Packaging Theory: The How, When and To Whom Behind Creating a Packaging

Procedure

• Michele Kosboth – Director of Student Financial Planning, Lasell College

• Daniel T. Barkowitz, Director of Student Financial Aid, MIT

State of Diffusion:Defining Student Aid in an Era of Multiple Purposes

(available at www.ihep.com)

• Encouraging access and choice for qualified needy students.

• Furthering persistence toward a degree.

• Promoting affordability for lower-income students.

• Promoting affordability for middle-income students.

• Rewarding student scholarship/merit.

• Targeting specific groups and priorities.

• Improving institutional financial aid administrative accountability.

• Managing institutional enrollment.

• Redistributing state taxpayer revenue.

In an era of increasing demand…

• How do you distribute the supply?

• Today’s Agenda– Types of Aid Packaging

– Understanding Preferencing

– The % Method

– Where do we go from Here?

Purpose of financial aid

• Vision– Does the college have

a vision?

– Is Aid as a part of it?

– Do you have a personal bias?

Need vs. Merit Aid:

• Need-Based– Pros and Cons

• Merit-Based– Pros and Cons

Merit within Need• AKA Preferencing

– Using some other measure to rank students and then prioritizing package based on that measure.

– Examples:• Admissions rank

• Major

• Likelihood of enrolling

Preferencing – Your Goals

• Equity and Access• Recruitment driven

– Just make the class?– Improve the academic profile?– Improve enrollment in a program or major?– Improve enrollment among a cohort group?

• Reward driven– Honors– Community Service– Leadership– Athletics (NCAA allowed?)

What do You Have to Work With?

• What is your discount rate?– Definition (institutional grant aid / total

tuition [+ room and board?] revenue).– Do you know this number?– What has it been historically?– Where is your competition?– What can you afford?

• Enrollment.– What size is optimum? Where are you

now?– Resident vs. Commuter blend.

How will you operate?• Full need?

– Private schools only?– Which need?

• Solving the IM/FM issue.

– For all populations?– Gap?

• Maximum Eligibility?– Public or low grant schools only?– Package by date?– Limited funds – give what you can?

• Limit on grant?• Gap?

– Rationing of funds?

Another strategy

• Percent of need met by (institutional) grant.– Studies indicate that when

comparing packages parents focus on the grant amount.

• Can you predict enrollment based on %age of need met by grant– Case example: Lasell College

• Add bonus for desirable traits.

Example of how this works# of Cases Enrolled Didn't enroll Yield

70% 75% 20 10 10 50.00%65% 70% 25 15 10 60.00%60% 65% 120 73 47 60.83%55% 60% 110 54 56 49.09%50% 55% 90 30 60 33.33%45% 50% 80 23 57 28.75%40% 45% 30 7 23 23.33%35% 40% 10 2 8 20.00%30% 35% 5 1 4 20.00%25% 30% 2 0 2 0.00%20% 25% 1 1 0 100.00%15% 20% 1 0 1 0.00%10% 15% 0 0 0 0.00%5% 10% 0 0 0 0.00%0% 5% 0 0 0 0.00%

% Need Met

What will you do in future years?

• “Grandparent” to first year amount (dollars)?

• Use the same % of new need?

• A whole new calculation?

• Consider academic performance of 1st year(s)?

What other strategies?

• % of remaining need (after self-help and gap) with grant.– Pros / cons.

• Fixed gap (based on populations?).

• Other models?

Test, try, and improve

• Write out the logic.

• Try modeling any changes on this year’s population to measure impact.

• Keep in mind your goals.

• Simulate packaging before you deploy!

Wrap Up.

• Thanks!

• Evaluation.

• Any last questions or comments?

• Contact us:Daniel Barkowitz Michele Kosboth

barkowit@mit.edu mkosboth@lasell.edu

(617) 258-5612 (617) 243-2378