Post webinar Brief- Cost and Aid Strategies - Higher Education May2013

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Presenting insights into two key components of student choice, this webinar kicks off Hanover Research's 2013 Achieve Growth series for higher education executives. The first of five webinars dedicated to growing and sustaining enrollment, this webinar will present methodologies you can use to determine an optimal cost and aid strategy for your institution.

What you'll learn during this segment:
• How to determine student responsiveness to tuition cost, net cost, and aid at your institution compared to your competitors
• Understanding of tools such as tuition cost sensitivity, net cost sensitivity, and tuition discounting benchmarking
• Impacts of selected strategies on specific student populations
• Lessons learned from the use of cost and aid strategies from two Hanover Research partners, providing both a public and private institution's perspective

View the webinar presentation at http://www.slideshare.net/HanoverResearch1/cost-and-aid-strategies-how-to-maximize-results-at-your-institution

E-mail info@hanoverresearch.com or visit www.hanoverresearch.com for more information

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Post webinar Brief- Cost and Aid Strategies - Higher Education May2013

  1. 1. Research Without Limits™Academy Administration PracticeWEBINAR BRIEFINGMay 2013Featuring Hanover Research partnersDr. Harry Hellenbrand of California State University, Northridge andMr. Gamward Quan of Claremont School of TheologyCost and Aid Strategies:How to Maximize Resultsfor Your Institution©2013 Hanover Research
  2. 2. OVERVIEWThe recent economic downturn has resulted in higher education institutions aswell as students and families to reconsider the way that the cost of a collegeeducation is approached and addressed. While prior to the onset of theeconomic recession students and families were not particularly price-sensitiveshoppers in the college education market, the recent sluggish economicrecovery has drastically changed the way families approach a collegeeducation. Additionally, institutions are offering a variety of aid strategies,including significant tuition discounts, to ease the financial burden of a collegeeducation. However, in some cases, despite generous tuition discounts, highsticker prices have proven a deterrent to pursuing higher education and tuitiondiscounting strategies have produced mixed results for institutions. Thisdynamic has a significant impact on the business model of higher educationinstitutions, especially those heavily dependent on tuition revenue.Presenting insights into two key components of student choice, the Cost andAid Strategies: How to Maximize Results for Your Institution webinar kicked offHanover Researchs 2013 Achieve Growth series for higher educationexecutives. The first of five webinars dedicated to growing and sustainingenrollment, this webinar presented methodologies for higher educationexecutives to use to determine an optimal cost and aid strategy at theirinstitution.CONTENT & PRESENTERSIn addition to research presented by Amy Moynihan of Hanover Research, thiswebinar featured lessons learned from the use of cost and aid strategies fromtwo Hanover Research partners, Dr. Harry Hellenbrand of California StateUniversity, Northridge and Mr. Gamward Quan of Claremont School ofTheology.KEY FINDINGSThis webinar explored commonly used tuition and cost aid strategies throughthe presentation of a selection of the findings of Hanover Research’s extensivetuition discounting research. To supplement this research, the expertscholar/practitioner perspectives of two of Hanover Research’s partnersprovided the invaluable perspective from administrators at a private and publichigher education institution. Some of the similarities and differences in tuitiondiscounting trends and perspectives based on institution type are illuminatedin the findings presented. Below we present several of the key findings of thewebinar to provide information on this topic as well as to explore thecomplicated intricacies of instituting aid strategies.2For inquiries, e-mail info@hanoverresearch.com or call 202.559.0050Webinar Briefing:Cost and Aid StrategiesMay 2013PRESENTERSAmy MoynihanContent ManagerHanover ResearchDr. HarryHellenbrandProvost and VicePresident forAcademic Affairs atCalifornia StateUniversity,NorthridgeMr. Gamward QuanVice President forBusiness Affairs andChief Financial Officerat Claremont Schoolof Theology“There  are  many  policies  that you can put in placethat will lower the feesover a four to five yearperiod of time forstudents that can bevery effective, but theywon’t  catch  the  public  eye in the way thatsomething moregrandiose or spectacularlike a tuition discount,either collected orforegone, will gather thepublic  attention.”  -Dr. Harry Hellenbrand
  3. 3. 3Webinar Briefing:Cost and Aid StrategiesMay 2013For inquiries, e-mail info@hanoverresearch.com or call 202.559.0050Recent Evidence Confirms That Administrators Are Concerned About The Sustainability Of Both Rising TuitionAnd Discount Rates.According to Inside Higher Ed’s 2012 survey of private university business officers, 66 percent of respondentsfeel that their institution’s rising discount rate is a very important issue. Nearly half (46.1 percent) believe thatreducing their institution’s discount rate will be very important to increasing revenue at their institution.Demonstrating the complexity of the issue, however, over half the business officers at private master’s andbachelor’s-granting institutions, 54.7 percent and 56.2 percent respectively, agreed or strongly agreed thattheir tuition discount rate was unsustainable. These perceptions are largely reflected in recent enrollment data:a 2012 study conducted by the National Association of College and University Business Officers (NACUBO)found that despite increasing tuition discounts, most U.S. private institutions have seen no change or a declinein new student enrollment.Financial Crisis for StudentsInstitutions nationwide are grappling with rising tuition costs and high student indebtedness.Several indicators of the financial crisis for students identified by Game Quan of Claremont School of Theologyare: Higher levels of undergraduate student debt Some students are already in default on prior undergraduate and graduate student debt Students borrow more than direct education cost to cover living expenses Bricks-and-mortar programs may require students to relocate Full-time programs limit employment opportunitiesA Key Finding Of Research Examining The Impact Of Tuition Changes On Enrollment Is That Students Act LikeConsumers.While students are responsive to price changes—whether they occur as a result of tuition hikes or changes infinancial aid, students tend to be less sensitive to price than consumers are for many other goods and services.A useful tool for measuring the responsiveness of a student’s enrollment decision to changes in a college’stuition is tuition elasticity, which is measured as the absolute value of the percentage change in enrollmentdivided by the percentage change in cost of going to college (tuition rates). The higher this ratio, the moresensitive enrollment is to changes in tuition costs.Complicating the use of tuition elasticity, differences in regional economies, school quality indicators, peergroup competition, and student demographics (to name a few variables) preclude the identification of anacross-the-board tuition price sensitivity threshold. As a result, determining price sensitivity levels within aparticular student market is entirely context specific. A recent aid strategy at Claremont School of Theology(CST) proved this to be true. As CST was routinely providing a significant tuition discount to students, theinstitution decided to eliminate the artifice of tuition discounting and reduce the gross tuition rate at theinstitution. The primary reasons for adopting this aid strategy were: So that prospective students will immediately understand the cost of attending the institution, andeliminate the waiting for a scholarship offer to determine the actual cost of attending the institution To reduce student borrowing To increase the transparency for the students
  4. 4. 4Webinar Briefing:Cost and Aid StrategiesMay 2013For inquiries, e-mail info@hanoverresearch.com or call 202.559.0050This overall reduction in the gross tuition rate did not prove to be a successful policy at CST. Though the planwas introduced to provide a clearer understanding of the cost of attending the institution to students, thestrategy was abandoned for multiple reasons, including the findings that: Students expected to receive scholarships, viewing scholarships as honors they earned and were tailoredspecifically to them Donors like to give money towards scholarships The perception of tuition price as an indicator of qualityThis example demonstrates the complexity of tuition discounting and underscores the importance of identifyinginstitution-specific price elasticity in order to inform a sound tuition strategy.There Are A Variety Of Common Types Of Aid Strategies In Practice.Commonly used aid strategies identified through research are: Institutional Grants and Other Grant Programs Tuition Freezes Tuition Reductions Tuition Eliminations Fixed-Tuition Guarantees Replacing Loans with Grants Four Year Graduation GuaranteesDemonstrating that a variety of aid strategies are often used in practice together, students at California StateUniversity, Northridge often receive multiple types of aid. Students commonly receive institutional grants fromboth restricted and unrestricted funds combined with State UniversityGrants, which is a program that awards grants to California residents to reduce tuition and fees. In recent years,these grants have discounted tuition significantly for many students and nearly or completely eliminated tuitionand fees for students from families with an annual income of less than $60,000.Institutions Must Examine The Potential Advantages And Consequences Of Tuition Discounting Strategies.The use of aid strategies is very context specific and should be considered carefully by institutions to determinethe most beneficial strategy. Several advantages of tuition discounting are: It allows colleges and universities to address student need as lower-income students may be able to enrollat institutions they would not otherwise consider as a result of the discount rates offered by theseinstitutions. It allows institutions to shape their student bodies as institutions are able to adjust their academic profilesby using tuition discounts to entice certain students to enroll. It can aid institutions in increasing enrollment.
  5. 5. 5Webinar Briefing:Cost and Aid StrategiesMay 2013For inquiries, e-mail info@hanoverresearch.com or call 202.559.0050Several identified consequences of tuition discounting are: It may unintentionally reduce student accessibility and affordability as it may divert resources away fromneed-based aid. Institutions that pay for discounting by shifting funds from instructional and student services may impedetheir own efforts to improve student retention and attainment. The finding that financial factors do not significantly influence the college choices of many affluentstudents. As such, students receiving large tuition discount offers might have enrolled without suchsignificant discounts or would not have enrolled no matter the discount level. While the actual tuition cost to students may be discounted at significant rates such as 25-30 percent,many people, including legislators and other public commentators, often instead refer to the sticker pricewhen discussing the cost of higher education.Importance of Identifying the Campus Constituencies to be Involved in the Tuition Discounting StrategySupporting research on the topic, Dr. Hellenbrand and Mr. Quan presented on the importance of consultingconstituencies when considering tuition changes. Considerations at a public institution within a large statesystem such as CSU-Northridge include the mandate to consult with student groups and local