Signs You May Need to Reconsider Your Institutional Aid Programs and Award Policy

John W. Dysart
President
The Dysart Group

Financial aid is an extremely important element of any enrollment management plan.  As inflation continues, federal and state aid stagnates and institutions witness downward enrollment trends, it’s safe to say that well designed institutional aid programs and targeted award policies will be instrumental to enrollment success.

Most higher education administrators, including presidents and chief financial officers, are not well-versed in the details of financial aid.  It is difficult for many to even determine whether they have problems with their financial aid operations.  The following are some signs that might indicate issues with the structure of your institutional aid programs and/or financial aid award policy.

Low Conversion Rates

It’s a good idea to evaluate the percentage of accepted applicants for admission enrolling at your college.  While conversion rates are impacted by many factors, a particularly low conversion rate might indicate that your award policy does not effectively provide access for needy students.  Spending more may not be the answer.  Restructuring and better targeting scarce institutional aid dollars might help.

Large Receivables

Every institution enrolls some students who are unable or unwilling to pay their bills.  Many students with outstanding receivables at the end of the term may be another sign that your financial aid award policy is not effectively meeting financial need.  Ensure that your award policy provides realistic financial aid packages that make it possible for families to cover net charges.

Dismissals for Outstanding Balances

Along the same lines, keep an eye on the number of students dismissed or ineligible to re-enroll due to outstanding balances.  This is another sign that packaging policies may be ineffective.

Increasing Institutional Aid Costs

While increases in institutional aid costs are not always a source of concern, you should be concerned if such increases exceed the rate of inflation.  In most cases, your costs should increase below the rate of inflation.  Be deliberate in how you calculate tuition, room and board annual increases into your financial aid packaging policy.

Unpredictable Expenditure Levels

The brightest red flag when it comes to financial aid is an inability to accurately predict institutional aid costs each cycle.  The ultimate budget for institutional aid each year should be set at the beginning of the cycle.  Any expenditure surprises at the start of the term are a sign of design shortcomings.

Large Refunds

Keep your eye on the amount of refunds generated for currently enrolled students.  I have worked with some private colleges and universities refunding literally hundreds of thousands of dollars to students.  This is a sign that your award policy may be overly generous.

Financial Aid is critical to successful enrollment management, but it is complicated and often misunderstood by key administrators.  If you have any doubts about your current level of expenditure; if you are concerned that your merit and need-based institutional aid programs are not effectively supporting your recruitment and retention efforts; if you have experienced cycles where aid costs have exceeded budgeted expectations, then consider conducting a comprehensive review of your financial aid operation.  The design and parameters of your institutional scholarships and grants must be periodically reviewed to meet your current needs and evolving market conditions.