Enrollment Management

[March Madness] Enrollment Management

Imagine, if you will, the high school senior that creates a tournament bracket similar to college basketball and seeds each of his potential college suitors in accordance with his interest.  Then, one by one he pits each school against one another using financial aid as the sole contributing factor to the decision on which college or university moves on to the next round.  (I saw something similar to this in our student affairs office last year when a college senior created a bracket during March representing his law school choices.)  As an enrollment management professional at a private, independent college and obviously not knowing explicitly who my institution is competing with, a process like this would make me cringe.

In the admission and financial aid office at Doane College, March 13th represents the date when we make our first official financial aid offers to prospective students.  We will mail over 400 financial aid awards representing over half of the total number of awards we will make this recruiting cycle.  And, when you consider that our first “wave” of financial aid awards accounts for roughly 60% of our anticipated class, it makes sense that this is a big deal.

March is maddening, particularly in this day and age in higher education and this would be true without college basketball!  I’ve discussed in previous posts the challenges of merit aid, price, cost, and tuition.  Financial aid is a beast and a blessing in enrollment management.  No two schools develop their financial aid policy and strategy the same.  As a result, all who want to make apples to apples comparisons with financial aid awards are easily frustrated.  A consequence of this process is an increasing demand for financial aid negotiations between potential students (or the parents) and the college.  At times it’s laughable because I often see those who have the greatest ability to pay for college lobbying for the greatest amount of aid.  But, then I ask myself, “Who could blame them?”  Just because people have wealth doesn’t mean they are any more interested in parting with it.  Nevertheless, I often hear more appeals for families with the financial resources than I do for those that do not.

Those in enrollment management understand that financial aid can be very complicated and therefore isn’t always the easiest to explain to families.  Even if you can articulate your institution’s philosophy and process, good luck helping a family understand why their Expected Family Contribution is $20,000 as defined by the FAFSA.  Who hasn’t heard the comment, “I don’t have $20,000 in the bank to pay for Junior’s college each year!”?  I suppose the saving grace is to share that the EFC is calculated the same for everyone and therefore each school is using the same information.  Unfortunately, that doesn’t provide families with much comfort.

So, how does an admission counselor navigate the March Madness bracket with a prospective student in the event they focus largely on the financial aid award?  As a private, independent college, how can we compete with the local community college on price?  If you draw that match-up do you simply throw in the towel?  How about if you draw the local state institution?  Maybe you have a chance if the student isn’t getting any aid from the state school.  But what if you draw another area competitor; similar college if you will?  Slam dunk, right?  Hmmm, not so fast.  In the end, we must to talk about value.  We cannot let it be only about cost even when we know that is a significant issue.

Let me share a brief story.  A father visits Doane College with his son.  During the visit they indicate that they have received an “offer” from another private, independent college in the state totaling more than our offer.  When asked for the details of the offer in order to determine if we could find a way to be more competitive, the father indicated that he doesn’t work that way.  He is a farmer and he likened his son’s college choice to a recent purchase of a tractor. He shared, “When I need a tractor, I go to two businesses and ask for the best price on a tractor.  Whoever gives me the best offer gets my business.”  I asked the father, “Sir, were both tractors John Deere?”  He indicated that both were Case to which I replied, “Sir, in your example, what if you were comparing Case to John Deere?  Would price be your only comparison point?”  I would bet that John Deere and Case reps would work hard to argue the differences in their tractors if given the chance.  That being said, if from the beginning this farmer knew that he wanted a Case, the fact that we are John Deere is irrelevant because it’s very possible that we don’t have what you want.  Comparing Doane College to another school based only on financial aid is shortsighted and assumes that everything else is equal.  A better financial offer from us may make your decision more difficult but it sounds like this farmer and his son had already decided what they wanted.

March Madness in higher education admissions seems to be all about financial aid and less the importance of fit and comfort in a college choice.  As colleges, we create financial aid awarding strategies in order to provide enough financial aid to make enrollment possible for a target amount of prospective students while also anticipating resulting revenue.  Ultimately, our awards will not be the best award for every student.  It doesn’t (and can’t!) work that way.  But, we want to be right for 350 first-year students for sure!

