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” financial aid leveraging is the act of repackaging financial aid so that it is specifically directed at students that a complex algorithm determines as most likely to make the school more money”

USM Economics Blog:

Wanting to look into this, I did a little bit of Googling about Noel-Levitz to see if I could find out anything of use about them. As it mentions above, they are an “enrollment management” consulting firm- the largest in the United States. What enrollment management consulting firms tend to offer universities and university systems is something called “financial aid leveraging.” If you clicked that link, you’ll see that it’s pretty hard to understand exactly what that is. I found that an article from the Atlantic from a few years ago explained it far more clearly than the companies that do it: in short, financial aid leveraging is the act of repackaging financial aid so that it is specifically directed at students that a complex algorithm determines as most likely to make the school more money. Frequently, this means taking financial aid away from the people who need it the most and giving it to people who are more likely to stay in school. If you look at the operating budget documents, you’ll notice that a majority of Noel-Levitz’s recommendations are related to financial aid.

While you can have a discussion of ethics about this practice on its own, something else is what made me uncomfortable:

Noel-Levitz is a former subsidiary of Sallie Mae, the student loan giant. If you’re not acquainted with Sallie Mae’s reputation, a quick Google search should remedy that.

Now, Sallie Mae isn’t what it used to be; it’s no longer officially tied to the government (now it’s publicly traded and has changed its name to SLM). However, in 2013, Sallie Mae was contracted by the Department of Education as the servicer of almost 20% of new federal student loans. That means, in general, that the more federal student loans there are, the more money Sallie Mae makes. In addition, Sallie Mae will sometimes sell off some of its loans in the form of financial securities. However, the income from those contracts ($109 million in 2013) pales in comparison to its income from selling those securities ($13.8 billion in 2012) and offering their own private student loans ($37.5 billion in loans outstanding as of Dec 31, 2013). In fact, the direct federal loan program has been a huge source of competition for Sallie Mae.

In other words, since it’s no longer originating federal student loans (which used to be its biggest source of revenue), Sallie Mae will make more money if there are more private student loans (especially if those private student loans go to the students most likely to repay them. More on that in a minute).

From the Noel Levitz 2014 Discounting Report

If all these students are paying $50,000 in tuition, how come our college doesn’t have more revenue to spend?

Kathy Johnson Bowles:

This institution charges $50,000 for tuition. We have 2,000 students. That’s $100 million. Where is it? What did the administration do with all that money? Can someone just explain it to me?”

All across the country parents, students, alumni, faculty and staff concerned about and frustrated by the price of education utter similar statements. But the fact is that not all students (and in some cases, not even a majority) pay the full price of tuition.

Wait, what? Yes, the math is correct, but the numbers in the equation are incorrect. Why? Two words: discount rate.

In 2020 the National Association of College and University Business Officers surveyed 361 private nonprofit colleges and universities and found tuition was discounted an average of 53.9 percent for first-time, full-time, first-year students in 2020-21. Meaning: a tuition price of $50,000 is an average of $26,950 per student after discounts (scholarships). The purpose of a discount rate is to net the budgeted revenue and yield the number of students an institution can accommodate, and make sure each student is willing and able to continue for all four years.

Related: Financial Aid Leveraging

Felicity Huffman, Lori Loughlin among 50 indicted in largest-ever case alleging bribery to get kids into colleges

Joey Garrison and Maria Puente:

Actresses Felicity Huffman and Lori Laughlin and nine college coaches are among the 50 people charged Tuesday in what federal officials say is the nation’s largest-ever college admissions bribery case prosecuted by the Justice Department.

The Justice Department charged 33 affluent parents, which include CEOs and television stars, with taking part in an elaborate conspiracy that involved cheating on the SAT and ACT and parents paying coaches “enormous sums” to accept students who fabricated their athletic credentials at elite universities and colleges.

In some cases, coaches agreed to pretend that students applying to their school were highly recruited athletes when, in fact, they didn’t even compete in that particular sport.

Wake Forest University says it has suspended its head volleyball coach Bill Ferguson amid the investigation. Ferguson has been placed on administrative leave after being accused of accepting $100,000 to recruit a student who had been on the North Carolina school wait list.

Others charged included three people who organized the scams, two ACT and SAT exam administrators, one exam proctor, and one college administrator.

