Tag: Financial

  • Another reprieve for gainful employment, financial value transparency reporting deadline

    Another reprieve for gainful employment, financial value transparency reporting deadline

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    Dive Brief:

    • The U.S. Department of Education is extending the reporting deadline for the gainful employment and financial value transparency regulations to Sept. 30, according to an agency announcement last week. 
    • The seven-month extension aims to give college officials more time to submit the required information and to allow institutions that have already sent in their data to make corrections. 
    • The Education Department has pushed back the reporting deadline several times amid concerns that colleges didn’t have enough time or guidance to provide the data required under the new regulations. This extension, the first one under the Trump administration, will be the last, the announcement said.

    Dive Insight:

    The Education Department originally asked colleges to submit the gainful employment and financial value transparency data by July 2024, but higher education institutions requested more time given last year’s bumpy rollout of the revamped Free Application for Federal Student Aid. 

    The Biden administration released final gainful employment and financial value transparency regulations in 2023. 

    Under the gainful employment rules, career education programs must prove that their graduates earn enough money to pay off their student loans and that at least half of them make more than workers in their state who only have high school diplomas. Programs that fail those tests risk losing their access to Title IV federal financial aid. 

    Although the financial value transparency regulations don’t threaten federal financial aid, they create new reporting requirements for all colleges. Under the rule, the Education Department will post data collected from institutions about their programs — such as costs and debt burdens — on a consumer-facing website to help students make informed decisions about their college attendance. 

    The Biden administration extended the deadline for reporting requirements three times. Despite the delays, Education Department officials said late last year that they still expected to produce data in the spring to help students select their colleges. 

    With its latest announcement, the Trump administration’s Education Department is delaying that timeline also. 

    “The Department does not plan to produce any FVT/GE metrics prior to the new deadline and will take no enforcement or other punitive actions against institutions who have been unable to complete reporting to date,” it said. 

    It’s so far unclear how the Trump administration will handle the gainful employment regulations. In President Donald Trump’s first term, then-Education Secretary Betsy DeVos rescinded the Obama-era version of the rules, saying they unfairly targeted the for-profit college sector. 

    The Education Department is facing at least one lawsuit over the Biden administration’s version of the gainful employment rule. However, a federal judge earlier this month paused legal proceedings for 90 days after the new administration sought more time “to become familiar with and evaluate their position regarding the issues in the case,” according to court documents.

    The National Association of Student Financial Aid Administrators — one of the organizations that pushed for a delay — applauded the move to extend the regulatory reporting deadline.

    The change “is a sensible and welcome decision that will give financial aid offices much needed breathing room while they navigate unresolved issues in submitting their data and make necessary corrections to ensure the data they submit is accurate,” NASFAA Interim President and CEO Beth Maglione said in a statement last week.

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  • Making better decisions on student financial support

    Making better decisions on student financial support

    By Peter Gray, Chief Executive and Chair of the JS Group.

    As the higher education sector starts to plan its next budget cycle and many may need to make savings, there is a concern about the impact of any cuts on students and how this could negatively affect their university experience and performance.

    Universities are bound to look at a range of options to save money, especially given the stormy operating context. But one less-often highlighted aspect of university finances is the cost (and benefit) of the additional financial support universities devote to many of their students. Through cash, vouchers and other means, many universities provide financial help to support with the costs of living and learning.

    Using Universities UK’s annual sector figures as one indicator, roughly 5% of universities’ overall expenditure has gone towards financial support and outreach, equivalent to around £2.5 billion. Although some of this money will inevitably not go directly to students themselves, this is still a significant amount of spending.

    There are, naturally, competing tensions when it comes to considering any changes to targeted financial support. With significant financial pressures on students, exacerbated by the cost-of-living crisis, there is always a very justifiable case for more money. However, with the significant financial pressures universities are facing, there is an equally justifiable case to control costs to ensure financial sustainability. Every university has to manage this tension and trade-offs are inevitable when understanding just how much financial support to give and to whom.

    In many respects, the answers to those questions are partially governed by Access & Participation Plans, with the clear intention that these financial interventions really change student outcomes. However, properly measuring those outcomes is incredibly difficult without a much deeper understanding of student ‘need’ – and understanding these needs comes from being able to identify student spending behaviour (and often doing this in real-time).

    It always amazes me that some APPs will state that financial support ‘has had a positive impact on retention’ and some quite the opposite and I think part of this is a result of positioning financial support from the university end of the telescope rather than the student end.

    Understanding real and actual ‘need’ helps to change this. Knowing perhaps that certain groups (for example Asylum Seekers or Gypsy, Roma, Traveller, Showman and Boater students) across the sector will have similar needs would be helpful and data really help here. Having, using, and sharing data will allow us to draw a bigger picture and better signpost to where interventions are most effectively deployed so those particular groups of students who need support are achieving the right outcomes.

    Technology is at hand to help: Open Banking (for example) is an incredible tool that not only can transform how financial support can be delivered but also helps to build an understanding of student behaviour.

