Our Blog: Small Stories for Smarter College Planning

Secret #3 - Paying Attention to Enrollment Yield Can Pay Big Dividends

What is enrollment yield? It is the ratio of the number of students who enroll at a college to the number of students who were accepted at a school.

 

Take the example of Hiram University in Ohio. Most have never heard of it, but it is an excellent school. If you are interested in pre-med, they are one of the most successful colleges in the nation at getting their graduates into medical school. They were also featured in the book “Colleges That Change Lives.”

 

But Hiram has a problem. If you live in Ohio, you know about them; if you live in the mid-west you might know about them. But like the thousands of excellent small to mid-sized private colleges throughout the mid-west and east coast, there are simply too many of them to be to known/remembered. They have a brand recognition problem. This is why their enrollment yield is under 30%, which means that they have to accept 10 students to get 3 students to enroll. Does this have anything to do with the quality of Hiram? No. Hiram is a great college. So why does this matter?

 

How does Hiram persuade a student to come to Hiram instead of one of the other schools on the student’s list? You got it, money. Schools with low enrollment yields are more likely to give scholarships because they have to in order to convince students to come! The opposite is also true too. Schools like University of Washington doesn't have to discount tuition to convince a student to choose them; University of Washington has over 20,000 applicants per year and there are families outside the state of Washington that are offering to pay out-of-state tuition to attend there! The same is true at top level schools like Harvard or Yale where the enrollment yield is 80% and higher. Schools like Harvard and Yale, whose endowments are in the tens of billions of dollars, could afford to charge nothing for undergraduate tuition and do so indefinitely. They charge because they can.

 

The first three secrets should have opened your eyes to how college admissions and financial aid actually works. However it is just scratching the surface—there is much more to it than that!


With the next four secrets let’s focus on what you can do differently to maximize your chances of getting scholarships.

 

Ask yourself, what do I need to win? What is my EFC? Can it be any lower and how will I fund it. Ask yourself, what does my student need to win? What colleges might be the best prospects for me student. Where will he get in, get scholarships at and graduate on time. Ask yourself, what does my family need to win? 

 

And finally, ask yourself, how can I afford not to schedule an initial consultation. It is free and there is no obligation.  Click the button on the right to schedule it today. 

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Secret #2 - Institutional aid is where the money is at. 

Undergraduate Aid by Source and Type (in Billions), 2012-2013

SOURCE: The College Board, Trends in Student Aid 2010, Figure 2A

There are four comments about the chart above:

 

1. The first is the largest amount of money given is loans. Loans are not the aid you want to go after. Too many students are ending up with huge debts that will take years to repay. Loans for college only make sense in small amounts.

 

2. Federal grants and most state grants truly are need-based, but the vast majority of students don’t qualify for them. If you do, then great, but most do not.

 

3. The item NOT on the chart that many students spend hundreds of hours pursuing is private scholarships. These are the $500 Exchange Club scholarships, the $250 PTA Scholarship, the $750 Boeing Scholarships. In total private scholarships account for less than 1% of the money out there to pay for college. Way too much effort and attention is paid to this insignificant piece of the pie.

 

4. Institutional Grants account for $26 BILLION/year! This is the money you want to go after. This is free money (not a loan). This is schools taking the sticker price of college and slashing it to some lower number, calling it a “Presidential” or “Regent” Scholarship and using the tuition discount to convince the student to choose their college over the competition.

 

So which schools are most likely to give out institutional aid?

There are a number of ways to answer this question, and not any one way will fully address it. However, one statistic to consider is enrollment yield. 

 

Ask yourself, what do I need to win? What is my EFC? Can it be any lower and how will I fund it. Ask yourself, what does my student need to win? What colleges might be the best prospects for me student. Where will he get in, get scholarships at and graduate on time. Ask yourself, what does my family need to win? 

 

And finally, ask yourself, how can I afford not to schedule an initial consultation. It is free and there is no obligation.  Click the button on the right to schedule it today. 