At the center of the case, according to federal prosecutors, was an admissions consultant named William Rick Singer, who pleaded guilty Tuesday to conspiracy charges of racketeering, money laundering, defrauding the United States and obstruction of justice.

Related: Financial Aid Leveraging and Ivy League Subsidies.

I Was a College Admissions Officer. This Is What I Saw.


But the longer I read applications, the more holes I saw in the so-called “holistic” process, and the more I discovered how much it came down to money.

Not infrequently, I would pull up a student’s file, see my “Defer” or “Deny” recommendation, and then a second reviewer recommending the same thing, and then a high-ranking admissions staff member would flip the decision to admit. Usually, the justification would be a brief couple of sentences with purposefully vague language, like “Student has struggled with math sequence but should be fine with on campus tutoring resources, ADMIT.” I saw these decisions flipped frequently for students from affluent backgrounds, and rarely for students who’d applied for financial aid. Once, I saw a student who fell far below our clearly outlined admissions requirements admitted — this student was heir to a popular processed-meat company’s fortune.

Although our school advertised our “holistic” review process, our director typically used test scores to screen applicants. His rationale was that these were “riskier” students. The only time he didn’t? If the student could pay full price to attend our institution, or a “full pay” student. He was not coy about this fact, and would frequently make comments about how students from Silicon Valley could “afford” to come here. When I planned my recruitment trip in California, I was given an Excel spreadsheet that listed high schools by average household income.

There were a variety of ways of gleaning if a student was “full pay” from an application. Firstly, on the Common Application, there is a place where students can indicate if they intend to apply for financial aid or not. My director’s instinct was always to see what we could do to admit the students who checked that they were not intending to file for aid, regardless of the student’s academic achievement. I had one student from Northern California who was, by all metrics, an outright deny. I remember vividly that he had several Cs and Ds on his transcript, plus a test score well below our average range, and an essay that consisted of two sentences (really, just two). He visited campus twice, once before applying, and later once he was admitted. He paid full tuition with no aid for four years.

Related: Financial Aid Leveraging

“The data clearly indicate that being able to read is not a requirement for graduation at (Madison) East, especially if you are black or Hispanic”

Will Congress Penalize Colleges That Increase Tuition?

Edward Zalinsky:

enator Charles Grassley of Iowa will serve as chairman of the Senate Finance Committee during the upcoming 115th Congress. Senator Grassley’s decision to lead the Finance Committee may have important consequences for the nation’s colleges and universities. Grassley, a Republican, has criticized increased tuition charges in the face of the pronounced, tax-free growth of many college endowments.

In light of his prior statements and the current political environment, a Grassley-led Finance Committee may scrutinize higher education endowments. On the committee’s agenda could be legislation aimed at the tax benefits such endowments enjoy and the benefits of tax-exempt entities more generally. …

It is likely that a Grassley-led Finance Committee will consider changes to directly regulate the tuition levels of endowed educational institutions. That consideration will take place in a Congress in which Republicans only control the Senate and House Democrats will have to choose either bipartisan cooperation or confrontation with the Senate.

Financial aid leveraging.

St. John’s College announces plan to lower tuition by $17,000 a year

Laureen Lumpkin:

In a move to make education more affordable for its students, St. John’s College will slash tuition by $17,000 and attempt to bolster its endowment fund.

The private, liberal arts school in Annapolis is planning to install a new philanthropy-centered financial model that relies more on donor dollars, it announced Wednesday. This model will make St. John’s less dependent on tuition-paying students.

“We’ll make up that difference by doubling our endowment,” said Panayiotis Kanelos, president of the college’s Annapolis campus. St. John’s also has a campus in Santa Fe, New Mexico. “By next fall, no student at St. John’s will pay more than $35,000 a year.”

St. John’s on Wednesday also announced a fundraising initiative called “Freeing Minds: A Campaign for St. John’s College,” with the goal of raising $300 million to make up any gaps in funding. Alumni Warren and Barbara Winiarski announced Wednesday that their family foundation will match dollar for dollar every new gift up to $50 million.

“The capital campaign is to grow our endowment to ensure that we have the resources to do this,” Kanelos said. He also said the school has already raised more than 60 percent of its goal.

By the 2019-2020 school year, the new model — and tuition change — will take effect.

Related: Financial Aid Leveraging.