    Lifting the bonnet and understanding behaviour poses additional questions, such as: When is the right time to give that support? And what form should that support take?

    I am a big proponent of providing financial support as soon as a student starts. When I talk to universities, however, it is clear that the data needed to identify particular groups of students are not readily available at the point of entry and students’ needs are not met. Giving a student financial support in December, when they needed it in September, is not delivering at the point of student need, it is delivering at the point where the university can identify the student. I think there is a growing body of evidence that suggests the large drop off in students between September and December is, in part, because of this.

    Some universities in the sector give a small amount of support to all students at the start of the year, knowing that by doing so they will ensure that they can meet the immediate needs of some students. But clearly, some money must also go to those who do not necessarily need it.

    However, and this is where the maths comes in, if the impact of that investment keeps more students in need at university, then I would argue that investment is worth the return. And the maths is simple: it really doesn’t take many additional students to stay to have a profoundly positive impact on university finances. Thus it is certainly worthy of consideration.

    To me, this is about using financial support to drive the ultimate goal of improving student outcomes, especially the retention of students between September and December, which is when the first return is made, where the largest withdrawal is seen and where the least amount of financial support is given.

    As to the nature or format of support: of course, in most cases, it is easier to provide cash. However, again, this is about your investment in your student, and, for example, if you have students on a course with higher material and resource costs, or students who are commuting, then there is an argument to consider more in-kind support and using data to support that decision.

    Again, I am a proponent of not just saying ‘one size fits all’. Understanding student need is complex, but solutions are out there. It is important to work together to identify patterns of real student need and understand the benefits of doing so.

    My knowledge draws on JS Group’s data, based on the direct use of £40 million of specialist student financial support to more than 160,000 students across 30 UK universities in the last full academic cycle.

    I have also looked at the student views on such funding and there is an emerging picture that connects student financial support with continuation, participation and progress. A summary of student feedback is here: https://jsgroup.co.uk/news-and-views/news/student-feedback-report-january-2025/

    The real positive of this is that everyone wants the same goal: for fewer students to withdraw from their courses and for those students to thrive at university and be successful. We need to widen the debate on how financial support is delivered, when, and in what format to draw together a better collective understanding of student need and behaviour to achieve that goal.

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  • An early look at 2023–24 financial returns shows providers working hard to balance the books

    An early look at 2023–24 financial returns shows providers working hard to balance the books

    In most larger UK providers of higher education, the 2023–24 financial year ended on 31 July 2024.

    Five months and two weeks after this date (so, on or before 14 January 2025) providers are obliged to have published (and communicated to regulators) audited financial statements for that year.

    I’ve got a list of 160 large, well known, providers of higher education who should, by now, have made this disclosure – 43 of them are yet to do so. Of the 117 that have, just 15 (under 13 per cent) posted a deficit for that financial year (to be fair, this includes eight providers in Wales, where the deadline – for bilingual accounts – is the end of the month). This was as of the data of publication, there’s been a few more been discovered since then and I have added some to the charts below.

    If you’ve been aware of individual providers, mission groups, representative bodies, trade unions, regulators, and politicians coming together to make the case that the sector is severely underfunded this may surprise you. If you work in an institution that is curtailing courses, making staff redundant, and undergoing the latest in a long series of cost-cutting exercises, the knowledge that your university has posted a surplus may make you angry.

    But these results are not surprising, and a surplus should not make you angry (there are plenty of other reasons to be angry…) Understanding what an annual account is for, what a surplus is, why a university will pull out all of the stops to post a surplus, and what are the more alarming underpinning signals that we should be aware of will help you understand why we have what – on the face of it – feels like a counter-intuitive position in university finances.

    Why are so many results missing?

    There’s a range of reasons why a provider may submit accounts late – those who are yet to publish will already be deep in conversation with regulators about the issues that may have caused what is, technically, a breach of a regulatory condition. In England, this is registration condition E3. which is underpinned by the accounts direction.

    If you are expecting regulators to get busy issuing fines or sanctions for late submissions – you should pause. There’s a huge problem with public sector audit capacity in the UK – the big players have discrete teams that move on an annual cycle between higher education, NHS, and local government audit. You don’t need to have read too much into public finances to know that our councils are under serious pressure right now – and this pressure results in audit delays, hitting the same teams who will be acting as external university auditors.

    That’s one key source of delay. The other would be the complexities within university annual accounts, and university finances more generally, that offer any number of reasons why the audit signoff might happen later than hoped.

    To be clear, very few of these reasons are going to be cheerful ones. If a provider has yet to publish its accounts because they have not signed off their accounts, it is likely to be engaging with external auditors about the conditions under which they will sign off accounts.

    To give one example of what might happen – a university has an outstanding loan with a covenant attached to it based on financial performance (say, a certain level of growth each year). In 2023–24, it did not reach this target, so needs to renegotiate the covenant, which may make repayments harder (or spread out over a longer period). The auditor will need to wait until this is settled before it signs off the accounts – technically if you are in breach of covenant the whole debt is repayable immediately, something which would make you fail your going concern test.