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Enrollment Management

FAFSA Rank Dilemma

Quick, list five of your favorite vacation destinations.  Don’t over-think it and don’t worry about priority order.  Now, once you’ve listed each destination go back and give them a rank order.  Does the order change much from your initial list?

I believe if I would do this activity with a large group of people, the priority order (particularly the first and second destination) would remain the same.  While I’m no psychologist, I think it’s human nature when asked to provide a list – even without any type of ranking expectations – we subconsciously prioritize our responses.

So, what does this have to do with enrollment management?  Right now all over the United States, students and families are completing the Free Application for Federal Student Aid (FAFSA).  On this application, students are invited to release their FAFSA information to potential college suitors.  The paper version of the FAFSA allows for a student to send information to four schools while the electronic application allows for up to ten schools.  To be clear, the application does not require students to identify colleges in priority or rank order.  But, “for state aid”, they do suggest that a student may choose to put their preferred college first.  Here is a great article that illustrates this particular component of the application.

Colleges and universities have come under a bit of scrutiny as of late for attempting to leverage the rank order influence enrollment, creating a strategy around the rank location of their institution on the student’s FAFSA.  Here is a great article highlighting how some colleges utilize the FAFSA data. A Noel-Levitz analysis of 153 of their campus partners provides some great data on enrollment actions relative to FAFSA rank position.  The resulting data shows that students chose the first school listed on the FAFSA by an overwhelming margin (64%) even though they can list up to 10 schools.  There are those critics who question whether the rank position should be shared with colleges by FAFSA suggesting that it is private information.  Moreover, given that the rank position is currently shared, what is an ethically acceptable way for a college to use the information? 

Colleges have been monitoring and assessing FAFSA data for some time, but rarely have I seen colleges make public how they use the information, let alone if they use the information strategically.  Is it wrong for a college to take advantage of this information?  I’ve considered the opinion of those who believe the rank order is private information and therefore should not be shared with colleges.  Personally, as an enrollment leader at Doane College, I’m a proponent of using every bit of available data possible to enroll a class.  For my institution, the yield on students who have put us in the first FAFSA location has been between 64% and 68% the last three years.  However, yield on students who have put us in the second FAFSA location has been varied more greatly between 14% and 25%.  Not surprisingly, students who put us in the third location or lower, yield at a very low rate.  Therefore, the Doane College data supports the Noel-Levitz analysis. I think it makes perfect sense that if we are number 8 on a student’s FAFSA, it’s unlikely that the student will enroll at Doane.  I’m not sure we really had much of a chance with that student.

A component of the privacy issue is the notion that colleges use the information unethically.  An example could be the practice of providing students less aid if a student lists your school first on the FAFSA.  In theory, if you are the student’s first choice, you may not need to give them as much aid to enroll as a student who lists you in the number two position.  This is a possible tactic.  However, I think it’s a risky decision by a school and a practice that I’m not sure many schools are willing to test.  It stands to reason that a school knowing the lower yield on lower rankings may try to increase yield in other areas, but not necessarily at the expense of what yields well.  In this vein, I’ll share two important questions reflecting on recent Doane College FAFSA data.

#1 – Why is Doane losing 32%- 36% of those that put Doane in the first location?

#2 – Why did Doane see such a significant change in yield from one year to the next with those that put Doane in the second location.

FAFSA position data for individual students helps me answer these questions.  For both questions, I evaluate the schools that Doane College was competing with (or who also received the student’s FAFSA information).  Although this will not tell me the complete story, it will help me to understand if I was competing with another in-state private college on students who put me as #1 but did not enroll.  It will also tell me if I was competing with public university on students who put me as #2 but did not enroll.  In fact, the data gives me a great idea regarding the competition with individual students, but it is short-sighted to think there were no other factors in the student decision, much of which can’t be learned by FAFSA ranking.  Nevertheless, couple FAFSA information with additional data we have internally and a more clear picture can emerge.

I believe that while the FAFSA does not explicitly ask students to provide the schools in any particular order, students are inclined to list schools in order of their interest at the time of the FAFSA filing.  I see nothing wrong with this and believe even if FAFSA added the statement explicitly stating that order does not matter, it’s likely that the order and ultimately yields based on these orders would not change substantially.  All this being said, colleges use the data that is available to them to assist in meeting enrollment objectives.  In the event this data becomes unavailable to colleges, enrollment managers will be forced to adapt.  Personally, I don’t consider this an ethical dilemma.

