Reassessing our Financial Aid Policies due to COVID

ABOUT THIS EPISODE

Dr. Phillip Levine, Professor of Economics at Wellesley College, and Founder of MyinTuition joined the podcast to talk about where our institutions are at financially right now, and why we need to reassess our aid policies and packages heading into next year in order to ensure we still have an access story for our lower- and middle-income students and families.

Between lost revenues from room and bore, reduced enrollment, teaching modifications, testing on certain state subsidies for public institutions and other reasons, it's going to be a very tough year ahead for colleges financially. You're listening to enrollment growth university from Helix Education, the best professional development podcast for higher education leaders looking to grow enrollment at their college or university. Whether you're looking for fresh enrollment growth techniques and strategies or tools and resources, you've come to the right place. Let's get into the show. Welcome back to enrollment growth university, a proud member of the connect Du podcast network. I'm Eric Olsen with Helix Education and we're here today with Dr Philip Lebene, professor of economics at Wellesley College and founder of my intuition Phil. Welcome to the show. Glad to be here, so excited to talk to you today about why institutions may need to reassess...

...their financial aid policies because of covid. Before we dig into that, can you give the listeners a little bit better understanding of both Wellesley College and your role? They're sure so. I've been a professor of Wellesley College for this is my thirty year there. It's a Liberal Arts College in Wellesley Massachusetts. I've been teaching economics the entire time I've been there. A few years ago I founded a nonprofit organization called my tuition corps. Role is to provide a very simple financial aid estimator which students can use free of cost, and we make it available to colleges and universities. Those calculations, as we're going to discuss, may get trickier and trickier. Filled to kick us off today, remind us where many institutions are currently at today financially because of covid and the covid recession. Sure, I don't think we really know the extent of the damage yet from our current environment, but it's pretty clear it's going to be...

...substantial. Between lost revenue from the board, reduced enrollment, teaching modifications, testing on certain state subsidies for public institutions and other reasons, it's going to be a very tough year ahead for colleges financially. Why do you believe many institutions will need to reassess their overall financial aid policies heading to next year? So colleges are in a difficult position here. At the same time that their revenue is down, they're also operating an environmental significant economic weakness and anxiety that affects their current perspective. Students affordability is going to be huge issue next year and probably after that as well, and the realities of pricing and higher education today are not going to help. There's three points I think that I'm important to make here. First, very few students pays this different prices institutions charge. The second issue is that, despite the fact that most people don't pay the sticker price, mostly that's the number that people know. Yeah, and...

...so that's a problem because they think that what they're going to have to pay is much greater than actually what they are going to have to pay and that, even after the thing is thought, even after a jesting for financially, prices for lower income students can often be too hot. Both for next year and incoming years. We need to address these issues if we're going to address concerns regarding affordability. Yeah, and you do think that it is our low income students that are the most likely to fall through the cracks without these kind of broader changes to our FA policies? Well, I would say that it's both lower and not ory income students. I mean, these are the families that are always bear at the prompt of an economic crisis, and this one is no different. It's going to be quite some time before the labor market improves to the point where these families finances will recover, and the pricing issues that I addressed earlier, they directly affect these families. We have to find ways to better communicate actual pricing, not the sicker price, and we have to find ways to at least all the line and let these families really need...

...to pay ver ten college. We've seen a lot of really creative, well intentioned test pilots from other institutions over the last several years aimed at increasing access and financial access to low income students. Is there any learnings that we can, you know, learn from the curve of these other institutions? Sure, I want to be clear about this. There's a lot of factors the stent that stand in the way of access to college for lower income students. It's not a simple process and there's many hurdles that these students face along the way. Lack of information about financial aid and what students will really pay definitely matter, though. It definitely is part of the problem, and we know this from welldesigned research studies. So one one reason study involved a true experiment, a Treatment Group A control group. Random assignment between the two groups participants for high school students with annual family incomes below sixtyzero in the state of Michigan.

Those in the treatment group were told that they could attend the University of Michigan tuition free. Was called the hell scholarship and just you know, for point of reference, to help Scot Haw, name comes from the Michigan Fight Song. The thing is is that these students could have attended Michigan tuition free any time, not just because of this experiment. So let's say that that, just for the sake of argument, let's say that the Michigan Sticker Prices Thirtyzero. Half of that is tuition and half of that is room and board. Tuition free is just the tuition part. The fifteen thousand dollars. They would still owe fifteen thousand dollars to attend the University of Michigan. In fact, Michigan's regular financial aid policy is actually more generous than that. You probably would have to pay less than the Fifteenzero to tend the University of Michigan if you are a low enough income. The experiment wasn't about lowering the price. The price wasn't caught for these students. It was just doing a better job of...

...communicating affordability, and what the results of this experiment show is very impressive. The students receive the software, we're considerably more likely to apply and well to the University of Michigan. Information Matters. So it's exciting to know that we might have some potential nudge solutions and communication solves to help folks understand about the affordability programs that were offering. But how do you suggest institutions think about funding these new aid programs, especially given the revenue issues that they're up against? For example, you mentioned the sticker price and, for example, you know, historically we've relied on full pay students to subsidize our students who require aid. Today, those full pay students are harder to find, especially with the international student decline due to covid and other federal policies. As well intentioned as this desire for affordability policies, how should institutions think about this really real funding...

...issue? Let's face it, there are no more full pay students in out there and we're not going to get in a national students in the current political environment to fill in. That just isn't a solution these days. It also really violates principles of access if college is solved their financial problems by crowding out more lower incomes to students with with full pay students if they were there, but they don't exist anyway. You know, the real answer this question depends a lot on the type of institution we're talking about. So for public institutions, they're going to suffer unless and until states get funding from the federal government. Even then, public institutions are likely to increase sticker price. Full pay students will have to pay more. The trick is to reduce the harm done to all students who can't afford to pay the sticker price by increasing financial way and making it to the helability more transparent. For elite private institutions, there's a little bit more slack in the system. For them, they can use...

...the downmon funds, they can borrow. Hopefully they have some reserves for them. This is really about belt tightening, but the current financial problems are not really. It's astential. Where we really see problems is for the tuition dependent private institutions. Those are the places where you're really going to see places struggling. If our current situation extends another year or two, these institutions are going to have a real problem and, to be quite honest, they're really there are just no easy solutions. There feel really, really helpful, if not hard to hear stuff. Any Next Steps, advice for institutions? Listening feverishly, had been scrambling to make sure that we had some sort of fall offering to offer our students, but now buckling in thinking about what they're financially. Policies need to look like next year and evolve into next year. Where should they start? I understand that they are important financial crank constraints facing these institutions right now, but Philli sees effects the bottom line as well. In Our...

...carent economic environment, providing adequate support for lower and moderating income students is critical to maintain interests. And providing that support doesn't help if you don't tell anyone. Schools need to make their pricing systems more to ask parent awesome. Thanks again so much for joining us today. Feel we're of help thout. Attracting today's new post traditional learners means adopting new enrollment strategies. Helix educations data driven, enterprise wide approach to enrollment growth is uniquely helping colleges and universities thrive in this new education landscape, and Helix has just published the second edition of their enrollment growth playbook with fifty percent brand new content on how institutions can solve today's most pressing enrollment growth challenges, downloaded today for free at Helix Educationcom. Playbook. You've been listening to enrollment growth university from Helix Education. To ensure that...

...you never miss an episode, subscribe to the shown itunes or your favorite podcast player. Thank you so much for listening. Until next time.

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