Identifying a Financial Aid Problem
John W. Dysart
The Dysart Group, Inc.
The financial aid operation at a small college or university can have an enormous impact on institutional success. The focus here is not on compliance issues, but on policies and procedures in the Financial Aid Office as they seek to support institutional goals regarding recruitment, retention and net revenue.
The following is intended to enable representatives in leadership positions to recognize warning signs.
Erratic/Unpredictable Institutional Aid Expenditures
The idea that institutional aid expenditures are not reasonably predictable and controlled is erroneous. An inability to anticipate and manipulate institutional aid expenditures is a sign of inadequate planning, lack of procedural checks and balances and an indication that appropriate reporting and tracking mechanisms are not in place.
High, Outstanding Receivables
While outstanding receivables throughout the cycle and at the end of the academic year can be an indication of poor collection practices, they can also be a sign of a problematic award policy. Many institutions operate with financial aid award policies guaranteed to place students and families in situations where it is virtually impossible to meet financial obligations owed to the school. Review your institutional award policy to ensure that you are not packaging your own collection problems. The implications for both recruitment and retention are real.
Pressure on Cash Flow
At the beginning of the term, efficient financial aid operations have more than 98% of all financial aid ready for disbursement. This is true for both new and returning students and includes loans. If your institution is still processing any significant amount of financial aid after the first day of classes, you have a problem.
It is important for financial aid offices to take primary responsibility for ensuring that new and returning students apply for financial aid and complete their folders in a timely manner. Applications for all students should be tracked throughout the cycle. Representatives in the Financial Aid Office must take all necessary steps including reminder letters, postcards, emails and telephone calls to ensure that all students are packaged and ready for disbursement by the first day of class.
Disappointing Recruitment/Retention Results
The role of the Financial Aid Office in securing new student enrolments and facilitating retention is significant. It is important to review the key elements of your financial aid program for the impact on recruitment and retention.
Make sure that the dollar amounts of your scholarship and grant programs are sufficient to attract and retain students. You may need to make adjustments as tuition costs rise.
The timing of financial aid awards to new and returning students can also influence student enrolment. Awards to both new and returning students should begin by the end of the first week in January and it is important to set targets and track results. For example, seek to award at least 80% of currently enrolled students by the end of the Spring semester.
Examine process and paper requirements to find out if your approach acts as a barrier to students. The process of applying for financial aid can be intimidating for prospective students and parents. Procedures and paper requirements in the Financial Aid Office can further complicate the process. Complicated processes can delay the awards and actually discourage prospective and current students from completing aid applications. Complex processes may even discourage students from enrolling.
Make sure you have streamlined the financial aid process for both new and returning students. Reconsider the use of institutional aid applications and professional judgment forms. Make use of third-party documentation sparingly. Remember that additional documentation not only complicates the process and slows the awards, but extra documents in student folders can also increase the possibility of liability as a result of an annual, state or federal audit.
Excessive Number of Financial Aid Suspensions
Carefully review your institutional policy on satisfactory academic progress. Schools are given significant leeway in the design of these policies and many colleges and universities make the minimal requirements harsher than they need be.
While you certainly do not wish to encourage students who are ultimately going to be academically unsuccessful to continue at school, just make sure your policies are not strict to the point that they unnecessary penalize students.
Many of these pitfalls can be avoided by administrators in top leadership positions taking a more active role in financial aid policy and process. Vice Presidents for Enrollment and Vice Presidents for Finance should possess a specific understanding of the basic tenets of financial aid. The greater the understanding, the better the positive influence these administrators can have on the financial aid operation.
In the meantime, it is beneficial to be able to recognize some of the signs that you may have a problem.