© College Inroads, LLC. 2014, all rights reserved© GuidedPath, 2014, all rights reserved
The Reality of College Affordability:
2014 and beyond
Cyndy McDonald
Michael Davila
HECA Jan. 2012
Presenters
Cyndy McDonald Owner McDonald & Associates College Consulting
& GuidedPath/MyCCA.net 25 years of experience Nationally recognized as having expertise in this
area Does training at national/regional level
Michael Davila Owner/Director College Inroads attended US Naval Academy & taught there MS degree with emphasis on Strategic Enrollment
management from UT Austin
College Affordability
Open the mystery box of college funding for families
Help families make appropriate college choices, including college scholarships
Be proactive with families
Families of ANY means want to know how to best manage their resources for paying for college.
© GuidedPath, 2014 all rights reserved
Not a Cookie Cutter Process One size DOES NOT fit all people.
Families need to know how their family situation will fit into the financial aid process.
© GuidedPath, 2014 all rights reserved
Gaining A Perspective
Education in the 21st Century
Why does College Cost so Much? Physical resources
Investment in “best” of everything on campus Deferred Maintenance Costs
Intellectual Assets High Costs of Star Faculty Salaries “Baumol’s Cost Disease”
Administration Staffing Number of administrators ballooning
Teaching loads reduced
Unprepared Students
Division I Sports
Competitiveness amongst Colleges…and consumers Market within Higher Ed
Many others
(c) College Inroads, LLC. 2014, all rights reserved
Cost of Attendance: College MSRP
The average public university costs:
$22,828 per year The average private university costs:
$44,757 per year The average elite private university costs:
$65,000 to $70,000 per year
(c) College Inroads, LLC. 2014, all rights reserved
And, college prices are trending up…up…and away…
(c) College Inroads, LLC. 2014, all rights reserved
Trends in Out of Pocket Costs 1999-2012
(c) College Inroads, LLC. 2014, all rights reserved
Exponential Increase
Enrollment management contributes to process
Merit scholarships offered, especially for ½ and Merit categories
Increases in merit awards has outpaced increases in need based awards
© GuidedPath, 2014 all rights reserved
A Picture is worth a thousand words…
(C) 2009 College Inroads, All rights reserved
Strategic Enrollment
Management
What is Strategic Enrollment Management ? Definition: Enrollment Management is the strategic and selective
use of offers of financial aid to shape the incoming freshman class in furtherance of the institution’s goals. It is distinguished from the allocation of financial aid based on student needs or on academic merit.
(C) 2009 College Inroads, All rights reserved
What SEM does
Increase “net tuition revenue” streams Increase “full pays” Lower the discount rate Increase the enrollment yield
Increase the academic profile of entering freshman class
Increase diversity Increase retention
Can all of these be simultaneously achieved?
(C) 2009 College Inroads, All rights reserved
How to Enroll the Class You Want
(C) 2009 College Inroads, All rights reserved
What drives financial aid packaging? “A student’s willingness to pay is the most important factor in
determining the size of an aid package” Noel Levitz White Paper “Connecting Enrollment and Fiscal Management”
What is “willingness to pay” vs “ability to pay”?
Hint: Look at what the College Enrollment Managers look at! Table Analysis…
(C) 2009 College Inroads, All rights reserved
Quick Take
“Good luck getting any institution to tell you exactly how they handle ability to pay as a driver in their admit decision," said one enrollment manager who requested anonymity. "What they will say is 'We're need-blind.' That's bull(expletive deleted). They would never tell you exactly how they do it, but they do it all the time.”
Quirk, M. (2005, November ). The Best Class that Money Can Buy. Retrieved November 15, 2007, from http://www.theatlantic.com/doc/200511/financial-aid-leveraging/4
(C) 2009 College Inroads, All rights reserved
(C) 2009 College Inroads, All rights reserved
Where’s the $$$?
Where’s the Money?
In the last ten years, colleges have increased the number of scholarships they offer to students.
Of the private colleges/universities in the United States,
94% offer some merit scholarships. 100% of the public colleges/universities offer some sort of merit
scholarships. (NACAC, 2007)
© GuidedPath, 2014 all rights reserved
College affordability picture Where do Merit $$$ come
from? From schools From high schools From outside sources
Use Net price calculators from college websites or College Navigator.
