Numbers to Say No

Finding the guts to reject a financial aid appeal can't be easy. Financial aid administrators face pressures from all directions, including students (and their parents) who say they won't be able to attend an institution without more money, admissions officers who want to ensure class sizes, and presidents who don't want to lose students to competitors.

As a result, many colleges have tended to err on the side of approval, emboldening more families to appeal. Conventional wisdom tells parents that the worst that could happen is that their appeal gets rejected. As a consequence, discount rates have risen to levels that many college officials view as unsustainable.

But maybe that doesn't have to be the case. Maybe nobody's bothered to check the numbers.

By tracking data related to financial aid appeals, the financial aid office at Nazareth College found that students enrolled at the same rates (or even slightly higher rates) when their appeals were denied as when they were accepted. That finding has emboldened the office to reject certain appeals and reallocate money to students whose decisions really do hinge on financial questions. It also highlights a trend of "frivolous" appeals by families who don't actually need the money.

For fall 2009, students whose appeals were rejected were just as likely to enroll -- 66.7 percent -- as students whose appeals were granted. A year later, 65 percent of students whose appeals were approved enrolled, while 67.2 percent of students with denied appeals enrolled. For this fall's incoming freshman class, the gap is even wider. Only 62 percent of students whose financial aid appeals were approved ended up enrolling. For students whose appeals were denied, the number was 69.4 percent.

That pattern might not hold for every college, said Samantha Veeder, Nazareth’s director of financial aid. But that’s not the point. The big takeaway, Veeder said, is that most colleges aren’t tracking this kind of data well and are making decisions about financial aid appeals based on gut instincts or anecdotes. They could be raising their discount rates unnecessarily and missing out on revenue. "Most aid offices don't track and analyze data in the way that we do," Veeder said. "And when you don't have that data, you're kind of backed into a corner. You feel like you have to say yes."

Veeder said she is better able to convince other administrators, particularly in the admissions office, that rejecting an aid appeal will work out fine, because she has the numbers to support it. About 8 percent of the past three admitted classes have appealed their financial aid award, and the amount awarded can reach hundreds of thousands of dollars.

Using data to better manage admissions, enrollment, sticker price, and financial aid decisions was a major theme of this year's conference of the National Association of College and University Business Officers. Several sessions discussed the future of tuition pricing, including one run by Veeder and Mary Piccioli, an enrollment management consultant with Scannell & Kurz.

Better enrollment and financial aid management can have a dramatic effect on a college's bottom line. Unlike universities with large endowments and federal research money or public colleges with state support, small private colleges like Nazareth are almost entirely dependent on tuition revenue. Every dollar that is spent on financial aid, then, is a dollar that can't be used for another purpose, such as instructional budgets or student services. Further, because most private colleges don't meet the full financial need of all students, any money spent on aid that isn't needed can limit the awards to the truly needy.

In Nazareth's case, the data helped illuminate several trends that have worked to the college's advantage. First, the college found that students who appeal financial aid awards were significantly more likely to enroll at Nazareth than were the general population. "They appeal because they do want to come to your school in the first place," Veeder said. Because of this, administrators treat rejections very carefully. "You have to say 'no' with love," Veeder said.

Second, the college was able to break down appeals into which students were appealing because they were actually in need of more money and which could afford to attend anyway and were simply appealing because they had better offers at other colleges. Piccioli said there is a general attitude among the public that families should appeal financial aid decisions even if there has been no change in their financial situation because there's a chance they could get more money. "The advice that comes from magazines and from other individuals essentially is 'What's the worst that could happen? They could tell you no,' " she said. But each appeal takes resources for a college to process.

Despite the numbers, the college has still approved the majority of appeals it has received in the last three years. But Veeder said her intention is to better understand which students need aid so the college can become more targeted in its awards. Her goal is to make the best offers in the first round of financial aid award letters. The less money she has to hold for appeals, the better. That way the system is transparent and doesn’t punish students and families who are not aware of an appeals process.

Piccioli said she couldn't think of another college that she has worked with that tracked data as well as Nazareth. However, when she has run simulations using data that other colleges provided, she found that in most instances where college deviate from their day-to-day policies when it comes to awarding financial aid, the colleges end up giving money to students who would likely have enrolled anyway.

"You have to be collecting and analyzing data," she said. "You shouldn't be making decisions willy-nilly. You need supporting data for things that were at one time anecdotal."