As public and private colleges and universities alike struggle with budgetary concerns and increasingly compete for the best and brightest students, an emerging enrollment management industry has influenced how some institutions distribute their financial aid, sometimes to the detriment of more disadvantaged students.
During a panel discussion hosted by New America on Thursday, several experts who have worked in and studied the enrollment management field discussed how competing interests over time have guided what proportion of institutional financial aid is allotted to need-based grants and scholarships, and how much goes toward merit-based aid. During the discussion, New America’s Stephen Burd, a senior policy analyst for the education policy program, said that many in the world of higher education have offered theories for why fewer low-income students enroll in four-year colleges and universities, many having to do with state disinvestment. Another explanation, he suggested, is that the financial incentives have shifted toward high-achieving, more affluent students who are able to bring in more tuition revenue.
“Perhaps some of the blame rests on the colleges themselves,” Burd said. “There’s been a revolution in the way colleges distribute their financial aid.”
Burd explained how this change began several decades ago, mostly among non-selective universities. But as states have reduced their funding for public higher education, and schools compete for students not only to stay afloat, but also to boost their prestige, more public institutions have jumped into the fray, he said.
“Today there’s only a small group of colleges … that still use their financial aid exclusively to meet financial need,” Burd said.
Donald Hossler, a senior scholar at the University of Southern California, said that while enrollment management is still a relatively new concept, many of the policies and practices in place today have been used in admissions offices for many years.
Essentially, he said, when things are good and plenty of students are applying, institutions use their funds for need-based aid. But in the past when institutions felt like “perhaps they were slipping, losing their place in the market,” they funnel more money into merit-based aid. However, some institutions will argue that these tactics are for the overall financial well-being of the school, and that the tuition revenue they receive from more affluent students is redistributed to needier students.
Still, Hossler said, the analytic tools used in enrollment management are “value-neutral.” These tools, he said, can be used to focus on “high-ability, affluent” students, to try to increase the number of first-generation students, or to focus on diversifying the campus, among other things.
“The tools themselves are not evil,” Hossler said. “It’s how they get used and for what purposes.”
Some of the students that can bring in more money for schools feeling the pinch of reduced state funding are nonresident students.
Ozan Jaquette, an assistant professor of higher education at the University of Arizona, showed through his research the negative relationship between state appropriations and out-of-state enrollment – when appropriations are down, out-of-state enrollment is up. The question, then, becomes whether the increase in nonresident enrollment crowds out resident students. At non-prestigious public universities, Jaquette found no relationship. But at prestigious universities, nonresident students do crowd out resident students, he said.
And when the share of nonresident students increases, both the socioeconomic and racial and ethnic diversity of the campus declines. There are fewer Pell Grant recipients, and a decline in the percent of black and Latino students at public research universities. Nonresident students, he said, are more likely to be wealthy, to be white and Asian, and to score higher on admissions tests like the SAT.
“That dramatically affects the campus climate,” he said. “If you feel isolated … that really affects your experience.”
Lesley Turner, an assistant professor of economics at the University of Maryland at College Park, discussed how institutional aid offers can vary depending on the other types of aid students receive.
“Schools may actually value the fact that the student is coming in with a Pell Grant because that increases the economic diversity of their economic class,” she said. “Schools want to give more money to students that they value, and if they value Pell Grant recipients, they’re going to want to give them more money. But schools also see this outside aid as a way to relax their revenue constraint.”
In many cases, she said, students who receive Pell Grants are offered reduced institutional grant aid. However, at public and more selective non-profit institutions, there is more of a willingness to pay for Pell Grant recipients.
Ken Redd, director of research and policy analysis at the National Association of College and University Business Officers, discussed the point of view from the institutional business office, and the idea of tuition discounting.
“As business officers, obviously, we’re concerned about the revenue students bring in, and institutional grants … is an expense,” Redd said. “From that point of view, it’s very different.”
Part of NACUBO’s annual study on tuition discounting at private institutions also focuses on net tuition revenue, he said, because most private schools in the United States are very dependent on tuition.
“A lot of institutions in general, but private colleges in particular, get a lot of criticism for their aid policies and practices,” Redd said. “I think we forget … that institutions by themselves, without any federal mandate, provide over $40 billion of funding to students from their own coffers. Most of that comes from private colleges. … They do it because I think there is wide agreement among parents, students, and the government that institutions should be available to students regardless of the price, regardless of the student’s financial circumstances.”
Publication Date: 7/22/2016