easfaa 2014 - puerto rico may 18-21, 2014 waves of change, oceans of opportunity cost containment...

EASFAA 2014 - Puerto RicoMay 18-21, 2014

Waves of Change, Oceans of Opportunity

Cost Containment and Price Sensitivity: the Perfect Storm

Agenda

• The challenging environment

• How do we respond?– Institutional understanding– Process/outreach

• Questions

Trends in College Pricing 2013 For detailed data, visit: trends.collegeboard.org.

Change Family Income by Quintile1982–1992, 1992–2002, and 2002–2012

SOURCE: The College Board, Trends in College Pricing 2013, Figure 20A.


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.

Demographic Forecast

-3%

-6%-6%

+3%

SOURCE: WICHE, Jon McGee

Projected Change in High School Graduates2012 to 2020

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.


Average Total Debt of BA Degree Recipients Public Four-Year Institutions

SOURCE: The College Board, Trends in Student Aid 2013, Figure 10A.

How America Pays For College2009 vs. 2013

2009 2013

Source: Sallie Mae

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

$4000-$6000 25/100 25%Gift Aid $2000-$4000 16/80 20%

$1-$2000 8/40 20%$0

$0 $1-$2k $2k-$4k $4k-$6k $6k-$8k > $8kNeed

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 Total

# of appeals 187 39 226# enrolled 118 21 139

yield 63.1% 53.8% 61.5%



yield 62.0% 69.4% 64.7%



yield 65.0% 67.2% 65.7%

Fall 2012

Fall 2011

Fall 2010

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

Years Past Present Future# Freshmen# on aidAverage aidTotal aid

# Sophomore# on aidAverage aidTotal aid

# Junior# on aidAverage aidTotal aid# Senior# on aidAverage aidTotal aid

#

Assumptions:EFC, % on aid, % retained, change in average award, etc.

Sample Benchmarking

College A $18,095 35.0% 69% 1020-1200 Liberal Arts Bach. 3rd tierCollege B $22,790 50.4% 79% 1060-1250 Liberal Arts Bach. 2nd tierCollege C $24,945 29.5% 35% 1104-1284 Liberal Arts Bach. 2nd tierCollege D $27,400 39.3% 89% 1010-1220 Liberal Arts Bach. 3rd tierUniversity E $28,190 54.6% 61% 1040-1240 Liberal Arts Bach. 2nd tierCollege F $28,900 28.7% 61% 1100-1290 Liberal Arts Bach. 2nd tierCollege G $28,928 25.6% 69% 1130-1320 Liberal Arts Bach. (38)College H $30,000 33.6% 35% 1200-1370 Liberal Arts Bach. (18)

College/University U.S. News Ranking 2010

(America's Best Colleges)

Tuition & Fees

2009-2010

Discount Rate

2007-2008

Fall 2008 Accept Rate

Fall 2008 SAT 25-75%

Sources: College/University websites, IPEDS, and USNews & World Report.

Questions?

Sam VeederNazareth College

4245 East Ave.Rochester, NY 14618

[email protected]

www.naz.edu

Heather McDonnellSarah Lawrence College

1 Mead WayBronxville/Yonkers, NY 10708

[email protected]

www.slc.edu

mailto:[email protected]

mailto:[email protected]

easfaa 2014 - puerto rico may 18-21, 2014 waves of change, oceans of opportunity cost containment...

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