IN A RECENT MOODY’S SURVEY, almost 30 percent of private colleges projected declines in net tuition revenues for the current fiscal year. This is likely not because enrollments declined, but because more financial aid was spent in achieving enrollment goals. Officials at institutions whose discount rates increased this fall are wondering if this is the new cost of doing business or whether they spent more than necessary.
The drivers behind increased discount rates are many, including:
• Increases in the percent of students who applied for financial aid
• Increases in average need that exceeded the increase in charges
• Cuts in state support that colleges either deliberately replaced with institutional dollars, or replaced by default through continuing to meet the same percent of need with grants as grant sources shifted
• More generous responses to appeals to ensure enrollment targets were met
So what should officials do to prepare for fall 2010 and beyond? Here are 10 activities that make sense:
1. Identify the key metrics that reveal how you’re performing, then track them against the same or a similar period in the prior two years.
Tracking the admission funnel begins with looking at inquiries by source category (e.g., self-initiated, direct mail, etc.) and making comparisons to the same period in the prior year (the last two years would be ideal, as 2009 may either be an outlier or the new base year). This will provide a picture of how the admissions office is progressing toward goals.
Also, the number of financial aid applicants (new vs. returning students), average need, and average institutional grant (again, new vs. returning) should be tracked against figures for the prior year(s)’ figures for the same time period. This will enable enrollment management staff to project total institutional grant expenditures based on growth in the average from the same time last year and the year before to the final figure for enrollees. Such metrics and projections will help avoid surprises and identify trends of concern while there’s still time to intervene.
2. Benchmark annually on sticker price, discount rate, and prestige indicators with top competitors to ensure that tuition, aid, and quality indicators are in alignment.
Institutions with higher sticker prices than their relative prestige positions would justify often find they must have higher than average discount rates to compensate for the “misalignment.” In contrast, those with sticker prices lower than those of their competitors with similar prestige profiles often experience growth in demand despite relatively low discount rates.
3. Help admissions recruiters make the case for affordability, value, and career outcomes with proof statements.
Students and their parents are concerned about meeting college costs as well as finding employment after graduation. Provide convincing evidence of affordability and outcomes. Case studies and an income profile of the freshman class can help families understand that students from all economic backgrounds have found a way to meet your costs. Similarly, employment statistics, job titles, salaries, and employers by major can help build confidence in graduates’ success.
Yet at many institutions, data on the employment or graduate school acceptance rates of recent grads are limited. Students have not been surveyed at all, or survey response rates are low. Addressing this “data gap” should be a top priority. In the interim, employer testimonials and stories about successful alumni can help provide evidence that graduates can expect a good “return” on their investment.
4. Make sure financial aid counselors can talk comfortably and accurately about financing/payment plan options as well as financial aid programs.
The need for strong links between financial aid and student accounts has never been more pressing. While providing seamless service to students has always been important, many families are now facing new challenges in obtaining private loans and meeting their share of charges. Working together, financial aid and student accounts staffs can identify students who might be at most risk financially and help them find a way to continue.
