Title: The Strategic Use of Institutional Financial Aid
1The Strategic Use of Institutional Financial Aid
- Mr. Ron Day
- Director of Financial Aid
- Birmingham-Southern College
- rday_at_bsc.edu
- Ms. Deborah (Tolly) Tollefson
- Director of Financial Aid
- Univ. of NC Greensboro
- tollefson_at_uncg.edu
2Session Description
- This session will first focus on various
methodologies that can be used to both predict
and control the institutional aid budget from
both a public and private school perspective. And
second on ideas of how to use those funds
effectively.
3Suggested Reading
- Trends in Student Aid and College Pricing,
1997-98 to 2001-02, Watson S. Swail, Educational
Policy Inst, 2003. - Funding and Distribution of Inst. Grants in
1999-2000 Results from the 2001 Survey of
Undergrad Fin. Aid Policies, Practices, and
Procedures, Kenneth E. Redd, Journal of Student
Financial Aid, Vol. 31, 2001.
4Suggested Reading, cont.
- Merit Aid and Inequality Evidence from
Baccalaureate and Beyond, Derek V. Price, Journal
of Student Financial Aid, Vol. 31, 2001 - Race, Gender, and Institutional Financial Aid
Awards, Donald E. Heller, Journal of Student
Financial Aid, Vol. 31, 2001.
5Suggested Reading, cont.
- Trends In Student Aid, College Board, 2003.
- Changing Direction Integrating Higher Education
Financial Aid and Financing Policies Informing
Public Policy Financial Aid Student
Persistence, Donald Heller, Western Interstate
Commission for Higher Education, 2003.
6- 2004-2005 College Costs
- Keep Rising Prices in Perspective
- There's no escaping the fact that college costs
are rising. According to recently released
reports from the College Board, most students and
their families can expect to pay, on average,
from 167 to 1,132 more than last year for this
year's tuition and fees, depending on the type of
college.
7Good News!
- There is more financial aid available than ever
before -- over 122 billion. And, despite all of
these college cost increases, a college education
remains an affordable choice for most families.
8(No Transcript)
9Financial Realities Affecting Education Consumers
- Astronomical rise in consumer debt has come at a
time when income growth has been slowing. - Median income of families with head of household
has grown just 10 in past decade. - Rising debt is particularly troubling for college
students/parents.
10Cont.
- Federal Student loans have increased 265 in the
past 10 years. - Alternative loan volume has swelled to 466 in
the same period. - Avg. loan debt (2000) for 4-yr pub. - 15,074
and 4-yr priv. - 16,516.
11- In summary, these are the new financial realities
facing current and prospective college students
and their families - Rapidly rising college costs, which show no sign
of slowing - Fears of continued economic malaise
- Increased debt from student loans, credit cards,
and other forms of consumer financing.
12- In past years, many families believed the promise
of higher salaries and other benefits of higher
education justified the expense of postsecondary
education. But will future students be willing
or able to take on more debt in order to attend
college?
13- We are already facing this question. How many
have had students and/or parents say, We dont
want a student loan. We just want the free money
and as much as possible.
14- How do you approach this request? With a
clientele that, for various reasons, do not want
loans and/or work yet you know that headcount
is vitally important what ways do you prepare
and effectively utilize the funds your
institution labels as - INSTITUTIONAL AID
15You are vital in Planning for Recruitment and
Retention!
- Become vital in both recruiting and retention.
- Become a member of the Retention Committee and
the admission team. - Gather and retain historical data
- a. Retention Rates
- b. Tuition Discount Percentages.
- c. Net tuition historical data
- d. Awarding policies, i.e., how does the
Admission Office award merit.
16Retention Rates
- Traditional data determines those students who
enrolled one academic year and did not return the
next typically from fresh to soph, from soph to
jr, and from jr to sr. This figure should
reflect a five (5) year average.
