Buying Back Iowans

Under pressure from its governing board the University of Iowa is leveraging financial aid to increase resident enrollment. And as competition for the state's students is increasing, the number of college-bound Iowans is not -- causing concern among Iowa's private colleges. 

September 30, 2015

In the last year the University of Iowa has received a clear mandate from its Board of Regents: enroll more Iowans or risk losing money.

Since then Iowa has worked overtime to strengthen its outreach efforts. It has hired recruitment staff and increased advertising. And, to the concern of some other institutions in the state, Iowa has significantly upped the financial aid it offers residents.

In recent years the nine-member Board of Regents that governs Iowa’s public universities has stressed resident enrollment at the three institutions it controls, and members have criticized Iowa for enrolling far fewer Iowans, proportionally, than Iowa State University or the University of Northern Iowa.

Most of the university's freshmen come from outside the state. Resident freshman enrollment has hovered around 47 percent the last three years and some regents have suggested that Iowa should receive less state funding unless it increases the number of in-state students it enrolls. Regents last year pushed for a new funding model that would tie 60 percent of university funding to resident enrollment, a change that would have netted Iowa State $23 million and UNI $24 million, but cost Iowa $46 million.

Proponents of the plan said the existing formula favors Iowa too heavily, especially given that Iowa enrolls the smallest percentage of in-state students of the three state universities. Factoring resident enrollment into funding “emphasizes the need for critical taxpayer support to ensure that Iowa resident students have affordable access to a quality higher education,” Bruce Rastetter, president of the Iowa Board of Regents, wrote in a Des Moines Register op-ed earlier this year.

And though Iowa’s president at the time, Sally Mason, publicly endorsed the plan, many alumni and faculty lobbied against it. Private colleges and community colleges also expressed concern that the formula would increase competition for resident students and make survival more difficult for smaller, enrollment-driven colleges in the state.

"Increased financial aid packages are just a small part of the overall strategy" at Iowa, said Bob Donley, executive director of the Board of Regents. And it's a strategy, he says, that has the regents' approval. "This board's focus and strategic plan has been on access and affordability."

The regents' plan failed to gain traction with the legislature this summer, but rewarding and encouraging resident enrollment remains a goal of many regents. As the conversation over a new funding formula brewed, Iowa launched new scholarships, effective this fall, to encourage in-state enrollment.

Entering resident students can receive a $1,500 Heritage Award each year for four years if a parent or grandparent graduated from Iowa's undergraduate or graduate programs, regardless of need. Another new scholarship, the Iowa Boost Award, offers $1,000 a year for residents who receive federal Pell Grants. This year 628 resident freshman are receiving the Heritage Award and 524 resident students are receiving the Iowa Boost Award.

Meanwhile, the university has increased its Iowa Scholars Award -- a merit scholarship for in-state students -- from $2,000 to $3,500 a year. Resident tuition and fees at Iowa total $8,100 a year.

Iowa administrators declined requests for an interview for this article. Yet many who watch the university say they’ve seen a marked increase in recruitment efforts by Iowa over the past year, specifically in the area of financial aid. And some private colleges are concerned that Iowa's efforts aren't actually expanding access, but are resulting in students being recruited away from their institutions and to the University of Iowa.

“There was pressure on Iowa before the funding formula, but the behavior of the institution, in terms of admissions and recruitment, changed dramatically with the introduction of the funding formula,” said David Maxwell, who this summer retired as president of Drake University, a private institution in Des Moines. “If they’re trying to enroll more in-state students, they’re not going to be able to do it just based on reputation and quality alone. They’re going to have to compete on price.”

New resident aid offerings this fall follow earlier increases. Last year Iowa gave 4,070 awards to resident students, according to the university's preliminary numbers, up from 3,050 awards in 2012 -- a one-third increase in two years. Resident aid has increased from $17.2 million to $20.8 million -- up 20 percent -- during that time. Last year about 75 percent of resident aid went to financially needy students (compared to 70 percent of nonresident aid).

Out-of-state students receive the majority of institutional aid at Iowa. Last year, for example, Iowa gave out $64.7 million in undergraduate aid: 68 percent went to nonresidents and 32 percent went to residents. Nonresident aid was $43.9 million, a 17 percent increase in two years. These figures do not include athletic scholarships.

There hasn't always been such a difference in the amount of aid residents and nonresidents receive. In 2008, when Iowa gave a total of $26.2 million in aid, 51 percent of that aid went to residents. But Iowa is among a number of state flagships that have leveraged aid to grow out-of-state enrollment in an effort to increase revenue and offset state funding declines.

Nearly 47 percent of Iowa's 5,240 freshmen are residents this fall, a percentage that has remained steady in recent years. Yet the university is growing, and it's enrolling more Iowans even as the percentage stays the same. It added 324 in-state freshman in two years, an increase of 15 percent. Meanwhile, nonresident enrollment increased 20 percent.

For comparison, ISU grew resident freshman enrollment by 43 students, or 1 percent, in two years, to 3,590 students this fall. (From 2012 to 2013 ISU saw a 9 percent surge in resident freshman enrollment). ISU this year enrolls 30,000 undergraduates, including 19,300 Iowans, up 4 percent from the previous year. Iowa enrolls 23,360 undergraduates, including 12,760 Iowans, up 5 percent from the previous year.

This fall ISU's need-based aid remains similar to last year, but the university did increase its merit aid. It upped the amount of money awarded to some recipients of its Cardinal Leadership Scholar Award, a scholarship provided to Iowans with high GPAs and test scores. The award in 2014 was $1,000 a year for all recipients. This fall qualifying students can either be awarded $1,000 or $2,500, depending on their academic profiles. A spokesperson said "proposed funding formula changes were not a major factor" in increasing aid. 

