Optimization Techniques for College Financial Aid Managers

    Vol. 40, No. 3, 2010 p. 39 

    by Donald I. Bosshardt, Larry Lichtenstein, George Palumbo, and Mark P. Zaporowski

    In the context of a theoretical model of expected profit maximization, this paper shows how historic institutional data can be used to assist enrollment managers in determining the level of financial aid for students with varying demographic and quality characteristics. Optimal tuition pricing in conjunction with empirical estimation of matriculation probability functions illustrates how financial aid can be used to maximize net tuition revenue given institutionally determined objectives. The model provides insight to the level of price sensitivity of prospective matriculants at a medium-sized comprehensive private college.