Looking Under the Hood is for governing boards, chief executives, and chief business officers looking to review their institutional aid policies. It enables them to view and benchmark these policies against a customized set of peers.* Ten colleges and universities were invited to serve as early adopters of the web-based tool and institutional-aid metrics. These colleges and universities would identify specific metrics and comparison groups that would be useful for them in engaging governing boards and senior campus leaders around their own institutional-aid policies.
A Case Study of Upper Midwest College and Looking Under the Hood
Upper Midwest College is a private, liberal arts college embarking on a strategic direction plan for the next five years, and having an aligned pricing policy for students will be part of it. The institution has a peer-comparison group nationally and in-state with which it wants to stay competitive, and it also has concerns about the changing demographics of students on the horizon. Historically, Upper Midwest’s trustees and college executives have not had deep discussions about pricing when developing strategic plans, and the discussions are often framed by an assumption that the college is not competitive with its peers in terms of institutional aid.
The vice president of finance was excited to use the online tool and compare key institutional metrics with the college’s peer groups, because the data provided a reliable look at its competitiveness regarding institutional aid. The VP initially looked at four institutional-aid metrics:
- Institutional-aid spending on non-need-based aid per FTE;
- Net tuition revenue;
- Average aid package for first-time freshmen; and,
- Percentage of operating budget used for institutional aid.
Benchmarking these metrics against its peer group revealed that Upper Midwest College was pretty competitive on three of the four metrics they reviewed. However, they discovered with the fourth metric that the percentage of the operational budget that’s used for institutional aid was far greater than that of its competitors. The VP shared these data with a small group of stakeholders, including the VP of enrollment, a financial-aid consultant, and a budget analyst, and with the president’s blessing is convening a small group to do more in-depth brainstorming around the best pricing policy to support the new strategic direction plan. The VP expects this group to come up with a set of recommendations that will be submitted to the strategic direction council, and then to the cabinet and the trustees.
The VP described the institutional-aid metrics and the web-based tool as a critical breakthrough for Upper Midwest College at an opportune moment, because it allowed for an “apples to apples” comparison with trustworthy data and helped the institution make more data-informed decisions about institutional-aid policy rather than relying on anecdotes. Moving forward, the VP is hopeful the metrics can address the distribution of institutional aid by income, which will be a critical issue in deliberations about pricing policies in the foreseeable future.
*The initial set of metrics included in the tool is based on financial data collected by IPEDS and the College Board’s Annual Survey of Colleges.