Need and Want

Administrators in higher education finance know that values are expensive, and in these times of austerity, many administrators are coming to realize that upholding some values might come at the cost of others.

In recent months, several colleges and universities have moved away from, or discussed moving away from, need-blind admissions (in which a student’s financial need isn’t considered in the admissions process) in favor of shoring up institutional finances, meeting students’ full demonstrated need, or limiting the debt load of graduates. The group includes wealthy institutions like Grinnell College and not-so-wealthy institutions like Albright College, in Pennsylvania. For the wealthier institutions, it has been a given that they would meet the full need of students they accept, but for institutions like Albright, the shift is partly a way to invest more in aid to make sure that admitted students aren't "gapped" (given aid packages that aren't enough for them to enroll) in the process.

Though the number of colleges that have publicly discussed such a policy change is small, many administrators in the sector say that such concerns are on the minds of more and more administrators, particularly as colleges face market and political pressure on the rate of tuition growth, as endowment returns fail to reach pre-recession levels, and as an unpredictable stock market makes donors uneasy. 

A broader shift away from need-blind admissions across the sector could potentially prove problematic for the private nonprofit college sector, some higher education observers said. While such colleges would likely meet full need for the needy students they admit, broad shifts could undercut the meritocratic ideals that many colleges embrace and drive lower-income students into the public sector at higher rates.

"In that case, one has to ask the question about exactly what non-profit college are getting their non-profit status for," said Mark Kantrowitz, a financial aid analyst. “If it’s not part of their mission to enable low-income students to pursue a college degree, then they’re just serving elite students.”

It is expensive for institutions to be need-blind in admissions and also pledge to meet the full demonstrated need of students in a way that does not result in huge loan burdens upon graduation. Even some of the country’s most prominent and wealthiest institutions, such as New York University, can’t afford to do so.

What’s emerged in the past few months is a trade-off between the two.

Complicated Costs

Both meeting full need and being need-blind in admissions are nebulous concepts that mean different things to different institutions, making broad comparisons of policies across institutions difficult.

Meeting full need simply means the institution completely fills the gap between the sticker price of the institutions and the “expected family contribution,” what federal calculations determine the family is able to pay. Some institutions make their own calculations about what a student owes. Need can be met through any combination of financial aid, including scholarships, grants, and discounted tuition, but also loans and work-study, which still place a burden on students. Some public universities meet full need for in-state students but not for out-of-state students.

Many institutions that meet full need still have students graduating with high debt loads. Fewer than 20 institutions, most with sizeable endowments or significant annual fund-raising, agree to meet students’ full need without loans.

Need-blind admissions policies also come in a variety of forms. Few are fully need-blind, while many consider financial status for international students, students who apply after a deadline, or when pulling students off of a wait list.

Institutional Finances

Because both policies can be expensive, several of the institutions considering a move away from being need-blind are doing so in favor of meeting full demonstrated need.

In announcing that Wesleyan University would consider financial need if it did not have the resources to meet all students’ need, the university’s president, Michael Roth, said the existing admission policy was costing the institution too much. He also noted that the shift is designed to give the students they decide to admit the best chance of graduating, and that sometimes means more financial aid.

Roth also framed the decision as a moral issue, saying it was wrong to sacrifice the quality of the education it offered and burden some needy students with large debt burdens to maintain the admissions policy. 

Administrators at Grinnell College, when they announced that the college would be examining admissions policies and accompanying tuition revenue earlier this month, said they were concerned about the institution’s financial viability in the long term. Endowment revenue, which has been shaky in recent years, makes up about 50 percent of the institution’s overall budget, and administrators are interested in deriving a larger share through tuition, fund-raising, and other sources.

Raynard S. Kington, the college’s president, said it is highly unlikely that Grinnell will actually move away from being need-blind, but he wanted the university community to be aware of the cost of the policy and the options on the table and to make an informed decision.

Other institutions have backed away from other costly access policies in favor of maintaining their need-blind policies. Several institutions, including Cornell University, Dartmouth College, and Williams College, also backed off the extent of their “no-loan” pledges made in 2007 and 2008, because of the strain they were putting on their budgets in the wake of the recession.

Albright

Albright College in Pennsylvania is in a slightly different position than Grinnell, Wesleyan, Williams, Dartmouth, and Cornell. It does not have the same kind of national profile as those institutions and it is not as selective. As of June, 2011, Albright's endowment was valued at only $52 million. Wesleyan's endowment was more than 10 times that, and the other institutions discussed in this article all have endowments of more than $1 billion. The relatively small endowment at Albright means the institution funds a majority of its financial aid through discounted tuition, rather than through endowment funding like the other institutions.

But the college is still wrestling with some of the same considerations.

Albright has not typically met the full need of students who are admitted, with an average gap of about $4,000 between financial aid offered (plus the expected family contribution) and the sticker price. Gapping is standard practice at colleges like Albright. In a recent survey of admissions directors conducted by Inside Higher Ed, 68 percent of respondents from private, four-year institutions said that gapping was necessary for institutions like theirs, and 64 percent said they did so. Administrators at institutions that gap say that it is better to give students the option of enrolling than to make the decision based on their financial need.

Last week Albright administrators announced that, starting with the class that enters in fall 2013, the college will  strive to meet full demonstrated need. The college will do so through a combination of institutional, federal and state aid programs, including grants, federal student loans and work-study jobs.

But in order to do that, the college will have to back off of its unconditional need-blind admissions policy.

Albright administrators said the decision to move away from being need-blind in admissions and toward meeting full need grew out of budget modeling. The college found that students for whom full need is met are more likely to persist from one year to the next, generating a higher return on investment.

“But it’s not just a budget thing,” said Gregory E. Eichhorn, the college’s vice president for enrollment management and dean of admissions. “It’s a mission thing. You also get something you can market.”

The college will continue to be need-blind in admissions for students who meet application and financial aid deadlines, but for students who apply late or who are in the university’s conditional acceptance program, financial need will be a factor in the admissions decision. In recent years, about 85 percent of applicants have submitted their applications by the March 1 deadline. Slightly fewer have also filed their financial aid forms by that date. Eichhorn said he hopes the new policy will drive more people to meet the deadline.

Meeting full need will likely increase the college's discount rate -- the amount of financial aid as a percentage of overall tuition revenue -- and therefore decrease the amount of tuition revenue it brings in per student after aid, but Eichhorn said the college will recover some of that through increased persistence and by growing the size of the incoming class. Albright administrators said they do not expect the policy change to affect access for low-income students. Eichhorn said that the college’s socioeconomic diversity should actually increase as a result of pledging to meet full need.