In the 1980s and 1990s, private colleges and universities faced a very difficult challenge. The cost of attending private institutions soared at a much faster rate than inflation, and those cost increases put many private institutions at a disadvantage. The sticker price was far greater than what most students could pay, meaning they needed more aid to enroll. Yet these private colleges and universities could ill afford to discount their tuition too heavily because it would deprive those campuses of the revenue they needed to provide a quality educational experience.
Many private institutions turned to a new strategy, financial aid leveraging, to address this dilemma. Financial aid leveraging is the strategic investment of financial aid funds to help campuses enroll the students they desire, control discounting and financial aid expenditures, and achieve the net revenue they need. It also helps institutions pinpoint the amount of aid students need to enroll. Leveraging has been very effective for private institutions, helping them get the biggest enrollment bang for their financial aid buck.