The Role ofFinancial Aid in Admissions Joe Szejk Assistant Director of Admissions Wheeling Jesuit University
Presentation Summary “Financial Aid’s” impact on enrollment is more than awarding of funds to students. It also includes a concentrated effort by college personnel to target key student groups, optimize the use of limited funds, frame discussions about affordability, and (sometimes, most importantly) calm student and family angst. The expanse of its reach includes academics, admissions, finance offices and, of course, families.
Federal Definition Resources (other than the family’s personal funds) that are used to pay for education. Financial aid consists of grants (usually based on financial need), scholarships (usually based on academic performance or other merits), loans, and on-campus employment (for example, the Federal Work-Study Program). In some cases, financial aid is offered on a first-come, first-served basis.
Family Definition Grants and Scholarships.(Does not include student and parent federal loans, self-help programs or alternative loans.)Point to Consider: How can an admissions office properly bridge this gap between the federal methodology and family misconceptions? Answers to come later. . .
Impact of Finances on College Choice Attending"Very Important" Reason for Attending this 4th ChoiceCollege 1st Choice 2nd Choice 3rd Choice and LowerThis college has a very good academic reputation 63.0 49.9 41.1 30.5This colleges graduates get good jobs 52.7 44.9 39.2 31.3A visit to campus 43.1 31.2 23.5 18.0I wanted to go to a school about the size of this 42.9 33.6 26.0 21.3collegeThis college has a very good reputation for its 35.6 28.0 21.6 15.5social activitiesI was offered financial assistance 32.5 37.2 39.6 39.8This colleges graduates gain admission to top 31.4 28.4 27.5 23.8graduate/professional schools The American Freshman - National Norms for 2006, HERI
Impact of Finances on College Choice Attending"Very Important" Reason for Attending this 4th Choice 1st Choice 2nd Choice 3rd ChoiceCollege and LowerThe cost of attending this college 29.1 37.4 40.4 41.2I wanted to live near home 19.6 16.7 13.8 12.5Information from a website 18.1 15.6 13.4 11.0Rankings in national magazines 17.5 14.4 14.0 12.9Admitted through Early Action/Decision 13.4 6.4 5.0 3.7programCould not afford my first choice 3.0 20.4 26.0 28.4Not offered aid by my first choice 2.3 13.2 18.2 21.4 The American Freshman - National Norms for 2006, HERI
Points of Reference On slide six, consider the disparity between outcome choices (academic reputation, graduates get good jobs) versus the financial incentive, especially in regards to 1st choice and 4th. For students who matriculated to their 4th choice, the financial incentive overwhelmingly resulted as the deciding factor. According to the first question on slide seven, cost increasingly becomes important for attending: from 1st choice to 4th choice there is 12% difference. For students who are unable to attend Choice #1, Choice #2 is not necessarily the default. Percentages increase from #2-4 (20-28%).Questions: Does your institution thrive by “stealing” students from #1 choices? Does this strategy provide you with a stable market share?
Methods of Awarding Financial aid can be tied to many student or family characteristics: Family Need Student Merit (Academic or Special Talent) Date-of-application for financial aid
Make Them YOUR StudentsAdmissions Offices can take a pro-active approach to framing thediscussion of financial aid, cost and affordability. Embrace theopportunity to serve as a resource for the community at-large andeducate students, parents, guidance counselors, etc. Know themandates for state and federal programs as well. Designate one person in the admissions office to be “financial aid liaison.” “Financial Aid Timelines” on web site and parent mailings. Include easily-found and complete cost and scholarship information on the web site. Publish financial aid brochure with same information. “Award package by income range” can dispel affordability myths. Provide Financial Aid Nights on-campus throughout the year and at local feeder schools.
Missed Opportunities? According to “Missed Opportunities Revisited” by American Council on Education, 1.5 million students who were likely eligible to receive Pell Grants in the 2003-04 academic year missed out on the assistance because they did not apply for financial aid. The statistics are even more stark: In 2003-04, 28 percent of the lowest-income independent students did not file a FAFSA compared to 24 percent in 1999- 2000. 27 percent of those at private not-for-profit four-year colleges and universities did not fill out a FAFSA.Questions: What processes are in place to educate students and families about the methods of awarding? Do you have information on your website (is it complete and detailed?); do you include parent mailings in your communications flow; do you have financial aid nights on campus or at feeder high schools?
Shaping Awards Financial incentives shape student population through institutional, up-front awards. Generally, these are unfunded and thus, are responsible for discount-rate. These awards identify cohort groups that support a component of the institution. Examples are numerous: Academic trigger awards Athletic awards Special Talent (musical, artistic, etc.) Accessibility (diversity, first-generation, for example) Mission (community service, leadership, denomination, etc.) Points to Ponder: Is your institution too reliant on up-front gift aid to recruit students who would otherwise matriculate; that is—do you overpay; Are you maximizing your budget of discount dollars (yield of students w/ certain scholarships)?
“There is No Spoon” Most private colleges leverage their financial aid. Develop a matrix of student criteria: Usually academic strength vs. financial need. Visually, it can be best described as a spreadsheet, with each subgroup creating a cell. Target subgroups (cells) within matrix that have a high propensity to matriculate based upon historical data and/or predictive modeling, or fit a desired profile. Percentage of need met; percentage met with gift aid, max discount rate are all part of the equation. Juggle “shape” of class vs. the needs of bean-counters. Low academic strength students subsidize the stronger academic students. (We’ll accept you, but you will pay to come here.) Point of discussion: Different colleges compete for the same students. What may work one year may not work the next, as competitors react to one school’s success. Have we entered a “Cold War” of financial incentives, raising the stakes, seeing whom will blink first? Are we ensuring our own financial instability?
