Re-Evaluate Policies During Trying Economic Times

John W. Dysart
President
The Dysart Group, Inc.

The economic downturn has had a direct impact at colleges and universities. In many cases, enrollments are stagnant or have declined. Financial aid costs have risen as increased unemployment and market drops have fueled growth in aggregate financial need for both new and returning students. Colleges are dealing with more financial need while simultaneously experiencing cuts in state financial aid. Often, institutional resources are scarce as returns on endowed investments have been disappointing. These conditions are likely to persist for at least the near future.

Perhaps the most important step institutional administrators can take is to re-evaluate their financial aid award policies. Are your packaging strategies structured in a manner that makes available the most aid to the most students?

• Calculate average and mean financial need over the last three years to determine how the economy has specifically affected your students.
• Determine changes in institutional expenditures for both merit/talent and need-based institutional aid. You may need to rebalance expenditure levels as a function of aid type based in the new economic realities.
• Institutional leaders may need to reconsider pricing strategies.
• Examine any changes in accounts receivable over the last three years. Ensure that perceived savings in financial aid costs are not just being transferred into increased student account balances.
• Business Offices may need to make changes in collection policies. If you are waiting until the end of each term to contact accounts in arrears, you are probably making a mistake.
• Believe it or not, now may be the time to make more exceptions and allow students and families even more time to catch up on outstanding balances. Decisions to be more aggressive in preventing students from enrolling in future terms due to balances will serve to increase overall attrition rates and deplete future revenue. It is definitely a balancing act and sometimes it makes more sense to increase the discount rates for some students to maintain enrollment levels, increase retention rates and generate needed revenue.
• Invest in your Financial Aid Office to allow for increased ability to provide proactive financial counseling early in the cycle.
• Expand payment plan options for your students and families. You might want to reduce or eliminate interest or enable payments to begin earlier in the cycle.
• Be more aggressive ensuring your students meet deadlines for state financial aid programs. ?thousands of eligible students miss out on grant programs every year because they do not apply ?for financial aid in time to meet deadlines. Have your financial aid staff follow up systematically with all eligible students to make sure they are able to take advantage of available state funds.
• Is your Financial Aid office taking full advantage of some of the smaller federal programs like SMART grants and TEACH grants?
• The traditional financial aid appeal process may be insufficient to deal with the current economy. Sometimes, students deal with their inability to meet expenses by withdrawing rather than appealing their financial aid package. Institutional administrators may need to be more proactive in identifying possible appeals rather than waiting for the students to contact the Financial Aid Office.
• Better communication with administrators across campus can be beneficial. Make sure that coaches, faculty, student services professionals and others keep their eyes and ears open to identify struggling students.

It is easy to become complacent with collection and financial aid policies. We get used to conducting business a certain way and do not take the time to consider that policies that may have been appropriate over the last five years are no longer the best approach. Current economic conditions should force all colleges and universities to at least conduct a little research and at least entertain some changes in policy and process.