Surviving higher ed’s prior-prior year shift
As we speculated last year, the shift to the use of families’ Prior-Prior Year (PPY) financial data on the FAFSA has come to pass.
Starting in October of 2016, the FAFSA will be available for students to complete for college enrollment in the 2017-18 academic year.
This shift has far-reaching implications not only for timing of financial aid awards, but also in other aspects of enrollment, such as marketing, recruitment and institutional budgeting.
For many institutions, particularly private nonprofits, providing financial aid packages in the fall means moving up the timeline for setting tuition rates.
Delaware Valley University in Pennsylvania will move tuition and financial aid budgeting timelines up six to eight months.
Those decisions will now be made up to a year before rates and budgets need to be finalized, says Arthur Glass, recently vice president for finance and administration at Delaware Valley and now in the same role at Mount Saint Mary College in New York.
“We will need to rely more heavily on predictive analytics than concrete data,” Glass says. “For example, when making decisions on costs in February, we would have spring enrollment figures to go on. Now, it will be harder because we’ll have to start discussions in the summer and project farther ahead, prior to having final fall enrollment metrics.”
In addition to the increased uncertainty in making projections, setting tuition further in advance requires more speculation in how students will perceive the changes in cost. “How will families react to tuition increases? It will be tough to gauge since the market could change a lot over that time,” Glass adds. “It’s a more fluid situation.”
Despite the challenge and increased uncertainty in building projected budgets, some are thinking even more aggressively.
“We usually set tuition at the fall board meeting for the next fall, but now we’re thinking of setting rates two years in advance,” says Laurie Levine, vice president for business and finance at Lynn University in Florida. “We’re thrilled that financial aid information will be available to families earlier, and we’re planning now to be able to package as early as possible.”
And Lynn is not alone. The Ruffalo Noel Levitz “2016 Marketing and Recruitment Practices Benchmark Report” asked institutions how they plan to respond to PPY. According to the report, nearly 36 percent of private institutions and 43 percent of public institutions polled were unsure what, if any, changes they would be making; more than 58 percent of officials at private institutions planned to encourage campus leadership to set tuition earlier.
In addition to the implications for budget planning, the shift to prior-prior year FAFSA also means institutions will have to evaluate processes surrounding:
Projected endowment earnings. Finance offices have typically waited for year-end earnings statements to project how much the financial aid office can spend in endowed scholarships.
If these awards are treated as “add-ons” to other institutional funds, financial aid officers will need this information at the time of packaging— or plan to use these funds to respond to appeals rather than including with the initial aid package. Even in the cases where funded scholarships are “swapped out” for institutionally funded awards, information about estimated funds will be needed for financial aid officers to effectively manage discount rates.
Returning students. NASFAA recently analyzed data of more than 70,000 students from public and private institutions and showed that the shift to PPY affected the Pell award amounts for both dependent and independent students.
For the former, who typically enroll in traditional undergraduate programs, 12 percent were changed between $0 and $999 and 15.6 percent of them had changes of $1,000 or more.
Institutions will need to decide if they will replace reduced Pell grants with unfunded aid and reduce institutional need-based grants in cases where Pell grants increase, and understand the implications to the discount rate and possibly student retention.
Financial aid office workflow. Shifting the start of packaging to a time that has traditionally been the quietest (if such a thing exists) in the aid office will certainly be an adjustment for financial aid staff, competing with annual reporting such as completing the FISAP.
However, verification should be less burdensome, as more families will be able to make use of the IRS data retrieval tool and there will be a longer time frame to complete the process. Appeal volume could increase, since there might be increased numbers of cases where families will need to update the aid office with their current financial circumstances, given that the FAFSA data is effectively almost two years old.
In addition, families will have more time to submit appeals. Levine adds, “We hope it smooths out, but it’s too early to tell.”
IT support. To facilitate earlier packaging, the IT department will have to accelerate the setup of several systems—including interfaces with the Department of Education, software updates from vendors, “rolling” data from the admissions platform to the campus enterprise system, and packaging routines. The IT calendar is often overflowing. This disruption will take careful planning.
Talent and departmental scholarships. The time frame for athletic, music and other talent-based scholarships where extra steps—such as auditions, competitions and applications—are required for award selection would also need to be moved up in order to facilitate financial aid packaging in the fall.
Enhanced communication between these offices and financial aid will be necessary. Financial aid offices typically hold these students out from regular packaging until these types of awards are determined.
Value messaging and recruitment planning. Early aid packages mean that under current, traditional marketing and recruitment timelines, there will be a much shorter window for students to fall in love with an institution before they learn how much it will cost them to attend.
Moving up and enhancing communication flows and recruitment practices to sophomores and juniors will be critical, and could also have operating budget implications in admissions and marketing.
Implications and recommendations
As these examples show, the breadth of change resulting from PPY is far-reaching. For further reading on this topic, Ruffalo Noel Levitz has authored a white paper outlining many more implications and recommendations.
The change to FAFSA data has strong potential to benefit families in streamlining the process for filing for aid, and receiving earlier notification of net cost. At least for the short term, however, the change will present challenges—as well as opportunities for higher ed institutions.
Will those able to send aid packages starting in October or November enjoy a competitive advantage? Will those that are not as nimble be left in the dust—or benefit from seeing how things play out for early adopters?
As much as it remains to be seen how many students will actually file before January 1, there will also likely be a broad spectrum of responses from institutions. Proactive planning and preparation will be key to managing this potential game-changer.
Jennifer Wick is vice president of Scannell & Kurz higher education enrollment consultants, a Ruffalo Cody company.