Bending to the law of supply and demand, some colleges are dropping their prices

Matt Krupnick:

Tuition is being cut by about $25,000 this year to attract more students to Mills College in Oakland, California, one of several colleges and universities freezing or reducing tuition this fall in the face of an enrollment decline and consumer backlash. Photo: John S Lander/LightRocket via Getty Images

It may have been one of the biggest back-to-school sales ever: a 36 percent drop in the advertised cost of a college education.

That’s what awaited students this fall at Mills College, one of a growing number of higher-education institutions that have started freezing or dropping their prices in the face of a years-long enrollment decline and heightened price sensitivity.

The 1,300-student private college in Oakland, California, which like many private colleges has been having trouble attracting students, dropped its sticker price from $45,000 to $29,000 a year.

Financial Aid Leveraging.

Commentary on College Tuition Price Theory

Frank WU:

At last, as evidenced by more colleges and universities performing a tuition reset, higher education leaders are awakening to the threat of tuition discounting. The increasing rates by which many institutions have had to cut what they wish to charge students should be cause for public concern. On more than one campus, the overall discount rate has surpassed 50 percent on a sharp trajectory, compared to levels less than half that in recent memory.

The situation is alarming for two independent reasons. First, colleges and universities, even those proclaiming a commitment to diversity, are leaving behind disadvantaged students for their own rise in rankings. Second, they are imperiling their continued existence by reducing revenues to sums below sustainability. Even administrators and board members who are indifferent to accessibility should care about bankruptcy. Tuition discounting is like other bets against the future — heavily against the odds.

Tuition discounting has been around for some time. But it is being used for very different purposes than previously. Tuition discounting is the practice, on a significant scale, of advertising a list price for enrollment and offering deals that reduce that amount for select students. It is akin to other forms of differential pricing and dynamic pricing, responsive to supply and demand in the marketplace.

Related: Financial aid leveraging.

Diminishing Returns for Tuition Discounting

Rick Seltzer:

Attracting students with tuition discounting has its limits — and one study suggests a surprisingly large number of small colleges and universities are flirting with those limits.

The study, which is being presented Friday at the American Educational Research Association’s annual meeting, looks at the practice and effects of tuition discounting over 10 years at a group of 448 small liberal arts colleges across the country. Tuition discount rates have risen substantially as institutions offer larger and larger scholarships and grants to students in order to entice them to enroll.

Financial aid leveraging.

Don’t Blame State Disinvestment Alone

Rick Seltzer:

Neal McCluskey, director of the Cato Institute’s Center for Educational Freedom, makes that argument in a new study seeking to explain increases in college and university tuition levels. It’s in some ways a middle-of-the-road finding for a libertarian think tank weighing into a debate whose different sides have long been dug in behind their favorite narratives. But it is also a distinct attempt to shift the focus at a time when some believe state funding has received too much attention in the debate over college costs and tuition levels.

Many campus leaders and higher ed analysts argue that public colleges and universities have had to raise tuition to keep their budgets balanced amid a long-term trend of decreasing state funding per student. Others reject that narrative, instead arguing that tuition hikes go to pay for increasing and often unnecessary spending — say, for posh new benefits for students, administrative bloat or inflated faculty salaries.

Related: “Financial Aid Leveraging“.

Private Colleges Up Tuition Discounts

Farran Powell:

Despite the annual sticker price shock, many students and their families are receiving tuition discounts at private colleges.

Under tuition discounting, a school offsets its published tuition price with grant aid from the institution to entice students to enroll at their college. It’s a practice that began more than three decades ago – and one that is more commonplace at many private schools, college financial aid administrators say.

But the gap between the published tuition prices and the amount students pay is widening for many private institutions – especially at smaller colleges, experts say.

Related: Financial Aid Leveraging.

Private Colleges Offering Record Tuition Discounts to Lure Students

Consumer Reports:

Amid all the grim news about the skyrocketing price of a college education, here’s something to celebrate: Colleges are asking students to shoulder less of the costs.

In the 2015-2016 school year, the discounts on tuition that private colleges gave to students in the form of scholarships and grants hit a record high, according to the National Association of College and University Business Officers (NACUBO) annual report.

Last school year, private colleges gave freshman an average tuition discount of 49%, and all undergrads an average discount of 43% off the published price of tuition.