Market Not Growing

Kevin Crockett, vice president of the higher education consulting firm Ruffalo Noel Levitz, noted how the number of high school graduates in the state is expected to remain flat or decline in coming years. He said the state produces about 19,000 high school graduates a year that choose to remain in state for college.

“That’s not a particularly large market, and if Iowa is successful at recruiting more students by incrementally investing in aid, then that’s going to come out of other [universities’ enrollments]. The market’s not growing,” Crockett said. He surmised that as Iowa tries to lure students with increased financial aid, other institutions might do the same in efforts to keep enrollment steady, putting “upward pressure on the financial aid spend across the state.”

Iowa’s private universities, many of which rely heavily on resident students and have smaller enrollments than their public counterparts, may struggle with their enrollment as a result, he said.

“In a growing market you can maintain your share and increase your share and you don’t necessarily hurt someone else,” Crockett said. Such is not the case in a flat or declining market.​

Gary Steinke, president of the Iowa Association of Independent Colleges and Universities, said that since regents began emphasizing resident enrollment as a factor in funding, Iowa began “aggressively recruiting Iowa students by any means possible.” A prevailing method has been financial aid. Some of the aid packages he’s heard about have “bordered on the unbelievable,” Steinke says, citing one family he spoke to whose child ended up receiving more aid dollars than necessary to attend Iowa, and actually ended up making money by enrolling.

The impact of Iowa's increased recruitment on private colleges appears mixed. The number of Iowan freshmen at Central College and Morningside College has dropped 31 and 9 percent, respectively. At Coe College, the number of resident freshmen has remained steady. And Drake University and Luther College have actually increased their resident enrollment by 12 and 4 percent, respectively.

Mark Putnam, president of Central College, attributes the decline in resident enrollment at Central in part to the increased competition for resident students because of the regents' proposed funding formula. As Iowa began upping its aid offers to resident students, Putnam says, the state's independent colleges "were placed at an immense economic disadvantage." 

"It's bad public policy because it did not take into consideration the entirety of the marketplace or the ecosystem that was present," he said of the proposed formula. Putnam said that as the state's public universities look to expand resident enrollment, they'll likely be supplanting private universities, since the number of Iowan high school graduates isn't expected to grow in the near term.

Donley, the executive director of Iowa's Board of Regents, said "competition is healthy," and noted how Iowans who attend private institutions are eligible for the Iowa Tuition Grant, a state award of up to $6,000 a year. That award has for years contributed to increased competition through student aid, he said.

“This is not an issue that's just an Iowa issue. This is a national issue,” he said. “Every state and every institution, they’re trying to pull both state and institutional resources to attract students with scholarships.”

Donley added that, according to internal analyses, all three regents' institutions have room to grow. This fall Iowa, for example, opened a new dorm with more than 500 beds. "We know we have the capacity to increase the number of students … at all three of our institutions, so it's natural for us to want to ensure that those students who want to attend can attend," Donley said.

Stephen Burd, a senior policy analyst with New America’s Education Policy Program, says that regardless of the impact on private universities, Iowa’s efforts to increase aid for Iowans are a positive development for students. Many flagship institutions, he said, are choosing to increase aid for out-of-state students at the expense of resident students.

“Public flagships have a responsibility that they have been evading more and more. They have a responsibility to still primarily educate students in their state,” Burd said. “So I’m not totally concerned if that causes some hardship for some private colleges that are more expensive.”

Tom Delahunt, vice president for admissions at Drake, said that Iowa isn’t acting any more aggressively than fellow public ISU. The difference, he said, is that ISU has had a history of heavily recruiting in-state students, whereas Iowa in the last decade has been a less noticeable presence among the state’s recruiters.

For example, Delahunt’s eldest daughter, now a senior in college, wasn’t contacted by Iowa when she was applying to colleges. Three years later, Delahunt’s youngest daughter was recruited heavily by the university during her senior year of high school, despite a similar academic record to her sister.

“There is no doubt the University of Iowa changed their tactics in being more aggressive in recruiting in-state students,” he said.

“They’re not really doing anything different than what Iowa State is doing. They just didn’t do it before,” he continued. “Iowa State, they’re very engaged with the students in Iowa. The University of Iowa didn’t have that approach until recently. Now they seem much more engaged with the Iowa high school student than ever before, so it’s a new dynamic.”

Noel Radomski, director of the University of Wisconsin’s Center for the Advancement of Postsecondary Education, said that if Iowa’s efforts are geared toward increasing resident enrollment, there’s a lot more progress to be made.

“The dial isn’t moving,” he said, noting how both in-state and out-of-state enrollment are growing simultaneously and, though the numbers are increasing, the ratio is not. To truly address the regents’ calls, he said, resident enrollment needs to be higher than 47 percent of the freshman class.

To achieve that growth Iowa will have to further increase its recruitment of Iowans, and the state’s other colleges and universities are bracing for the impact of such outreach.

“It does have the potential to significantly transform the landscape of higher education in Iowa,” Maxwell, Drake's former president, said of Iowa’s new efforts. “Greater competition for fewer students is essentially what’s happening now …. There are a number of institutions in Iowa that are not going to have the resources to survive in that competition.”

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Kellie Woodhouse

Kellie Woodhouse, Reporter, joined Inside Higher Ed in 2015. She covers business, funding and leadership in higher education. Previously she was a higher education and University of Michigan reporter for The Ann Arbor News and for three years and a general assignment reporter for The Baltimore Sun Media Group for two years. She interned at The Sun and National Geographic and graduated from the University of Maryland's Philip Merrill College of Journalism, where she was a staff writer for the daily student newspaper, The Diamondback. She has won press awards for investigative, public service and government reporting, as well as feature writing and ongoing coverage of a news event.

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