The Rich Getting Richer? Jeffrey Selingo reports in a 2001 article of The Chronicle, 64 percent of the scholarship funds in New Mexico go to students whose families make $50,000 a year or more; only 15 percent of the money goes to those earning $20,000 or less. The states median household income was about $32,000 in 1999, according to Census Bureau figures. An analysis of Nevadas scholarship program found that the biggest winners of its awards were families in Southern Nevadas affluent neighborhoods. In 2002, Gov. Bob Wise (WV) boasted nearly 20% of Promise Scholarships go to students with income under $30,000. According to Census Data, the average per capita income for the state in 2001 was barely above $23,000, 24% below the national average. One third of the Promise Scholarships went to students whose average income was at least three times the state average; sixty percent went to students with income at least double of the state average. According to Donald E. Heller, National Center for Educational Statistics, merit aid from colleges to undergrads increased 212% between 95-96 and 03-04; need-based aid increased only 47% over the same period. (USA Today 3/12/07) Merit (in billions, rounded) • 95-96: $2.4 • 03-04: $7.6 Need-based (in billions, rounded) • 95-96: $4.5 • 03-04: $6.5
Profile vs. Accessibility According to a report for the Dep’t of Education, authored by Jane V. Wellman, unmet financial need among the lowest income families (less than $34,000 annually) grew by 80 percent from the 1990-2004 period—at the same time, aid for the top quartile more than tripled. Worse yet, financial barriers will keep nearly 2 million low and middle income qualified high school graduates from attending college. A report produced for the National Center for Public Policy and Higher Education by H.A Hovey outlined the results of various state-sponsored merit programs. Key findings: Scholarships are being awarded disproportionately to populations of students who historically have the highest college participation rates (white, middle-class students.) Rather than helping to move each state closer to the goal of equality of educational opportunity, these programs likely exacerbate existing gaps in college participation, causing poor and minority students to fall further behind their wealthier and white peers.General Question: Does your institution offer grants for minorities, first-generation students or students from depressed regions? How do you balance the merit/need conundrum?
Cost and Aid Disparity The Price of College 1980-2005The two charts indicate a growing problem with college costsand financial aid accessibility. Consider the chart at the right:over a 25-year period, costs increased for private collegesnearly 200%,compared against AGI, which increased lessthan 10%. Source: Wellman Report The chart on the left reveals at no point has there been a greater gap between gift aid and loans. Generally, gift aid and loans were within 8-10% difference. Last year, gift aid was at an all-time low—less than 40%, while reliance on loans is at a record high. What are we doing in response to Wellman’s prediction of 2 million “lost” students?
Best Practices Establish Seamless Line of Communication Between Admissions and Financial Aid Offices. Assign one admissions person to serve as financial aid liaison, and if possible, allow that person to work in the financial aid office once a week. Train both offices to be aware of procedures and whom is responsible for specific duties; e.g. who certifies loans and which counselor handles a given region. Educate admissions personnel on financial aid requirements for institutional, state and federal programs as well as repayment options. Provide copies of financial aid paperwork to admissions offices with information as to when and to whom it is sent. Have both offices review each other’s financial aid publications.
Best Practices, Part Two Use Financial Aid Counseling to Increase Yield Start Early and Often: working with parents, students and guidance counselors. Frame the discussion before FAFSA completion. Learn as much about your families’ financial situation and your competitors before initiating a discussion about award packages. ISIR will tell you to which colleges a student sent information. Compile major competitors list and up-to-date costs. Make sure you know the family EFC and be prepared to discuss how EFC is derived; percentage of need met; percentage met with gift aid; family indebtedness; special circumstances. Know the nuances of your matrix—strengths and weaknesses and trust it. Don’t be afraid to say “no” to more money and why.
Summary Since 1980, college costs have risen nearly 200% while the percentage of grant programs have dropped to record lows. This cataclysmic shift has changed the college choice paradigm for students and parents, especially in the case of low-income students. First choice proves to not be final choice, as students and parents shop around for the most affordable college. There is an educational chasm for most families. Colleges need to do a better job in educating families on definitions, processes and budgeting options. Often, these can be used to increase yield and improve community relations. In response to the funding crises and the race to carve market niche for national or regional rankings, merit aid has skyrocketed. Colleges choose between various cohort groups based upon desirability and propensity to matriculate in order to maximize aid dollars, class profile and revenue. Financial aid and admissions offices must embrace the enrollment management model completely in order to maximize the efforts of both offices. The sum is greater than the parts.
Sources “Colleges Taking Another Look at Value of Merit-based Aid.” Mary Beth Marklein, USA Today, March 12, 2007. “Questioning the Merit of Merit Scholarships.” Jeffrey Selingo, The Chroncile, January 19, 2001. “Trends in Higher Education: 2005.” The College Board, 2006. “The American Freshman: 2006.” The Higher Education Research Institute, 2007. “Missed Opportunities Revisited.” American Educational Council, 2007. “Economic Profile, Promise Recipients.” West Virginia Higher Education Policy Commission, 2002. “Costs, Prices and Affordability.” Jane V. Wellman, The Secretary of Education’s Commission on the Future of Higher Education, 2006. “State Spending for Higher Education in the Next Decade: The Battle to Sustain Current Support.” H.A. Hovey, National Center for Public Policy and Higher Education, 1999. State Merit Scholarship Programs: an Introduction.” Donald E. Heller, Civil Rights Project at Harvard University, 2004. Challenging Times, Clear Choices.” College Board, 2003.Special Thanks: Tom Ball, Director of Financial Aid: Grove City College; Dave Collins, Assistant Vice President of Admission and Financial Aid: Saint Vincent College.