At the same time, the percentage of students who received some discount on tuition and fees—88%—remained relatively steady, the NACUBO report says.
Doling Out Discounts

Such discounting is nothing new. Rather, it is a continuation of a long trend of private colleges lowering prices to boost enrollment. Ten years ago, the average tuition discount was 34%, according to NACUBO.

“list prices” continue to rise….

Related: Financial Aid Leveraging.

What is tuition discounting and why do colleges do it?

Higher Ed Professor:

Tuition discounting is growing in higher education. Yet, by the very nature of the practice, the concept is confusing to prospective students as well as people who have spent their careers working in colleges and universities. A recent report by the National Association of College and University Business Officers (NACUBO) suggests that tuition discount rates are at an all-time high. The report further argues that the strategy is unsustainable and many institutions will have to reconsider their approach to discounting. But all of this raises the question: what is tuition discounting and why do colleges do it?

Related: Financial aid leveraging.

Fat-Cat University Administrators at the Top 25

New York Times:

Confronted with punishing state budget cuts, the public colleges and universities that educate more than 70 percent of this country’s students have raised tuition, shrunk course offerings and hired miserably paid, part-time instructors who now form what amounts to a new underclass in the academic hierarchy. At the same time, some of those colleges and universities are spending much too freely on their top administrators.

A report from the Institute for Policy Studies, a research group, says that the presidents at the 25 public universities that pay their presidents the most have seen their compensation soar since 2008. The average pay for presidents at all public research universities is hardly shabby, increasing by 14 percent, to $544,554, between 2009 and 2012. But average compensation for the presidents at the 25 highest-paying universities increased by a third, to $974,006.

Related: Financial Aid Leveraging.

What ‘Hard Work U’ Can Teach Elite Schools

Stephen Moore:

Looking for the biggest bargain in higher education? I think I found it in this rural Missouri town, 40 miles south of Springfield, nestled in the foothills of the Ozark Mountains. The school is College of the Ozarks, and it operates on an education model that could overturn the perverse method of financing college education that is turning this generation of young adults into a permanent debtor class.

At this college the tuition is nowhere near the $150,000 to $200,000 for a four-year degree that the elite top-tier universities are charging. At College of the Ozarks, tuition is free. That’s right. The school’s nearly 1,400 students don’t pay a dime in tuition during their time there.

So what’s the catch? All the college’s students—without exception—pay for their education by working 15 hours a week on campus. The jobs are plentiful because this school—just a few miles from Branson, a popular tourist destination—operates its own mill, a power plant, fire station, four-star restaurant and lodge, museum and dairy farm.

Some students from low-income homes also spend 12 weeks of summer on campus working to cover their room and board. Part of the students’ grade point average is determined by how they do on the job and those who shirk their work duties are tossed out. The jobs range from campus security to cooking and cleaning hotel rooms, tending the hundreds of cattle, building new dorms and buildings, to operating the power plant.

Spot on. Related: Financial Aid Leveraging (or, leveraging students).

Common App: Admissions Collusion?

Scott Jaschik:

Colleges may soon have a new reason — an antitrust lawsuit — to think twice about their relationship with the Common Application.

CollegeNET, which provides a variety of admissions-related services to college, some in direct competition with the Common Application, sued Common App last week in federal court, charging antitrust violations. And while the suit is only against Common App, it states that some of the 500 colleges that are members have been “co-conspirators” in some of the alleged violations.

When CollegeNET issued a news release last week about having sued Common Application, some admissions leaders were scratching their heads about how a service to process applications could violate antitrust law. The press release provided few details.

Related: Financial Aid Leveraging.

Getting into the Ivies

David Leonhardt:

ASK just about any high school senior or junior — or their parents — and they’ll tell you that getting into a selective college is harder than it used to be. They’re right about that. But the reasons for the newfound difficulty are not well understood.

Population growth plays a role, but the number of teenagers is not too much higher than it was 30 years ago, when the youngest baby boomers were still applying to college. And while many more Americans attend college than in the past, most of the growth has occurred at colleges with relatively few resources and high dropout rates, which bear little resemblance to the elites.

So what else is going on? One overlooked factor is that top colleges are admitting fewer American students than they did a generation ago. Colleges have globalized over that time, deliberately increasing the share of their student bodies that come from overseas and leaving fewer slots for applicants from the United States.

Related: “Financial Aid Leveraging”.