17Tuition Discount
- Three models
- 1. Simple Tuition Discount consists solely of the
waiver of all or a portion of the tuition due,
usually in the form of a grant. Excludes external
sources or funding from endowed accounts. - 2. Scholarship Allowance is the most inclusive
concept and consists of all institutionally
funded financial aid plus tuition payments funded
by gifts and endowments (used by NACUBO and FASB).
18Tuition Discount Cont.
- 3. Student Tuition Discount is a broader concept
than the Scholarship Allowance. It includes all
tuition that students do not have to pay out of
their pockets, or by loans or work. It includes
scholarship allowance plus all external federal,
state, and private grants and scholarships
(commonly utilized by Moodys Investors Service
when rating institutions).
19Tuition Discount Concerns
- According to a report written by Jerry S. Davis,
VP for research at Lumina Foundation - Tuition discounting frequently fails to increase
net revenue and may harm the intended quality of
the institution. - Tuition discounting does not always lead to
students with improved SAT/ACT scores and may
hurt access for financially needy students.
20Cont.
- According to the College Boards Annual survey,
Most colleges with the greatest increases in
tuition discount rates failed to significantly
increase the median SAT scores of their
students.
21Cont.
- According to Davis, The report (from the Lumina
Foundation) demonstrates that tuition-discounting
practices have restricted access to grant aid for
lower-income students to attend four-year
institutions and reduce students opportunity to
choose among public and private colleges.
22Determining Discount Example
- Using the NACUBO and FASB model
- ((total dollars awarded from institutional
funds)/(tuition figure of students)) - ((2,000,000)/(18,000 400)) 28 Tuition
Discount
23Net Tuition
- Simply done by determining tuition amount and
institutional award totals. - (Tuition amt. of students) (total
institutional dollars awarded) - (18,000 400) (2,000,000) 5,200,000 Net
Tuition
24Think outside of the Box!
- New ways to spend your institutions money
25What is your Focus?
- More first-time freshmen
- More Distance Learners
- Stronger Academics
- Happy Faculty
- Out-of-state students (full pay)
- Diversity
- Tuba Players
- Emotional Middle Class
26Merit vs. Need
- Must all institutional money be used for Merit
aid? - Can Need based aid help improve the academic
quality of the student population? - Sources of funds Tuition Discounting, Endowment
Income and Annual Gifts, State and Federal
27The Relationship
- Recruitment Retention
- Diversity Comfort
- Commitment and loyalty
- A Two-Way Street
- Cradle to Grave
- Future Donors
- Partnerships
28Need-Based Approach
- Carolina Covenant at UNC Chapel Hill
- A college-financing commitment between the school
and low income students - Debt Free if you will work
- Creates an inviting financial aid package
29Eligibility Criteria
- Academic
- Admitted to, or enrolled at UNCCH
- Pursuing 1st undergrad degree
- Full time regular student (not Con.Ed.)
- Financial
- Parents AGI does not exceed 150 of federal
poverty guidelines (based on family size
30How Much Aid
- Financial aid covering 100 of documented need
(including a reasonable amount of FWS) - Laptop computer for entering Freshmen
- Students can choose not to work, but will be
offered loan to replace FWS, - Loans can also be used to replace Expected Family
Contribution
31First Year Statistics
- Ave. SATs 1209
- Ave. High School GPA 4.21
- NC Residents 88 Other 12
- Gender Female 69 Male 32
- Minority63, White 32
- Education of either Parent
- High School or less 21,
- Some Post Secondary 34,
- Four year Degree 45
32Cost to Institution
- UNC Chapel Hill already had a commitment to meet
need of all admitted students. - Additional cost for the first year 1.38 million.
They have already raised over 3 million more
most unsolicited. - Adding a Faculty Mentor to the program.
33Merit Based Approach
- Dont just give out the money, build a bridge
with the student - Focus on Emotional Middle Class
- Make application easy
- Interviews/Campus Visits
- Overnight stays in residence halls
- Lunch with Faculty
34Multi-Task
- Faculty Mentors good for both faculty and
students - Interview Days, include current students,
faculty, staff, alumni, and donors. - Create Communities
- Restricted Money Combine many small scholarships
into one application.
35Questions