Willingness to Pay
FOR MANY FAMILIES GOING through the college search and selection process, there may be a big difference between the ability to pay college expenses versus the willingness to pay.
Ability to pay-the expected family contribution (EFC)-is based on income, assets, family size, number in college, and other key information from the Free Application for Federal Student Aid (FAFSA). Willingness to pay is a function of the institution's value proposition-the intersection of the perceived benefits of the educational experience provided and the net cost to the family (i.e., the amount paid through savings, work-study, and loans).
When the perceived benefits are high, the family is much more willing to pay, sometimes beyond what the FAFSA indicates as the EFC. But when the educational experience and benefits are viewed more as a commodity, willingness to pay is lower.
In an environment of increased competition, a strong brand is critical to building and sustaining the value proposition. Marketing expert Bob Sevier, a regular contributor to University Business, sees brand as a promise that matters and must be communicated clearly as well as authentically. When there is no time, space, or opportunity to communicate, a strong brand tells the world who you are and what you stand for. This provides a clear message and identity to customers that instills confidence and saves time in decision making.
For example, the marketplace views MIT's brand as a premier technological university and Yeshiva University (N.Y.) as a comprehensive Jewish institution. Students looking for these characteristics in a college easily identify these institutions.
There are two primary options for strengthening the value proposition: differentiate your brand and demonstrate the return on investment (ROI).
In the crowded education marketplace, differentiation is critical. Common approaches to differentiation used by higher education institutions include:
1. Academic quality. Families are willing to pay for an Ivy League education because the perceived value and benefits are high. Demand for these institutions is high, and so is selectivity, which enhances the perception of quality. But for most IHEs, limited resources make aspiration to Ivy League costs unrealistic. Those with smaller endowments choosing to brand based on quality typically focus on building their reputation for specific programs.
2. Big-time athletics. Successful athletic programs generate visibility. Think about the colleges and universities that sell the most branded apparel. All of them are either football or basketball powerhouses.
3. Convenience. IHEs providing flexible modes of delivery, multiple locations, and convenient class times will attract "busy" people who want to further their education but struggle to find the time.
4. Co-branding. Marrying your brand with another perhaps more prestigious or well-known brand, or one of particular interest to a target audience, is often used to jump-start a branding campaign. In order to gain more national recognition among high ability, college-bound students, officials at the University of Rochester (N.Y.) co-branded a number of scholarship opportunities with Bausch & Lomb, Xerox, and Kodak, all nationally recognized companies with local roots. This strategy allowed the university to gain visibility and penetrate markets that otherwise would have been unavailable or inaccessible.
5. Unique program or major. Students consistently and repeatedly say their main reason for choosing a college is that the major or program of their choice is offered. If the program is unique, is in high demand, or has a distinctive way in which it is taught, demand usually follows. Over the last few years, physical therapy and forensic science are two such academic programs.
When brand messages are weak, admissions recruiters and financial aid counselors have difficulty talking to prospective students about benefits and wind up concentrating on the discounting side of the value equation. It is important to demonstrate affordability-for example, by providing income profiles of the entering class and case studies of enrolled students from various socio-economic family backgrounds-but demonstrating benefits is equally important, if not more so.
Convincingly presenting the ROI of the total educational experience through data on the career and graduate school success of graduates is a critical, yet often missing, component of the value equation. This generation of parents and students considers the ROI for most major investments, education included. In terms of value and prestige, they are as focused on outcome variables (jobs, graduate school, etc.) as they are on input measures (standardized test average, GPA, selectivity, etc.).
When families ask, "Why institution X?" staff must be able to answer convincingly, with authentic proof points and outcomes. For example, students want to hear about career development opportunities (read "résumé building") or outside-the-classroom experiences available to them while earning their degree. This may consist of research opportunities, internships, coops, practicums, study abroad programs, clinical placements, and other career-related, educationally purposeful learning and service opportunities. Parents want to know their child will obtain full-time employment in their area of study upon graduation-or that they will be admitted to a well-respected graduate or professional school to gain an advanced degree.
Every institution has a story to tell. Successful IHEs are able to communicate successful outcomes, with proof statements based on disciplined collection of data and analyzed by major program, with emphases on employer names, job titles, average starting salary ranges, graduate or professional schools attended, and degrees sought.
James Gyure, senior assistant to the president for enrollment management at the University of Pittsburgh at Johnstown, points out that "today's college-bound students, and often their families, are very brand conscious. And part of that consciousness is a desire for some type of evidence that an institution's brand statement is accurate." Gyure's team at UPJ, which offers both professional programs and traditional liberal arts majors, has found that referring to placement data helps underscore descriptions of graduates' success.
Admissions recruiters can refer to data from the Career Services Office's annual survey of UPJ graduates during admissions interviews, Gyure says. "To be able to provide specific examples and stories, we also gather up-to-date information from academic division offices and Alumni Affairs, and stay in touch with our former Admissions tour guides. That type of real-life narrative can be compelling."
At many IHEs, such data have not been collected. At others, the career services office and/or academic departments have gathered the information about what graduates are doing and where they are advancing their education, but the data have not been organized effectively or shared with the admissions office. At still other schools, the data have been collected and shared, but the admissions staff has not translated the information into meaningful messages that 18-year-olds and their parents can both understand and value.
In the absence of data, many IHEs include the career services offi ce in recruitment days and admissions tours in order to address outcomes-related questions. As Sean Kaylor, vice president for Enrollment at Marist College (N.Y.), emphasizes, "Our value proposition is centered on two main points. The first is affordability. We pride ourselves on offering a high quality, moderately priced education. The second deals directly with outcomes. We are very proud of the success our alums have experienced in both job and graduate school placement."
Collaboration and active communication have made Marist's Center for Career Services efficient and successful, Kaylor explains, adding that proactive relationships between employees, alumni, faculty, and students are key. Information gleaned from an annual survey on postgraduate experiences is used by the enrollment area to better explain potential ROI to prospective students and their families.
Alumni are another often untapped resource for demonstrating the return on investment. As "walking billboards" for their institution, alumni should be involved in meaningful and appropriate ways in the recruitment process. Susan Sloan, director of Admissions at Wells College (N.Y.), formerly a women's college that went co-ed in 2005, notes that "alumnae volunteers provide the college with much needed recruitment support." More than 200 volunteers from across the country participate in admissions activities each year, from participating in college fairs and on-campus recruitment programs to hosting receptions and referring new students.
"I've found our admissions volunteers to be very enthusiastic and capable ambassadors for the college," Sloan says. "I've also found prospective students and parents eager to talk to our alumnae volunteers to get 'the real story' about Wells. Families really benefit from connecting with someone who made the investment in Wells." While developing and nurturing an effective volunteer program took time, she adds, the college now benefits every year from those initial efforts.
If you are concerned about your discount rate, take a step back and assess how well you've communicated the value and benefits of your educational experience. Developing a stronger brand and sharing outcomes and success stories will enhance your institution's reputation, increase demand, and ultimately result in greater willingness to pay.
<em>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 .</em>
UBTech 2017 Call for Speakers
Enhance your leadership influence by presenting at UBTech 2017, the biggest week in higher ed AV, IT, and Institutional Success. The UBTech program team is accepting proposal submissions in the following categories:
- Active Classroom
- AV Integration
- Campus IT
- Institutional Success
- Instructional Technology
- Policy and Practice
For more information and helpful tips on submitting high-quality proposals, visit the UBTech Speakers Portal.