The Role of Financial Aid in Admissions

The Role of
Financial 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 Choice
College 1st Choice 2nd Choice 3rd Choice and Lower

This college has a very good academic reputation 63.0 49.9 41.1 30.5

This college's graduates get good jobs 52.7 44.9 39.2 31.3

A visit to campus 43.1 31.2 23.5 18.0

I wanted to go to a school about the size of this
42.9 33.6 26.0 21.3
college
This college has a very good reputation for its
35.6 28.0 21.6 15.5
social activities

I was offered financial assistance 32.5 37.2 39.6 39.8
This college's graduates gain admission to top
31.4 28.4 27.5 23.8
graduate/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 Choice
College and Lower

The cost of attending this college 29.1 37.4 40.4 41.2
I wanted to live near home 19.6 16.7 13.8 12.5

Information from a website 18.1 15.6 13.4 11.0

Rankings in national magazines 17.5 14.4 14.0 12.9

Admitted through Early Action/Decision
13.4 6.4 5.0 3.7
program

Could not afford my first choice 3.0 20.4 26.0 28.4
Not 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 Students

Admissions Offices can take a pro-active approach to framing the
discussion of financial aid, cost and affordability. Embrace the
opportunity to serve as a resource for the community at-large and
educate students, parents, guidance counselors, etc. Know the
mandates 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
state's median household income was about $32,000 in 1999, according to Census
Bureau figures. An analysis of Nevada's scholarship program found that the biggest
winners of its awards were families in Southern Nevada's 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 1980-2005
The two charts indicate a growing problem with college costs
and financial aid accessibility. Consider the chart at the right:
over a 25-year period, costs increased for private colleges
nearly 200%,compared against AGI, which increased less
than 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.

The Role of Financial Aid in Admissions

More Related Content

What's hot

Similar to The Role of Financial Aid in Admissions

Recently uploaded

The Role of Financial Aid in Admissions