Financial Aid Processes and Packaging Strategies to Avoid
John W. Dysart, President, The Dysart Group
I have worked in higher education for nearly forty years. I have had the pleasure of working with more than 180 colleges and universities throughout the United States on myriad issues related to enrollment management. As a recovering Director of Financial Aid, I believe I have unique insight into financial aid issues. Instead of sharing a host of financial aid recommendations designed to support recruitment and retention objectives, allow me to offer a list of things NOT to do.
- Do Not Cap Financial Aid Packages at Tuition and Fees if You Have Students Living on Campus
I have run into this idea just in the last couple of years. Hoping to reduce or level their discount rates, some institutions are capping financial aid packages to cover only the cost of tuition and fees. While this might make sense for an on-line school or commuter college, it makes no recruitment or retention sense for residential colleges and universities. If any significant portion of your population demonstrates financial need, you will make it impossible for many students to attend. Those students who attend anyway are probably not going to be able to come up with the additional $6,000-$15,000 to cover room and board. These students are likely to end up unable to reenroll and any savings mistakenly realized by such an approach are going to end up in accounts receivable.
- Do Not Expect to Have a Below Average Discount Rate if You Work at a Private College Serving Large Numbers of Financially Disadvantaged Students
Institutions that serve high need populations should understand that high need students often require more financial aid than students coming from middle income and upper income families. It is a mistake, therefore, to think that such an institution has somehow been doing something wrong if its discount rate is higher than other institutions who do not primarily serve financially disadvantaged students. It is reasonable to expect higher discount rates for colleges and universities where more than 50% of the student population is eligible for Federal Pell Grants.
- Do Not Wait for the Arrival of Spring Grades to Package Currently Enrolled Students
No one likes to complete tasks more than once and this is true for financial aid professionals. Some schools wait until the publication of Spring grades before packaging currently enrolled students to eliminate the possibility of packaging a student, only to find that at the end of the term they did not meet minimum satisfactory academic progress requirements.
It is better, however, to package all currently enrolled students as soon after October 1 as possible to increase the timeline for financial planning for both students and families. The extra work of having to repackage some students after Spring grades is worth it if it means that returning students already have their financial aid packages well before the end of the Spring term. It is not good for students to go home over the summer unsure about how they will pay to return.
- Do Not Budget Institutional Financial Aid at a Flat Dollar Amount
I have encountered so many colleges and universities that establish institutional financial aid budgets based upon flat amounts. Financial Aid Offices are sometime placed in a position where they reduce or cut off institutional aid funds too early.
Budgets should be based upon averages per package and not total dollar amounts. This approach allows for greater expenditures if there are opportunities to recruit more students and will result in lower expenditures if, for some reason, the institution enrolls fewer students than expected.
- Do Not Increase Institutional Financial Aid Every Time you Raise Tuition
Tuition increases every year are a reality at most colleges and universities as costs such as insurance, other benefits and annual raises increase operating expenses. It does not make sense, however, to increase financial aid packages every time the school implements a price increase.
- If the price increase is modest, many families will be in a position to absorb it.
- Often, increases in federal direct loan eligibility will mitigate the impact of a tuition increase.
- Finally, it is an exercise in futility if increases in financial aid packages wipe out any expected new revenue from a pricing adjustment.
Ensure that practices in your Financial Aid Office are encouraging new student enrollments and supporting retention.