What are the benefits of offering students a four-year aid package at the point of admittance?
Michael Light, Assistant Vice President of Enrollment at Trinity College of Hartford, Connecticut, joined the Enrollment Growth University podcast to talk about the benefits of offering students a 4-year aid package at the point of admittance – especially for low-income students and their families.
The Prior, Prior Year in Financial Aid
When prospective students apply for financial aid, the college needs verifiable financial information from the family. Tax returns are one handy tool that almost everybody uses in order to verify their income information.
“The prior year tax return is usually the most recent year that’s been completed before the student starts enrollment,” Michael explained. “For instance, if you were interested in coming in the fall of 2018, we’d be asking for your 2017 information.”
This doesn’t always line up very well, though, because the tax year is on a calendar year, and the enrollment process works on the academic year. So, if you’re applying early decision, let’s say in November of 2019, for enrollment in fall of 2019, you wouldn’t necessarily have your 2019 taxes available yet.
Some potential Trinity students applying for an early decision were at a disadvantage in the financial aid application process. The prior, prior year takes into account that most people’s financial situations remain level from year to year.
“So to get around this timing issue, they started using, well the feds, and the rest of the industry decided that we’re going to use two years’ prior in order to eliminate the disadvantages these folks may experience, depending on either when they apply for admission, or when they apply, or when their taxes are available,” Michael said.
Extending the Prior, Prior Year Philosophy
At Trinity, Michael and his team started exploring a little further and realized if they were going to assume relatively level financial standings from year to year, it would make sense to assume that’s going to remain true for all four years of an undergraduate’s education.
“So, we started kind of digging into some of the characteristics of our undergraduate population,” Michael said, “The thing that we found is that students from lower-income backgrounds typically saw very little change in their financial circumstances.”
For most people, a college education is either the most expensive or the second most expensive purchase of their lifetimes. Despite this heavy financial load, students faced a changing financial aid landscape. Packages altered from year to year, especially at very expensive institutions like Trinity.
“At the end of the day, tuition, fees, room, and board at a place like Trinity could end up being, say, $300,000,” Michael said, “and so, it didn’t really seem fair for a lot of families that they might see the price change from year to year, especially if their income information was expected to stay relatively level.”
Trinity’s financial analysis suggested that families were doing a lot of work to submit very similar financial statements from year to year. So they decided to use one year’s information to project things out for four years and make a commitment to that family for one price for the entire credential.
Why a Four-Year Aid Packaging Policy Matters So Much
The unpredictability of paying for college is such a big deal for people for lower-income backgrounds. If your family makes $120,000 a year, and from one year to the next you see a $200 or $300 change in your financial aid, it’s annoying, but you can figure out a way to absorb it. For families that live a $25,000 income, by contrast, to see a $200 or $300 change in your financial aid may be huge.
“It could be a very difficult gap to cover,” Michael told us, “and it kind of creates a lot of anxiety for the family.”
Trinity is seeing a lot more people interested in this model because of the predictability it gives them. For students who need financial aid, higher education expenses are a huge source of anxiety, so knowing that they have a commitment from that institution allows them to start thinking about other parts of the decision process in selecting a college.
Next-Steps Advice for Institutions Considering Offering 4-Year Aid Packages
“When a lot of colleges and universities are trying to plan out their finances,” Michael said, “they’re looking at things in aggregate.” They’re looking at cohorts of students and at what their average financial aid looks like.
Colleges who want to replicate Trinity’s model can break that down to the family level.
“Think about other barriers that aren’t necessarily financial, that you could start to break down,” Michael said, “and have the same result and make an easier time for the families to navigate their college experience.”
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