EASFAA Puerto Rico May 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 2013For detailed data, visit: trends.collegeboard.org. Change Family Income by Quintile 1982–1992, 1992–2002, and 2002–2012 SOURCE: The College Board, Trends in College Pricing 2013, Figure 20A.

Trends in College Pricing 2013For detailed data, visit: trends.collegeboard.org. Annual % Change in State Appropriations for Higher Ed and Annual % Change in Tuition & Fees at Public 4-Year Institutions to SOURCE: The College Board, Trends in College Pricing 2013, Figure 14A.

Demographic Forecast -3% -6% +3% SOURCE: WICHE, Jon McGee Projected Change in High School Graduates 2012 to 2020

College Costs Surge 538% since Renewed calls for change & accountability from both political parties.

Trends in College Pricing 2013For detailed data, visit: trends.collegeboard.org. Tuition & Fees; Net Tuition & Fees; Room & Board at Public Institutions, to SOURCE: The College Board, Trends in College Pricing 2013, Figure 10.

Trends in College Pricing 2013For detailed data, visit: trends.collegeboard.org. 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 College 2009 vs 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 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

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

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 aid Average aid Total aid # 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 Sources: College/University websites, IPEDS, and USNews & World Report.

Questions? Sam Veeder Nazareth College 4245 East Ave. Rochester, NY Heather McDonnell Sarah Lawrence College 1 Mead Way Bronxville/Yonkers, NY