1. Trade-offs and Tantrums in Higher Education The Budget Battles

2. Some financial stressors in the world of higher ed – what keeps college leaders up at night ?  Putting the right heads in beds  Putting enough heads in beds  Keeping heads in beds  Affordability  Student debt  Access

4. Growth in college costs over past decade

5. Student debt $1.2 trillion in outstanding student debt #2 largest source of debt, trailing only mortgages $35,000 average debt (Class of 2015). 22% of borrowers who attended for-profit colleges are facing default, 11% of those who attended not-for-profit colleges are facing default

7. Access – a political and moral imperative

8. Uncertain future?

9. Case study: New Cambridge University 2500 students liberal arts college with a modest engineering program limited endowment, tuition driven very competitive market with both flagship state and private colleges 85% in-state student body 23% students of color

10. New Cambridge University (cont.) 65% on financial aid – need-based and merit awards admit rate of 60%, yield is 25%

11. New Cambridge University: Aspirations Raise academic quality (and by extension) US News profile  Higher testing  More enrollees in top 25% of HS class Increase diversity – racial, geographic, and socioeconomic  Bottom quartile kids  Underrepresented minorities

12. New Cambridge University: Aspirations Make Engineering the flagship department of the University using a merit aid program (just received BIGGEST gift in NCU’s history from an alum to build and sustain the program) Remain need blind Keep quality of life “reasonable” for financial aid students (loan indebtedness, term time work expectations, unmet need gaps)

13. Reality vs. Aspirations Scholarship aid required to achieve goals: $42M Maximum aid available after all other commitments: $35M How do you make all the pieces fit?

14. Decision time Rules:  Need to find $7 million...  Can’t say “we’ll raise more money” – most optimistic fundraising results already factored into budget...

15. What to do? Eliminate need-blind admissions/use more merit awards Savings: $4.5 million Results  Pros: More controlled, predictable aid costs, academic credentials improve, can compete effectively for designated kids  Cons: less diversity of all kinds, maybe end up with a “barbell” shaped student body, either fewer middle class kids or access severely curtailed. Reputation suffers.

16. What to do? Eliminate merit awards for top engineers and top out of state students Savings: $2.5 million Pros: eases aid dollar burden on New Cambridge, will help to keep other aspirations alive Cons: Engineering program doesn’t become the flagship department, national reputation isn’t enhanced. Biggest donor is wicked angry.

17. What to do? Significantly raise self help levels – replace scholarship dollars in aid packages with more loans (+$2,000 per student) and term time job expectations, meet lower percentage of need by “gapping” Savings: $3.0 million Pros: helps to make aid dollars available to sustain other initiatives Cons: Quality of life for aided kids is diminished, while merit awards continue to be available for wealthier kids. Aid packages less competitive than peer schools – yield goes down, loan debts go up, less diversity.

18. What to do? Other options Reorganize administration and lay off 30 staff  $2.0 million Close 5 smaller academic departments  $2.5 million Raise tuition by 7% for foreseeable future  $2.0 million Eliminate 6 smaller varsity sports (currently have 26)  $2.5 million Add 100 students – keep faculty size constant  $2.0 million

19. What to do? $20+ million in options... Eliminate need-blind -- $4.5 million Eliminate merit awards for engineers/out of state kids - - $2.5 million Increase self-help levels/gap -- $3.0 million Reorganize/lay-off 30 staff -- $2.0 million Close 5 academic departments -- $2.5 million Raise tuition by 7% going forward -- $2.0 million Eliminate 6 sports -- $2.5 million Add 100 students -- $2.0 million Other thoughts?

20. Discussion How do you fit all the pieces together and who wins, who loses?