College Finance Pie
Federal Loans
College
Fed/State
Colleges
Private
Other
© GuidedPath, 2014 all rights reserved
What can we do to lower our costs? Scholarships
Early College Start
CLEP
AP Tests
Pick the right college
Max out the GPA
Guaranteed Tuition Programs
Start at a community college
Move out of state and establish residency for out of state public colleges
Attend a “work college”
Demonstrated Student Interest
ROTC or Service Academies
Max out the SAT/ACT
Attend a less “visible” college
Appeals
Be the Shining Star!
(c) College Inroads, LLC. 2014, all rights reserved
What’s My Flavor
Tailoring college affordability to family needs
DOES THIS SOUND FAMILIAR?
Josie’s family: Dad is a teacher, mom shares a teaching position so she can
be home more with the kids. AGI is a $120,000. They have $50,000 in the bank, $100,000 in house equity, and a younger sibling just starting high school.
Derek’s family: Dad and mom are professionals, both bring home high salaries,
dad owns his own financial firm. They have an AGI of $375,000. They have extensive assets, and a lot of home equity. Their younger daughter is a sophomore in high school.
© GuidedPath, 2014 all rights reserved
SOUND FAMILIAR? (CON’T)
Enrique’s family: Single parent mom, works as nurse’s aid at the local hospital; has 3
other children, no child support. AGI is $45,000. Enrique works too, earning about $3000 per year. Mom has no home equity or savings.
© GuidedPath, 2014 all rights reserved
FAMILY FLAVORS
Financial Aid Whole
1/2 - 1/2
Merit
Merit
½ - ½
Whole
Josie EFC:
Derek EFC:
Enrique EFC:
1/2-1/2
Merit
Whole
$25,700
$180,000
$2600
© GuidedPath, 2014 all rights reserved
MATCH AFFORDABILITY TO FAMILY SITUATION
Whole: Eligible for all grants/aid available. Should have substantial aid package with Pell Grants, university grants, & work study.
1/2 - 1/2 :Same out of pocket expense for attending public/private schools. At the public school family foots most of the bill. At the private school ½ paid by student, ½ paid by school.
Merit:Scholarships are fundamental to college financing- $ in the pocket. Only source of grants/scholarships
MERIT
½ - ½
WHOLE
© GuidedPath, 2014 all rights reserved
Scholarship
Fallacy
Scholarship Fallacy Q: Why do families want a scholarship?
A: To replace family contribution
Real A: Scholarships are part of financial aid Scholarships DO NOT replace family contribution
Affordability strategy: Help families understand how scholarships are actually used in college financing. Using the 3 flavor strategy will help.
© GuidedPath, 2014 all rights reserved
Finding your flavor1. Help families calculate
their Estimated Family Contribution
2. Use the EFC to calculate their family flavor
Use net aid calculators, FAFSA forecaster, www.finaid.org, college board, etc. to calculate EFC.
Category Approximate EFC
Whole $11,000 & less
½- ½ $11,100-$30,000
Merit (Skim) $45,000+
Check out the College Board list of colleges using their NPC:http://netpricecalculator.collegeboard.org/participating-schools
© GuidedPath, 2014 all rights reserved
Affordability Strategy: Whole Apply to colleges where the student’s academic profile
is in the top range Makes awards more gift rather than self-help heavy
Apply to colleges that have eliminated self help aid for low income students. These policies include: Reducing or eliminating parent contribution or parent/student loans Examples: Amherst, Bowdoin, Brown, Dartmouth, Stanford, Yale
List available at www.finaid.org
Apply to colleges who will fully or come close to fully funding financial need Use websites or databases for searching (College Navigator, collegedata.com,
other) Usually high need met ≠ high merit
Write letters of special circumstances to appeal financial aid offers as needed
© GuidedPath, 2014 all rights reserved
Affordability Strategy: ½ -1/2
Compare Financial Aid AwardsMerit or need based scholarships may replace:
Student loans/workStudent scholarships- offered by the college
Parent loansCheck college policies
Write letters of special circumstances to appeal financial aid offers as needed
Use “1st choice” strategy
© GuidedPath, 2014 all rights reserved
Affordability Strategy:
Help families find Merit Scholarships Find schools that offer merit awards through meritaid.com,
collegetreasure.com, mycca.net, other resources
Match academic profile to school profile
View academic profiles in Wintergreen Orchard House, Common Data Set, College Navigator, College Board, other
Develop outstanding quality to bring to college:
Athletics
Recognition
Performing Arts