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Enrollment Management

Merit aid and the impact on tuition price

Eric Hoover wrote an article on January 17th, “Want to Define Merit?  Good luck.”  He accounted for a discussion among higher education enrollment officials at a conference focused on merit aid, specifically how colleges assess and reward merit aid to shape the socioeconomic and racial diversity of students at selective colleges.  I enjoyed the article but it got me thinking.  Shape socioeconomic and racial diversity?  I wish!

The term “merit aid” has grown in relevance exponentially over the last ten years for private, independent colleges.  But, merit aid is an enrollment tool used for very different reasons depending on the college.   Hoover’s article is focused on the discussion of officials from more selective colleges.  He discussed need-blind admissions, the influence of social class on students’ test scores, and the important debate surrounding the way in which colleges leverage aid to solidify diversity in enrollment.

Now, allow me the opportunity to share the world that many enrollment managers and college administrators live in related to this merit aid.  Our institutions are not considered highly selective.  We would love to shape our classes with more diversity and better test scores which typically translate into higher retention rates and ultimately stronger ratings in US News & World Report.  We thoroughly enjoy those conversations and get excited whenever the opportunity arises to participate in that discussion.  Unfortunately, our real-world, day-to-day challenges often push the discussion of shaping a class to the periphery.  Focus on that and we don’t have the enrollment to shape!  Fair to say, our issues with merit aid are different.

When colleges began offering merit, they opened Pandora’s Box.  On one hand, it was genius because it made private college attractive to many students who may have seen it as out of reach due to cost; college only for the wealthy.  On the other hand, it started a financial war which continues today.  Schools are pitted against each other fighting for the same student often not based on value of the education, but instead based on the value of a scholarship.  And, make no mistake; as the pressure to offer more merit has increased, schools have had to recoup their financial investment (net tuition revenue) in the form of tuition increases.

Because colleges offer merit with slightly different criteria, comparisons can be challenging.  There are different qualifications for different scholarship amounts.  Some scholarships are competitive whereas others are given based solely on arbitrary criteria.  Moreover, the arbitrary criteria are different at each school as is the amount attributed to the criteria.  Easy example is Doane College and Hastings College.  Very similar schools but different academic qualifications for different scholarship amounts.

As tuition-driven colleges increase merit to attract more students, it puts other similar colleges in a position to increase merit as well to be competitive in very price/cost-sensitive markets.  One college can significantly increase merit aid forcing other similar schools to do the same to stay competitive or lose enrollment.  In the private college environment, I believe this tactic erodes the value of the product we sell.  And not only that, but as I mentioned before, tuition will increase in order to recoup some of the net revenue lost by increasing aid.  I don’t expect students/parents to appreciate this or feel any remorse for colleges.  Nevertheless, merit aid war games are significantly effecting decisions made with respect to tuition and other costs at colleges today.

I’m not suggesting that merit aid is bad.  I don’t think I can make that argument.  But, it complicates an already challenging college decision.  If instead of merit, a college chose to provide financial aid based solely on need, it’s not likely that the college would meet enrollment targets, nor would it likely meet net tuition revenue targets for operational budgets.  But, some would argue that’s the “right thing to do.”  I don’t see an easy answer here but I do anticipate a change coming in higher education.  The path of more aid and increased tuition is a very rocky road at best.

I’m not minimizing the importance of the merit conversation related to Mr. Hoover’s article.  However, I think it’s important to understand that there is another merit issue unrelated to and (to me) equally important for many colleges today.  We can’t begin to shape our enrollment if we don’t have enrollment to shape.

What do you believe the role of merit aid should be in college enrollment?   

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Enrollment Management

College Tuition – the Price and the Cost

This is the time of the year in higher education recruitment when rubber hits the road.  Students begin to make the often tough college choice.  An important factor in that choice for most is the cost of education.  And, the cost of education depends greatly on the *price.

The price of tuition at private, independent colleges has received a great deal of criticism as of late.  There are those that feel that tuition prices have escalated far too high as a result of college greed or unwillingness to take into consideration the impact of that cost on families.