 

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Secret #1 - The line between need-based and merit-based scholarships is gone. 

The notion of giving need-based scholarships to students who get into college but can’t afford it, and merit-based scholarships to highly capable students is largely a myth. Instead, according to noted higher education expert Kati Haycock, colleges are “[using] their resources to compete with each other for high-end, high-scoring students instead of providing a chance for college-qualified students from low-income families who cannot attend college without adequate financial support” (Haycock 2006). 1

 

Colleges have invented new advanced uses of calculus to determine how much in tuition discounts to give to each student to simultaneously maximize the academic profile of the freshman class while delivering the net tuition revenue needed to run the institution. Who NEEDS the money is often irrelevant in this calculation.

 

Many students who qualify for need-based aid and get accepted into a school where they are towards the bottom of the applicant pool will receive no financial aid. This is called “admit-deny”. If that same needy student was higher in the rankings of the college

freshman class, he or she would have received “need-based” scholarships. Thus merit absolutely plays a role in supposedly “need-based” scholarships.

 

The opposite is true too. Most merit based scholarships take into account financial need at some level. This is because a wealthy and an impoverished student who are both highly meritorious will require different scholarship amounts to be persuaded to attend a certain institution. The less affluent student will receive more “merit” aid than the wealthy student.

 

Giving scholarships/financial aid based on need or on merit alone is history. Aid or scholarships are given based on what will increase the profile of the freshman class and thus the rankings, the prestige, the alumni donations, and the power/wealth/influence of the institution. The scholarship money given is thus given in a self-serving way.

 

Ask yourself, what do I need to win? What is my EFC? Can it be any lower and how will I fund it. Ask yourself, what does my student need to win? What colleges might be the best prospects for me student. Where will he get in, get scholarships at and graduate on time. Ask yourself, what does my family need to win? 

 

And finally, ask yourself, how can I afford not to schedule an initial consultation. It is free and there is no obligation.  Click the button on the right to schedule it today. 

 

1 Haycock, Kati. 2006. Promise Abandoned: How Policy Choices and Institutional Practices Restrict College Opportunities. Washington, D.C.: The Education Trust.

The 7 Little Known Secrets of the College Admissions Process ©

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From one parent to another - Our College Funding Experience

There are three things that I believe we could have done differently in approaching college funding for our kids today.

 

First, we would have made sure our kids were on the right career paths. Our oldest took 6 years to graduate which is expensive. 

 

Second, we would have kept an open mind about completing the FAFSA forms. We thought it was pointless for us to complete the FAFSA forms because we assumed we made too much money. We felt that there would be nothing available to us.  

 

And, third we would have applied to multiple colleges even out of state.  


Now I can see that our biases prevented us from exploring all of our options. This resulted in college costing us more than it needed to. My hope is that other parents will learn from our experience.

 

- Gayle Reed, Financial Advisor

 

Gayle is a successful financial advisor, her husband a successful entrepreneur, and their children smart, successful students. At the time, they believed they had done everything they could to prepare their children and their finances for colleges. And they had done everything they knew they needed to do. But there lies the problem, they didn't know what they didn't know. 

 

And what they didn't know, in the end, cost them thousands and thousands of dollars.

 

Learn from Gayle's experience, attend a workshop, participate in a webinar, sign up for our newsletter, get educated, do your homework, please do not think you can "wing it!" 

 

Ask yourself, what do I need to win? What is my EFC? Can it be any lower and how will I fund it. Ask yourself, what does my student need to win? What colleges might be the best prospects for me student. Where will he get in, get scholarships at and graduate on time. Ask yourself, what does my family need to win? 

 

And finally, ask yourself, how can I afford not to schedule an initial consultation. It is free and there is no obligation.  Click the button on the right to schedule it today. 

Student Loan interest rates decrease July 1

New, lower interest rates for federal student and parent loans for the 2015-2016 academic year went into effect July 1, 2015. 

