When I speak with enrollment managers at public universities, they're often frustrated by the limits of their financial aid strategy—and, for some, “limits” is a euphemism for “complete lack of.”
Motivated by a genuine desire to fulfill their institution’s mission of increasing access to higher learning for all, enrollment managers want their aid dollars to stretch far and benefit many. But these same enrollment leaders must also generate more revenue than ever. As states have cut funding, public universities must cover mounting operating costs with tuition revenue. While often viewed as a challenge, the tension between these two mandates also provides an opportunity for enrollment managers to get the rest of campus on board with improving financial aid programs.
Researchers with EAB’s Enrollment Management Forum have found that in order to simultaneously achieve these contradictory ends, public universities must adopt a more complex price strategy. Students who are willing and able to pay more must do so, while aid must be channeled to students who need it or would otherwise not enroll.
The solution is clear: Adopt the practice of aid optimization—using data to calibrate aid awards to advance strategic enrollment priorities. The challenge is finding the resources for in-house analyses or hiring a vendor to help.
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Enrollment managers must find alignment (and answers)
As many enrollment managers know, adopting a new practice requires the support of many stakeholders across their institution. This challenge is particularly difficult at public schools where admissions officials are often constrained by the oversight of various interested parties. The price of tuition, for example, is typically established by the university’s board of trustees or the state legislature, and the annual financial aid budget is determined by the institution’s chief budget officer, often in collaboration with a wide range of other stakeholders.
Needless to say, many enrollment managers at public schools find it difficult to align policy makers’ mandates, faculty needs, and board aspirations into a coherent aid strategy. A flurry of questions can foil strategic planning: Is allocating more aid or raising the discount rate risky? Are some students subsidizing others? Is that fair? Are we prioritizing students in accordance with our mission of public service?
Answering such difficult questions can make it hard for enrollment managers to focus on tactical challenges like calibrating allocations or even discerning which goals have been met or missed.
A common challenge to outsourcing aid optimization
These questions suggest that financial aid optimization is necessary. Universities have not underinvested without reason: aid optimization is both complicated and expensive. Few schools have the internal resources to go it alone in this tricky terrain, but choosing to enlist the help of external consultants to cull data and channel aid dollars purposefully can be expensive. University leadership is often understandably wary of investing in a complicated process—the benefits of which are difficult to comprehend and not immediately apparent.
Perhaps it is not surprising, therefore, that enrollment managers at public universities are far less likely than those at private institutions to seek outside assistance with financial aid optimization. Only 33% of public schools outsource some or all of their aid optimization efforts, while 89% of private schools solicit the resources of consultants to maximize aid dollars.
Because public school stakeholders cannot fully appreciate the value of aid optimization, they are often unwilling to allocate resources to doing it well. But without the resources to invest, it’s difficult to show stakeholders with a high degree of confidence that aid optimization actually works. Overcoming such challenges will be essential for moving toward greater flexibility in aid allocation.