Where college enrollment planning meets budget planning

Financial aid budget planning is a struggle for some institutions. In preparing for an upcoming column on the topic for University Business magazine, I reviewed sample spreadsheets that we often recommend to institutions in need of improvements to their budget planning. Cohort-based budget planning is the approach we typically recommend because it allows an institution to see trends as cohorts of students and their institutional grants/scholarships move through the years. It helps an institution better understand if the average institutional award per cohort is increasing or decreasing over time.

If the average grant for a cohort increases from year to year, it may mean that the more highly discounted students are being retained and students with lower discounts are leaving. This is important to know for projecting aid expenditures.

Eliminating surprises by analyzing how much institutional aid “graduates”

A trend-based approach to financial aid budgeting minimizes surprises. It is critical for an institution to understand the amount of institutional aid that “graduates” with each senior class, and how much of a difference there is between that figure and the amount needed to appropriately fund the incoming freshman and transfer classes.

Clearly, the analytical component is key. In addition, there is a human element to this process that cannot be overlooked. Because inputs for budget projections are typically required from several different offices on campus, it is crucial that this be a collaborative effort. The registrar and/or institutional research office should be at the table, along with representatives from financial aid, enrollment, and the finance office.

Chris Saadi, director of student financial planning at Alvernia University, has this to say about their approach: “At Alvernia, we began to use cohort, trend-based financial aid/NTR budgeting a number of years ago and we now have reliable historical information that is used in projections. Our office works closely with enrollment, finance, and IR to consistently review and evaluate our data to ensure we have correct information.”

Three action steps your campus should take to enable cohort-based budget planning

1) Get the right people around the table
Make sure the key stakeholders and decision makers for admissions, finance, and anyone needed to provide additional institutional research participate in this analysis. This will facilitate both examining financial aid budgeting and developing action steps.

2) Identify the data you need
There are a number of variables in cohort-based aid analyses, so be sure you have the supporting data necessary to analyze and take action. A list of data you may need goes beyond the scope of this post, but please feel free to email me if you would like to discuss your situation.

3) Continually assess and refine your plan
Student behavior and financial trends are ever-changing, so it’s vital to have a review process so you can adjust your strategies and stay ahead of changes in student need, discount rates, and graduation/completion rates.

If you would like to discuss cohort-based analysis in more depth, or have any questions, please email me and we can continue the conversation.