 

Direct Stafford Subsidized Loans for Undergraduates interest rate is 4.29%

Direct Stafford Unsubsidized Loan for Undergraduates interest rate is 4.29%

Direct Stafford Unsubsidized Loan for Graduate/Professional programs interest rate is 5.84%

Parent Loan for Undergraduate Students (PLUS) interest rate is 6.84%

 

The 2015-2016 rates are .37% lower than the previous 2014-2015 rates saving students approximately $118 on $5,500 Direct Stafford loan with a 10-year repayment schedule. Interest rates are based on the yield return of the 10-year Treasury Note at the spring auction each year. 

 

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Lawmakers: FAFSA should use 'prior-prior year' data

On Friday, several dozen congressional lawmakers urged the President to allow families to apply for Federal Financial Aid using the tax information already filed with IRS during the student's senior year of high school.  Translation: the tax year 2 years prior to the student enrolling in college.


Lawmakers stated in their letter to the President, "By letting students find out what federal aid they are eligible for before college application deadlines, it will help them make more informed decisions about where to apply and what they can afford..." Yes, Amen!  That magic word, AFFORDABILITY.  Letting students know what aid they are eligible for so they can make more informed decisions, this is exactly what My College Authority has been doing for families for 10 years.


But, collecting income and asset data from families two years prior to college is not the answer to making college more affordable. The answer is in making federal financial aid eligibility more transparent, state financial aid eligible more transparent, and understanding how college's use their own financial aid monies.


Explain to families that their federal aid eligibility is determined by their Expected Family Contribution (EFC).  Explain to families that their EFC is primarily calculated based on parent income, parent assets, student income, student assets. Explain to families that if their household income is less than $24,000 per year their EFC is zero.  And, finally, explain to families what federal aid is and how it's awarded.

  • Federal Pell Grants - Eligibility and grant amount based on the EFC. Eligibility calculation is maximum PELL grant minus EFC equals student's amount.  $5,775 - $0 = $5,775 PELL Grant compared to $5,775 - $5,775 = $0 PELL Grant.
  • Subsidized Stafford Loan - Students must show financial need to be eligible. Eligibility calculation is college's cost of attendance minus EFC equals student need.  Maximum Subsidized Stafford Loan is $5,550 for first year students and a maximum of $31,000 per student for life.
  • SEO Grant - Students must be eligible for the PELL Grant first to be eligible for the SEO Grant.  Colleges are allocated a lump sum each year and will determine grant amounts at their own discretion.
  • Federal Work Study - Students must show financial need to be eligible. Eligibility calculation is college's cost of attendance minus EFC equals student need.  Federal Work Study funds are allocated as lump sum each year to each college who then determine individual student amounts at their own discretion.
  • Federal Perkins Loan - Students must show financial need to be eligible. Eligibility calculation is college's cost of attendance minus EFC equals student need.  Federal Perkins Loan funds are allocated as a lump sum each year to each college who then may determine work study amounts at their own discretion.

States may then have their own financial aid monies available to students who meet eligibility requirements.  For example, in the state of Oregon, Oregon high school graduates who are PELL Grant eligible receive an additional $2,100 Oregon Opportunity Grant. If a student is not PELL Grant eligible, they are not eligible for the Oregon grant.


The next best opportunities for financial aid, after federal and state monies, will come from the college's own pockets. This is institutional financial aid awarded by each individual college to the students they want to give it to.  They may give it because a student "needs" it, for merit, for athletics, and talent.  They may have raised their prices enough to come back and provide a feel-good discount across the board much like shopping at Kohl's. It's the college's own money and they will give it to the students they want to give it to. 


If you want to know what federal aid your student is eligible for before college application deadlines, want to help them make more informed decisions about where to apply and what they can afford, and have more time to consider and apply to multiple colleges, attend one of our college planning workshops or call today for a free 15-minute consult. 


Creating opportunities, My College Authority, Inc.

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