Financial Aid Calculators: A Tool to Leverage Your Aid Dollars

Bill Smith
President
Think Ahead, LLC

Web-based financial aid calculators have been available for several years, and many colleges have incorporated them into their outreach and marketing programs. Other colleges have avoided them, fearing that the posting of a financial aid calculator will open a Pandora?s Box. Aid officers sometimes fear calculators will create questions for users, resulting in increased call volume to explain calculator results. Others are concerned they?ll bind their hands, creating the expectation of an unofficial commitment to prospective students. And some worry that their aid packages will appear meager when exposed via a calculator.

With the passage of the HEOA, signed into law in August 2008, financial aid calculators are receiving renewed attention. As part of its transparency provisions, HEOA charged the Department of Education with developing a Net Price Calculator within a year of signing, and two years after that, by August 2011, all colleges will be required to have net price calculators on their own websites. So ready or not, online calculators will soon be a part of every college?s reality.

Should colleges be concerned about the calculator requirement? Does the calculator requirement represent an opportunity for colleges instead of just a burden? First we?ll look at the traditional concerns aid administrators have had about calculators to see if perceptions of their downside are justified. Then we?ll consider their potential for positive impacts on your operations.

Does a calculator create more questions for users than it answers? It?s a legitimate concern ? no aid officer wants to add to their office?s already busy workload by having additional calls and questions coming in from families who don?t understand the information a college provides on its website.

A well-designed calculator should answer more questions than it creates. Year after year studies show that financial aid and tuition calculators are consistently ranked by high school students as among the features they most value and want to see on college websites. It stands to reason that including a calculator that provides the information students want will result in fewer calls, not more. In fact, statistics shared by Yale University at a recent College Board Forum showed that call volume to its financial aid office declined after it posted an online calculator in the summer of 2008. Call volume from October 2007 to October 2008 actually fell, although applications for aid increased, and the general economic climate deteriorated significantly over the same period.

Does a financial aid calculator create unrealistic expectations for users? Will they expect their final aid package to look like what they see on your calculator? It?s important to qualify a calculator by including a statement that the calculator?s results are an estimate, and that the determination of the financial aid office based on receipt of verifiable documentation will be the deciding factor in actual aid awards. Obviously the quality and accuracy of the data entered by the user is critical in getting an accurate result, and your message should inform users of that. Providing good explanations and help messages within the calculator can go a long way to helping guide users through the data entry steps. The treatment of income and asset items for financial aid can be baffling for families ? the more your calculator can demystify the needs analysis, the better.

Your calculator will be most effective if it gives a realistic portrayal of the aid a student is likely to receive. That way a family that enters its information accurately can be reasonably confident of the general amount of financial aid they?ll receive. In that sense a calculator will lead to expectations. If the calculator is flexible and well designed, the expectations won?t be unrealistic. Colleges often build ranges into their calculators to provide flexibility ? and still have actual awards that are consistent with their calculator.

Will a calculator emphasize small awards, driving prospects away? Perhaps ? so the key is to use your calculator to focus your aid toward the prospects you want to apply, then attend and retain. Incorporating a merit aid element into your calculator allows you to direct aid toward prospects whose GPA or test scores make them desirable target students. You can also direct aid to students in desired geographic locations. Colleges can allocate more of their tuition discounting towards students they want to attract. Over time you may be able to lower your discount rate while improving the demographic and academic profile of your student body.

We?ve discussed the potential negative aspects of calculators and how to address them. What are the positive reasons for adding a calculator to your site?

It?s the kind of information prospective students want to see. If they can find it on your site, they?re going to stay and learn about other factors that set your college apart. The longer you can keep a prospective student engaged on your site, the better your opportunity to connect with that student.

It can be a tool to collect data on the people using your site. By including a form within your calculator you can collect demographic and financial information from your users. Including an offer of a Financial Aid Resource Packet can be a valuable incentive to encourage prospects to use your calculator and submit their data to you. Once you?ve gotten user information you can establish a dialogue with prospective students. The information you collect can also tell you who is visiting your site and how they are using it.

A good calculator can give you a competitive advantage relative to other colleges your prospects are considering. A calculator that?s easy to use and gives users specific information is much more valuable than a link to a generic free calculator. If your calculator gives users information tailored to their circumstances, they?ll get valuable feedback ? specific answers to the questions that matter to them. Calculators that deliver non-specific aid ranges based on broad income, asset, or EFC brackets will be far less valuable to prospects.

A calculator can be an important tool in your overall marketing program. By targeting aid to the prospects you want to apply to your college, you can leverage your financial resources. Letting prospects know that they can benefit from your aid packages is important. How better to let them know than by showing them what their benefit can be? ?If you?re an A or B student, our college has financial aid programs that can benefit you. See what they can mean for you by checking our financial aid calculator.? Unless your target market knows what your aid packages mean for them, you won?t be getting the full value of your marketing message.

Online calculators are going to be a fact of life. By choosing a calculator that can provide a realistic portrayal of a student?s likely aid, you can turn the DOE requirement into a net benefit for your college. A calculator demonstrates that your college will provide information your prospects want to see. It can be an important way to collect data on your target market. It can give you an edge relative to your competition. And it can demonstrate that the prospects you most want to attend will get a better package. A calculator isn?t a silver bullet, but it can be an important part of your communication toolkit, helping you move toward such goals as marketing your college, improving your application, admission and retention metrics, and influencing your discount rate.