It’s Time to Review Your Financial Aid Award Policy
John W. Dysart
The Dysart Group
Financial aid packaging has begun for the Fall 2023 cycle, and it is a good time to review your packaging strategy if you have not already done so. The following are some questions to consider as you begin awarding new and returning students for the coming year.
What have been your new student recruitment trends over the last three years?
- If your new student enrollments have increased, you may have a packaging strategy that is effectively supporting your admission plan.
- If the number of new students has declined, you may need to consider changes. Enrollment drops associated with corresponding declines in the number of applications for admission and acceptances are indications of bigger recruitment plan issues. Enrollment declines in situations where the number of admission applications and acceptances have remained steady, or increased, is likely an indication of a financial aid strategy that is not supporting your recruitment efforts.
- Declines in applications for admission could be an indication that your merit scholarships and grants are not sufficiently attractive for prospective students and their families.
What have been your retention trends over the last three cycles?
- Retention is critical for colleges and universities and financial aid may play a role in your ability to retain students.
- Downward retention trends may be an indication that your award policy is not providing appropriate access, especially for students with high financial aid.
Review the trends in accounts receivable.
- Approximately 6.6 million students left college with outstanding balances.
- It is not unusual for colleges and universities to end cycles with 1-2% of annual charges still outstanding at the end of the year. If your institution is dealing with higher percentage rates, it may be an indication that your financial aid packages are insufficient.
- Outstanding balances, even modest ones, contribute to attrition.
Evaluate your trends with financial aid appeals.
- If you are not already doing so, make sure you count the number of new and returning students who file appeals of their financial aid packages each cycle.
- Be sure to perform separate counts for new and returning students.
- An appeal rate for either population greater than 2% might be a sign that your packaging approach is too conservative for the market you serve.
How is your Financial Aid Office incorporating recent increases in the Federal Pell Grant and increases in state grants into your packaging strategy?
- We have realized increases in the Federal Pell Grant and some states are increasing the state grants for college students.
- Are you using these increases to increase institutional net revenue?
- Are you using the increases to provide for more generous financial aid packages?
It is important to review your financial aid packaging policies every year to take into consideration your enrollment and retention trends and constantly evaluate the impact of your award policies on retention and net revenue. As financial aid packaging starts for the new cycle, ensure you have evaluated your current approach.