First, price does matter.  Let’s say you are considering two pair of shoes.  A brand name shoe has a price tag of $70 while a no-name brand has a price tag of $35.  Quick, which shoe in your opinion represents higher quality?  What if the $70 shoe is 50% off?  Now, both shoes will cost you the same amount out of your pocket.  Does that change your opinion of the quality of the higher priced shoe?

Although I acknowledge that this is a bit of an oversimplification, price is often perceived as representative of a specific product’s quality in the market.  While I recognize that there are other impacts on price such as demand, price can be very important in the context of competition in a specific demographic and geographic market.  Consider the private, independent colleges in the state of Nebraska.  List each college and their respective tuition. Tuition amounts are typically within $2,000-$3,000, and sometimes within less than $1,000.  The fact that these colleges have tuition prices so close is not by chance.  But this still doesn’t answer the question as to why tuition prices continue to escalate.

Price does matter but the increasing price is not necessarily attributed to a college’s incessant desire to fill their coffers with your money.  What is easily misunderstood is a college’s ability to maintain appropriate net revenue to operate (with modest program investments) without increasing the price.  In order for a college to operate annually with net revenue from tuition, it must not only consider the price of tuition but also the amount of discounting required in order to meet overall enrollment targets.  Essentially, to what extent must a college put tuition on-sale in order to meet or exceed enrollment targets?

Consider the shoe example above.  Let’s try to keep this relatively simple.  Both shoes will cost the consumer the same out-of-pocket cost.  In turn, each company receives the same net revenue.  Private, independent colleges can be considered similar to the name brand shoe while a public university is the no-brand shoe.  While tuition is high, often the cost is discounted with significant merit aid and grants.  This discount is equivalent to a sale.  Each year enrollment managers assess the amount of aid required to yield the previous class.  Consumers are expecting more and more aid each year.  To be clear, this discussion is not addressing state and federal aid such as Pell Grants and loans.  I’m simply speaking to the funds provided independently by the institution which are not loans.  The amount of average institutional aid (merit or grant aid) for each student divided by the tuition translates into a college’s average tuition discount.

PRICE

Tuition = $20,000

———–

 Average Merit/Scholarship/Grants (provided by institution) = $7,000

Tuition Discount = 35%

———-

COST

$13,000

Many colleges are discounting tuition at historically high rates in order to meet enrollment goals.  If tuition does not increase and the rate of discount increases, a college will lose net revenue and be forced to operate with fewer resources than the previous year.  Think about this in the context of a family budget.  Fewer resources lead to decisions that ultimately can affect quality of life.  At a college, this can affect the quality of the educational program.  In order to account for a significant sale (discount) on tuition, the price must increase to protect net revenue and maintain operations with the same consume value expectations.

It’s important to understand that when a college provides a discount on tuition with institutional aid, rarely is that aid actually funded by actual paper money.  That’s not to say it never is, but most colleges simply don’t raise enough money annually to off-set the financial aid that they fund.  Do some quick math.

(Enrollment)  x  (Tuition Price) x (Sale/Discount) = Financial Aid Funding Required Annually

1,200$20,000  .35  = $8,400,000 (that is 8 million!)

There are not too many colleges that fundraise $8 million annually to support financial aid.  Nor are endowment returns (even on substantial endowments like Doane College’s) enough to support the scholarships/grants provided to students.  And, this example uses a tuition discount of 35% rather than upwards of 40% which is becoming more typical for some schools.

So, if the example above holds true, why not decrease tuition by $10,000 and stop discounting?  First, let me bring you back to the shoe comparison.  There is a strong theory that if a college cut tuition by 50%, it would impact their perception of quality.  There are schools that have done this but not without a great deal of research, consternation, and some risk.  Pricing may seem elementary on the surface.  Unfortunately, it is a significant issue and one that colleges wrestle with each year.  The price of tuition is one number while the cost of tuition to a family can be something quite different.

*For the purpose of this post, price is reflective of tuition only.

P.S.  Doane College approached tuition pricing a bit differently in 2013.

This academic year Doane College approached setting tuition slightly different than in the past.  First, internally administration discussed tuition considering the ongoing debate of increasing prices.  Doane considered holding tuition also known as “freezing tuition” for a year.  Doane considered lowering tuition, albeit for only a short conversation.  Ultimately, Doane decided on a 4% tuition increase but rather than make this decision in February – the customary time – the college’s board approved the tuition in October.  This move was an acknowledgement of the importance of financial planning and providing families with definitive costs for which to plan early in the year rather than in late February.  In addition, Doane College also modified academic scholarships and increased allocations of merit aid to historic high levels for new students enrolling in fall 2014.

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Enrollment Management

We are in sales!

I still remember a conversation I had with a gentleman when I was about 23 years old.  He was recruiting me to sell life insurance – New York Life I think.  I listened.  He wanted me!  Nevertheless, I was scared by what I thought was a stigma of selling life insurance.  Little did I know that everything I would do in my career shared many commonalities to that of a successful insurance salesman…cold calls, making appointments, managing a schedule, marketing, communication.  Nevertheless, no regrets.   I didn’t think I wanted to be in sales. How naive was I?  We are all in sales one way or the other.  We are either selling a product or selling ourselves.

Sales often gets a bad rap.  Is it because people believe that someone in sales is trying to convince or trick you to buy something that you don’t need or want?  We treat the word “sales” with kid gloves in higher education, particularly with faculty.  I’ve been told, “Don’t use the word sales.  It makes them (faculty) uncomfortable.”  The words “recruitment” and “enrollment management” are so much better right?  But, the truth is that those of us in higher education, particularly recruitment and enrollment management, are in sales.  It’s what we do.  We have something of value that people pay for.  Often the more important question we ask is how much will people will pay for the value we provide.  As a result, we must justify our value and rightfully so.  Today, more than ever, students and parents are questioning the value of private college education.  College administrators are spending much more time today on providing outcomes of a degree and establishing a value proposition.  People must expect outcomes or value from what they buy.  Regardless of your role; whether it’s admission counselor, faculty, coach, music director, aid officer, the job is to articulate the value of the product.  We sell our college experience.

Response to recent blog comment connected to sales:

Following my last blog, I received a quick text from a friend…we’ll call him Jim.  Jim tactfully accused me of taking advantage of the word “guarantee”, possibly overusing it.  He felt the word guarantee was too strong.   We have a 4-Year Graduation Guarantee at Doane College.  He had remembered years ago when we worked together and I scoffed at the notion of any type of guarantee in higher education calling it a gimmick.  I remember and he was right.  At the time, I felt it was a gimmick.  Anyone can offer a guarantee provided they are ready to back it up.  In our line of work, it’s tough to offer satisfaction guaranteed or your money back.  The outcome of an education isn’t always that tangible.

At Doane College, we’ve had our guarantee for many years.  In fact, we were the first in the state to offer this.  It’s a signed contract between the student and the college faculty and administration.  The student does their part and the college does theirs, the result is graduation in four years.  It’s not rocket science.  In fact, it’s what students and parents expect.  But, they also know it doesn’t happen as much as people would like.

Over time other institutions have implemented a similar guarantee.  For example, Midland University did so just recently.  So, to my point, anyone can do this.  Or can they?  You see, the value of our 4-year Graduation Guarantee isn’t in the signed contract between the student and the president.  The value is in the ownership that our faculty have in the foundational reason for the guarantee.  At Doane, the faculty feel like it is their duty to graduate our students in four years, if not sooner.  This became obvious to me when I first got to campus and began to watch how our faculty interacted with students during advising.  But, we don’t just stop there.  We also have what we call our HELPS program which stands for Higher Education Life Planning Systems.  This program supports our alumni whose chosen field just doesn’t seem to fit anymore.  It provides two semesters of free tuition to graduates who have gone into the workplace and not been able to flourish.  It brings them back to campus for coursework to prepare for better career opportunities.  So, in a way, it is satisfaction guaranteed, or come back for free.

So yes, anyone can create a contract and implement a guarantee.  But that doesn’t mean the culture is any different.  The culture at Doane College has been around for many, many years and the 4-Year Guarantee is a component of our beliefs and our values.  Similar, our HELPS program takes the guarantee to the next step.  This is not a sales gimmick.  This is not purely administrative.  It’s a way of life on our campus and one that I believe cannot be easily copied.

QUESTION TO READERS:  This is one man’s opinion on sales in higher education.  I welcome thoughts from others.  Tell me, do you believe admission counselors are (or should be) sales representatives or are they purely advisors/counselors to prospective students/parents?

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