Financial Aid. Part of your Marketing Plan.
Last week, I was tuned to the Los Angeles PBS radio station and was listening to Larry Mantle’s popular and well-respected morning show, AirTalk (Larry is a long-time friend and campus radio broadcasting partner from college days). Patt Morrison’s show followed, and I heard that one of her subjects was about college admissions during this recessionary period. I stayed tuned. Her guests were Katherine Harrington, dean of admission and financial aid at USC; Mae Brown, director of admissions at UC San Diego; and Rick Shaw, dean of admission and financial aid at Stanford. It’s an interesting discussion. All three institutions are in peak demand, and do not anticipate that the recession will negatively impact their final admissions numbers. On this point alone, they are unlike many institutions this year that have adjusted their tuition revenue numbers because of concerns about families’ abilities to pay for college right now.
Stanford offered admission to only 7% of its applicants this year. Their aggressive financial aid policies, announced in February 2009, almost guarantee that the recession will not have a negative impact on their freshman class. This from the Stanford website:
Zero Parent Contribution for Parents with Income Below $60,000. For parents with total annual income below $60,000 and typical assets for this income range, Stanford will not expect a parent contribution toward educational costs.
Tuition Charges Covered for Parents with Income Below $100,000. For parents with total annual income below $100,000 and typical assets for this income range, Stanford will ensure that all tuition charges are covered with need-based scholarship, federal and state grants, and/or outside scholarship funds.
More Generous Method for Determining Family Contributions. Our methodology for calculating the expected family contributions for all applicants has been revised to be significantly more generous, while remaining true to the principles of need-based, equitable distribution of funds. Changes include: capping the amount of home equity in the parent asset calculation at 1.2 times the amount of total annual income; increasing the portion of total parent assets that are protected against assessment, for most families; adjusting the parent income calculation to reflect the higher cost of living in certain parts of the country; dividing the total calculated parent contribution evenly among multiple siblings in college; decreasing the assessment rate for student assets from 25% to 5% per academic year.
Students Not Expected to Borrow to Meet Educational Costs. Students are no longer expected to borrow student loans as part of their financial aid packages. Instead, students can cover their expenses by working part-time during the academic year, with a standard earnings expectation of $2,500. The typical hourly wage for student part-time employment on campus is $11 per hour. At this rate, students would need to work an average of 7.5 hours per week to meet the earnings expectation.
Aggressive. Demands our respect. Great marketing move.
Even though this decision by Stanford to aggressively use its endowment and fundraising campaign to aid its students should be commended for its ethics and its higher education policy implications, it is a marketing power move by a major player in higher education. Long known as the Ivy League school on the west coast, Stanford gains all that positive press as a moral leader in the world of student financial aid, keeps in step with Harvard, Yale and Dartmouth; gains political points in government relations at a time when the cost of attending college has been gaining more government attention; becomes more appealing to the nation’s top prospective students; etc., etc., etc. In other words, a shrewd marketing strategy.
Obviously, financial aid is a major component and concern of any university’s CFO. But like Stanford and USC, over the last 15 years, more and more universities have placed their financial aid operations under the enrollment management umbrella because it is a key tool in marketing higher education. It is the most important piece of the recruitment game. It plays a huge role in how students make their decision on where to go to college.
Earlier in the adoption cycle, after much research on the subject, after multiple debates with colleagues at national conventions, and after persuading senior administrators and the finance committee of the board of trustees, I was able to get our university to shift to a financial aid leveraging program with a certain, well-known vendor. It was a controversial decision because of the program’s emphasis on students’ willingness to pay, which depends on where financial need and academic ability intersect. It’s also controversial because it takes a detour from the financial aid purist’s point of view that aid should be awarded for calculated financial need and not on merit alone; a view that is more easily held by those institutions that meet full need in their financial aid packages. However, in our situation, we actually offered more need-based aid–and more aid overall–with the financial aid leveraging program than we previously offered.
Since that decision to go to financial aid leveraging in the mid-1990s, we were able to grow the enrollment, raise the academic profile of the freshman class, more accurately project tuition revenue, and be much more competitive with our aid offers. The branding implications cascade from there. Since that time, many more institutions have followed suit and have adopted a leveraging model for financial aid. But that decision back then was a marketing decision. Sure, it had financial and educational policy implications. But it was at its core a marketing decision, and another example of the impact marketing decisions have on an institution of higher learning.