This post is based on an article in the current issue of University Business.
It has been amply demonstrated that strategic financial aid leveraging can, under the right circumstances, increase enrollments and net tuition revenue. It is a practice that has been successfully applied by colleges and universities across the higher education landscape. The National Association of College and University Business Officers (NACUBO) has shown through its annual tuition discounting study that institutions of higher education have steadily increased their spending on institutional aid in recent years, especially as a result of the financial pressures resulting from the Great Recession. This action translated into discount rate increases of 9.5 percentage points (from 39.1 percent to 48.6 percent) for first-time freshmen from 2007 to 2015 as well as discount rate increases for all undergraduates of almost 8 percentage points (from 34.7 percent to 42.5 percent) during the same time period.
These increases in aid spending, when driven by data and implemented strategically, have increased enrollments for many institutions as tuition discounting is often used to attract students who otherwise would not be able or willing to pay the sticker price. Having said that, more than half (51.2 percent) of the schools that reported enrollment data for 2014-15 and 2015-16 experienced declines in total undergraduate enrollment and more than half (53.5 percent) also reported declines in freshman enrollment. Furthermore, over a third of these institutions (37.5 percent) experienced declines in both total and freshman enrollment.
Cost and affordability are strong deciding factors for prospective students and their families as evidenced by the findings of a recent study by Ruffalo Noel Levitz regarding the expectations of rising seniors. The results showed that one of the top reasons for students to eliminate a school from consideration is simply the family’s perception that attending a particular college or university would cause them financial difficulty.
Three specific approaches to grow enrollment when financial aid cannot be increased
With the above information in mind, enrollment leaders at institutions that are already strategically allocating financial aid funds but haven’t met their goals and cannot increase aid spending must evaluate other areas in order to develop or strengthen them. Among these are the following: