EASFAA 2014 - Puerto Rico
May 18-21, 2014
Cost Containment and Price
Sensitivity: the Perfect Storm
Waves of Change, Oceans of Opportunity
Agenda
• The challenging environment
• How do we respond?
– Institutional understanding
– Process/outreach
• Questions
Change Family Income by Quintile
1982–1992, 1992–2002, and 2002–2012
SOURCE: The College Board, Trends in College Pricing 2013, Figure 20A.
For detailed data, visit: trends.collegeboard.org.
Trends in College Pricing 2013
Annual % Change in State Appropriations for Higher Ed and
Annual % Change in Tuition & Fees at Public 4-Year Institutions
1982-83 to 2012-13
SOURCE: The College Board, Trends in College Pricing 2013, Figure 14A.
For detailed data, visit: trends.collegeboard.org.
Trends in College Pricing 2013
Demographic Forecast
Projected Change in High School Graduates
2012 to 2020
-6%
-6%
-3%
+3%
SOURCE: WICHE, Jon McGee
College Costs Surge 538% since 1985 - Renewed calls for change
& accountability from both political parties.
Tuition & Fees; Net Tuition & Fees; Room & Board at
Public Institutions, 2003-04 to 2013-14
SOURCE: The College Board, Trends in College Pricing 2013, Figure 10.
For detailed data, visit: trends.collegeboard.org.
Trends in College Pricing 2013
Average Total Debt of BA Degree Recipients
Public Four-Year Institutions
SOURCE: The College Board, Trends in Student Aid 2013, Figure 10A.
For detailed data, visit: trends.collegeboard.org.
Trends in College Pricing 2013
How America Pays For College
2009 vs. 2013
2009
Source: Sallie Mae
2013
Recent Trends
• Students are applying to more schools.
• The number of students applying for aid has
increased.
• Attending a community college for the first two years
has become more socially and educationally
acceptable; in some cases it’s an economic
imperative.
• Inside Higher Ed reported on a study from Sallie Mae that
said 22 percent of college students with a family income of
over $100,000 opted for a community college in 2011.
Four years prior, it was at 16 percent.
Recent Trends
• Institutional discount rates are increasing as are
“appeals” for additional aid – without corresponding
increases in enrollment.
• Significant additions/changes in Title IV regulatory
requirements, particularly in consumer information
and program integrity.
• President Obama’s Affordability Plan (college rating
system)
• Paying for performance
• Promoting Innovation and competition
• Ensuring that student debt remains affordable
How Do We Respond?
12
How Do We Respond?
Use Data Not Anecdote
• Keeping an “ear to the ground” plays a role,
but that should not be the foundation of your
awarding strategies.
• Using analytical approaches to understanding
student responses to your aid offers is where
your strategy needs to begin.
▫ Table analysis
▫ Predictive modeling
▫ Simulation tools
Sample Yield Table
• Tuition = $15,000
>$6000
Gift Aid
$4000-$6000
$2000-$4000
$1-$2000
$0
25/100 25%
16/80 20%
8/40 20%
$0 $1-$2k $2k-$4k $4k-$6k $6k-$8k
Need
> $8k
Cost/Benefit Analysis
• Current NTR:
▫ 8 * $14,000
▫ 16 * $12,000
▫ 25 * $10,000 = 49 enrolled - $554,000
• Projected NTR:
▫ 20% * 220 = 44 enrolled
▫ 44 * $14,000 = $616,000
• Projected Gain in NTR = $62,000
How Do We Respond?
Focus on NTR
• Not just class size or the aid budget
• Keeps admissions and financial aid on the
same page
• More (# or $) is not always better
▫ Depends on capacity
▫ Depends on price elasticity
• Helps with realistic budget planning
How Do We Respond?
Be Transfer Friendly
• Usually have lower discount rates and higher yield
rates, but still need to know that you are affordable
• Less demand on service courses and support services
• Growing market – need to be prepared to serve
them effectively
How Do We Respond?
Have a Plan for Handling Appeals or Changes
in Federal/state support
• Types of appeals:
▫ PJ
▫ Matching
▫ Affordability
• Importance of tracking reports
• Timing of decision
• Academic program
• Account for the costs in the aid budget
Appeals Analysis
Approved Denied
Fall 2012
# of appeals
# enrolled
yield
187
118
63.1%
39
226
21
139
53.8% 61.5%
Approved Denied
Fall 2011
# of appeals
# enrolled
yield
108
67
62.0%
# of appeals
# enrolled
yield
117
76
65.0%
Total
62
170
43
110
69.4% 64.7%
Approved Denied
Fall 2010
Total
Total
64
181
43
119
67.2% 65.7%
Sacrifice
Sacrifice is assumed
The U.S. Post Secondary
education system of financing is
based on the family’s
responsibility to pay for their
child’s college education.
Financial Aid is based on
supplementing not supplanting a
family’s ability to pay.
Ability is not willingness
Merit wars!
How Do We Respond?
Become Comfortable with Conversations about
Financing
• Tighter credit
• Parent loan vs. unsubsidized Stafford vs.
private loans vs. payment plan vs. home
equity line of credit
• Impact of new regulations regarding income
based repayment and loan forgiveness
• Financial literacy
How Do We Respond?
Build a Trend Based Financial Aid Budget
Model
# Freshmen
# on aid
Average aid
Total aid
# Years Past
Present
Future
# Sophomore
# on aid
Average aid
Total aid
# Junior
# on aid
Average aid
Total aid
# Senior
# on aid
Average aid
Total aid
Assumptions:
EFC, % on aid, % retained, change in average award, etc.
Sample Benchmarking
College/University
College A
College B
College C
College D
University E
College F
College G
College H
Tuition &
Fees
2009-2010
Discount
Rate
2007-2008
Fall 2008
Accept
Rate
Fall 2008
SAT 25-75%
$18,095
$22,790
$24,945
$27,400
$28,190
$28,900
$28,928
$30,000
35.0%
50.4%
29.5%
39.3%
54.6%
28.7%
25.6%
33.6%
69%
79%
35%
89%
61%
61%
69%
35%
1020-1200
1060-1250
1104-1284
1010-1220
1040-1240
1100-1290
1130-1320
1200-1370
U.S. News Ranking 2010
(America's Best Colleges)
Liberal
Liberal
Liberal
Liberal
Liberal
Liberal
Liberal
Liberal
Arts
Arts
Arts
Arts
Arts
Arts
Arts
Arts
Bach.
Bach.
Bach.
Bach.
Bach.
Bach.
Bach.
Bach.
Sources: College/University websites, IPEDS, and USNews & World Report.
3rd tier
2nd tier
2nd tier
3rd tier
2nd tier
2nd tier
(38)
(18)
Questions?
Sam Veeder
Nazareth College
4245 East Ave.
Rochester, NY 14618
585-389-2310
sveeder0@naz.edu
www.naz.edu
Heather McDonnell
Sarah Lawrence College
1 Mead Way
Bronxville/Yonkers, NY 10708
914-395-2170
HMcDonn@sarahlawrence.edu
www.slc.edu