communitygroups. Consultation with student and local community groups is essential for public institutions as often thestate wants to ensure that institutions are making tuition changes with the support, or at least theunderstanding, of local constituencies.Presenting on the internal constituencies involved in discussions on tuition discounting, Mr. Quan highlightedthe campus constituencies that are consulted before bring a tuition rate proposal to the trustees at CST. Theseconstituencies include the Admissions Office, Financial Aid Office, Registrar, Business Office, Student Life, andthe Deans Office.Benefits of Additional Changes to Reduce the Overall Cost of Higher Education to StudentsAlong with tuition discounting through institutional grants and the State University Grant program, CSU-Northridge has instituted several institutional policies that serve to reduce the overall cost of a collegeeducation throughout the span of a degree program. Some of these strategies include: Encouraging students to take a full academic load each semester. An increase from an average of 11 to over12 units per student per semester will save students approximately one semester of tuition over a 4-5 yeareducation. More strictly controlling the courses that students take to ensure that students are following a major plan. Eliminating non-essential electives Improving transfer policies from community colleges Reducing total unit load from 140 units to 130 unitsWhile many of these policies do not receive a lot of attention or fanfare from the public or legislators, thesepolicies provide students with significant savings over the span of their degree programs.
  6. 6. 6Webinar Briefing:Cost and Aid StrategiesMay 2013For inquiries, e-mail info@hanoverresearch.com or call 202.559.0050POLLING RESULTSSeveral live polls during our webinar provided invaluable information on the aid strategies in practice at theinstitutions of our webinar participants. When asked about the goals of the aid strategies at their institution,two-thirds of participants that responded identified the ability to attract more students as a goal of thestrategy. Other common goals included allowing the institution to shape the incoming class, the ability toattract higher quality students, allowing the institution to have a more secure financial standing, and reducingthe student indebtedness of student population.A follow-up poll question illuminated the responses to the previous question as participants were asked toidentify unintended consequences of their aid strategy. The top unintended consequence experienced by theinstitutions of participants who responded to this question was a loss of net revenue by the institution, followedby cuts in other academic departments or programs to account for the loss in revenue.BIOGRAPHIESAmy Moynihan (Moderator)Amy Moynihan is the Content Manager- Webinar Specialist at Hanover Research. Amy is currently a Ph.D.candidate in Higher Education at The University of Virginia, Curry School of Education. She also holds a M.Ed. inSocial Foundations from The University of Virginia, Curry School of Education and a B.A. from ColumbiaUniversity.Gamward QuanGamward C. Quan is the Vice President for Business Affairs and Chief Financial Officer at Claremont School ofTheology. Quan joined Claremont School of Theology in April 2008 as Associate Vice President for FinancialAffairs and Planning. He was appointed Vice President for Business Affairs and Chief Financial Officer in July2012. He leads the School’s financial operations, institutional research functions, and financial analysisfunctions. Prior to joining Claremont School of Theology, Quan was at the University of Southern California from1989 to 2008. Quan has a Bachelor of Science Degree in Economics/Systems Science from the University ofCalifornia at Los Angeles.Dr. Harry HellenbrandDr. Harry Hellenbrand is Provost and Vice President for Academic Affairs at California State University,Northridge. In this role, he has brought a wide range of administrative and academic experiences to theUniversity, including 18 years of experience within the California State University System. Provost Hellenbrandserved as Dean, and Professor at the College of Liberal Arts at Cal Poly, San Luis Obispo from 1998-2004; asDean, and Professor at the College of Liberal Arts at the University of Minnesota, Duluth from 1994-1998; andas Chair, and Professor of the English Department at California State University, San Bernardino from 1982-1994. After earning his bachelors degree in English and American literature from Harvard College in 1975,Provost Hellenbrand received his Doctorate in Modern Thought and Literature from Stanford University in1980.
  7. 7. “As  a  graduate  institution,  you  see  this  shift  in  federal  financial  aid  shifting  more  and  more  towards  undergraduate education, so that really puts a burden on our students to fund their education mainlythrough debt. The School does provide a significant amount of scholarship assistance. The totaltuition aid for this just completed academic year was about 50 percent. So when we see the nationalsituation, the President calling higher education to account for high tuition cost and high student debtwith a greater emphasis on economic return for jobs, we felt that we needed to do something to helpthe  students  and  control  their  total  debt.”  -Mr. Gamward Quan7For inquiries, e-mail info@hanoverresearch.com or call 202.559.0050
  8. 8. LEARN MORETo view the recorded webinar, open the following linkhttps://hanoverresearch.adobeconnect.com/_a1113233245/p3yw3tydmxb/For more information on Hanover Research’s higher education research, see ourblog at http://www.hanoverresearch.com/category/blog/higher-education-blog/To learn more about how Hanover Research can provide research for your aidstrategies, check out our capabilities at http://www.hanoverresearch.com/higher-education-market-research/District Administration PracticeResearch Without Limits™Academy Administration Practice©2013 Hanover Research

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