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Gear Up Now for Financial Aid Appeals

How policy and practice can help in maintaining enrollment, net tuition revenue, and your institution’s reputation
University Business, April 2013

Most financial aid offices are already beginning to receive appeals from families looking to improve their aid awards. A recent Wall Street Journal article encouraged families who were unhappy with their aid offer to call the aid office “as soon as possible.” Financial aid appeals have been a regular part of the aid awarding landscape for some time now, but the way institutions respond to appeals varies widely. How your own institution responds can affect enrollment, net tuition revenue, and your school’s reputation in the marketplace.

Reasons for submitting an appeal vary. Some families have experienced changes in their financial circumstances since the time they completed the FAFSA. Others have had no change in circumstances, but are simply trying to figure out how to make the finances work. Some are comparing your offer to one from another institution. And some just appeal automatically, viewing the aid award as simply the first offer in a negotiation.

Regardless of what spurred a family to appeal, recognizing the inevitability of appeals doesn’t mean that aid awards should be designed to encourage them. “Low-balling” the original offer to see whether a student responds simply reinforces the view of financial aid as a negotiation. And even though some families will have the persistence or the confidence to respond to a low offer with an appeal, others may simply write off your institution as financially out of their reach. This can be especially harmful to your enrollment goals if you seek to enroll first-generation college students or other groups that may have little experience with the intricacies of financial aid.

Therefore, regardless of how you plan to handle appeals, the initial aid offer should be based on a data-driven understanding of the price sensitivity of the admitted student pool and designed to achieve specific goals for class size, quality profile, net tuition revenue, etc.

Even with a well calibrated, data-driven packaging strategy in place, however, every institution needs a plan for addressing appeals. Here are three questions that should be considered in preparing for “appeal season.”

1. Is there an appeals policy and a process in place?

Some administrators express concern about publicizing the fact that their institutions have an appeals process, thinking it will lead to an increased number of appeals. That hasn’t been the case at Nazareth College (N.Y.), according to Samantha Veeder, director of financial aid. “In fact, I could argue we have fewer appeals.” Indicating the criteria for considering requests (such as change in financial status or employment), tends to discourage frivolous requests (“Will you match school X’s offer?”).

“It’s helpful to be clear and up front when communicating with families and to let them know there is a process,” she says. “This allows us to manage the review and decisions in a systematic and consistent way.”

Appeal responses should be thoughtful and designed to further enrollment goals. The data used in developing the initial packaging policy can be helpful in targeting responses to appeals, as well. For example, if your institution has more demand than you can accommodate in some academic areas and other programs that are under-enrolled, the appeals process should probably differentiate responses by academic area.

The process should also differentiate between “professional judgment” reconsiderations and other types of appeals. Professional judgment appeals are based on changes in a family’s circumstances or other financial concerns that result in a recalculation of need. In these cases, many institutions simply repackage using the institution’s normal packaging strategies to meet the new need.

Other appeals are typically handled differently, depending, for example, on how the rest of the class is coming together or on whether the student appealing is from a desirable subpopulation. Many institutions may provide no additional aid for nonprofessional judgment appeals, or only a small award to indicate the institution’s continuing interest in the student.

The policy should clearly describe what information you will ask to see before you respond. It should also identify who will be responsible for making decisions on appeals (hint: it should be both admissions and financial aid staff involved), and who will communicate a response to the student. You may even choose to establish an appeals budget, if you have historical information on how much you’ve spent on appeals in recent years.

2. Are staff set up to respond promptly?

Depending on when appeals come in, administrators may delay a decision until more is known about how deposits are coming in. However, even in those circumstances, appeals deserve a prompt response with a message saying that all appeals will be reviewed at a specific future date. This allows an institution to acknowledge the family’s concern but delay a specific response. 

Despite the signal that a family is dissatisfied with the financial aid award offered, an appeal is typically a strong indicator of interest. As a result, it’s critical to ensure family members feel their concerns have been heard and that they’ve been treated fairly. Be sure to carve out the staff time and resources necessary to devote to appeals. Staff training is also important, from the first line on the telephone throughout the entire staff. Even if the appeal is denied, a thoughtful, detailed response will allow the family to at least understand the reasons. And a full, written response is an opportunity to present information on institutional return on investment, affordability, alternative financing, and payment plan options.

If an appeal seems to be motivated by a better award from another institution, resist the temptation to immediately get into a bidding war. If the family is willing to share the other award and you’re willing to take it into consideration, this can be a teachable moment. You can work with the family to compare the awards. Since there isn’t (yet) a required standardized award letter format, families may be comparing scholarship amounts without considering price differences, or they may be comparing bottom lines without reviewing the different types of aid included in the award package.

For example, some institutions include federal PLUS loans and/or unsubsidized direct loans in the award package, while others do not. Looking carefully at comparisons of direct costs vs. total gift aid amounts vs. self-help (loan and work) awards will help both you and the family to see a true comparison of the bottom lines—what the family would be expected to pay, the level of unmet need (if any), etc.

This provides an opportunity to explain your process and what your award is based on. Understanding the circumstances that led to the other institution’s award may even reveal conditions you failed to take into account.

3. Are there mechanisms in place for tracking the results of appeals?

Colleges that track the results of appeals typically find that yields for students whose appeals are denied are higher than the average for the class as a whole. Yields for these students may even be as high as those for students whose appeals were granted.

Given the interest in the institution that an appeal demonstrates, this isn’t surprising. However, recording all requests for appeals and the responses in the school’s student information system is important. If possible, the date of the appeal should be captured, along with the amount requested (if there is one) and the amount offered.

This will enable you to generate reports to understand who appeals and why. Looking at the level of need for those who appealed, as well as loan amounts, unmet need, academic qualifications, state residency, and whether or not the student ultimately enrolled may reveal patterns that can be helpful when considering future revisions to awarding policies as well as future responses to appeals.

Few of us like appeals. But anticipating and managing the process, and gathering data to inform future responses, can help in surviving “appeals season” without derailing the enrollment outcomes you desire.