutional grant budget. All endowed awards should be counted in the Step Two analysis (see chart). In order to determine how much unfunded grant aid is necessary for budget purposes, the endowed awards would be subtracted from the Total Aid line.