    We’ve covered covenants on the site before – a lender of whatever sort will offer finance at an attractive rate provided certain conditions are met. These can include things like use of investment (did you actually build the new business school you borrowed money to build?), growth (in terms of finances or student numbers), ESG (are you doing good things as regards environment, society, and governance?) and good standing (are you in trouble with the regulator?) – but at a fundamental level will require a sense that your business is financially viable. If covenant conditions are breached lenders will be keen to help if they hear in advance, but your cost of borrowing (the interest rate charged, bluntly) will rise. And you will find it harder to raise finance in future.

    This is an environment where it is already hard to raise finance – and in establishing new borrowing, or new revolving credit (kind of like an overdraft facility) many universities will end up paying more than in previous years. This all needs to be shown in the accounts.

    Going concern

    When your auditor signs off your accounts, you would very much hope that it will agree that they represent a “going concern” – simply put, that in most plausible scenarios you will have enough money to cover your costs during the next 12 months. If your auditor disagrees that you are a going concern you are in serious trouble – all of the 117 sets of accounts I have read so far have been agreed on a going concern basis.

    This designation tells everyone from regulators to lenders to other stakeholders that your business is viable for the next year – and comes into force on the day your accounts are signed off by the university and external auditor. This is nearly always for a specific technical reason – additional information that is needed in order to make the determination. For some late publications, it is possible that the delay is a deliberate plan to make the designation last as far into the following financial years as possible. This year (2024–25) is even more bleak than last year – anything that keeps finance cheaper (or available!) for longer will be helpful.

    Breaking even and beyond

    So your provider had a surplus last year – that’s good right? It means it took in more money than it spent? Up to a point.

    In 2023–24 we got the very welcome news that Universities Superannuation Scheme (USS) has been revalued and contributions reduced for both members and employers. From the annual accounts perspective, this will have lowered staff costs (very often one of the most significant costs, if not the most significant cost, for most) in USS institutions. Conversely, the increase in Teachers Pension Scheme (TPS) contributions will have substantially raised costs in institutions required by law (yes, really!) to offer that scheme to staff.

    That’s some of the movement in staff costs. However, for USS, the value of future contributions to the current calculated scheme debt (which is shared among all active employers in the scheme) has also fallen. Indeed, as the scheme is currently in surplus, it shows as income rather than expenditure This is not money that the university actually has available to spend, but the drop shows out in staff costs – though most affected separate this out into a separate line it also shows up in the overall surplus or deficit (to be clear this is the accounting rules, there’s no subterfuge here: if you are interested in why I can only point you to BUFDG’s magisterial “Accounting for Pensions” guidelines).

    For this reason, many USS providers show a much healthier balance than accurately reflects a surplus they can actually spend or invest. This gives them the appearance of having performed as a group much better than TPS institutions, where the increase in contributions has made it more expensive to employ staff.

    Here I show the level of reported surplus(deficit) after tax, both with and without the USS valuation effect. Removing the impact of valuation puts 35 providers (including big names like Hull, Birmingham, and York) in deficit based on financial statements published so far.

    [Full screen]

    And here I show underlying changes in staff costs (without the USS valuation effect). This is the raw spend on employing staff, including pay and pensions contributions. A drop could indicate that economies have been sought – employing fewer staff, employing different (cheaper) staff, or changes in terms and conditions. But it also indicates underlying changes in TPS contributions (up) or USS contributions (down) with respect to current employees on those schemes.

    [Full screen]

    Charts updated 11am 27 January to remove a handful of discrepancies.

    Fee income

    For most universities the main outgoing is staff costs, and the main source of income is tuition fees. Much has been made of the dwindling spending power of home undergraduate fees because of a failure to uprate with inflation, but this line in the accounts also includes unregulated fees – most notably international fees and postgraduate fees. The full name of the line in the accounts is “tuition fees and educational contracts”, so if your provider does a lot of bespoke work for employers this will also show up here.

    Both of these areas of provision have seen significant expansion in many providers over recent years – and the signs are that 2023–24 was another data point aligned with this trend for postgraduate provision. For this reason, the total amount of fee income has risen in a lot of cases, and when we get provider level UCAS data shortly it will make it clear that just how much of this is due to unregulated fees. International fees are another matter, and again we need the UCAS end of cycle data to unpick it, but it appears from visa applications and acceptances that from some countries (China, for example) demand has remained stable, while for others (Nigeria, India) demand has fallen.

    Here I show fee income for the past two years, and the difference. This is total fee income, and does not discriminate between types of fees.

    [Full screen]

    One very important thing to bear in mind is that these are figures for the financial year, and represent fees relating to that year rather than the total amount of fees per student enrolled. For example, if a student started in January (an increasingly common start point for some courses at some institutions) you will only see the proportion of fees that had been paid by 31 July shown in the accounts. If you teach a lot of nursing students who start at non-traditional times of the year this will have a notable impact, as will a failure to recruit as many international students as you had hoped to do in January 2024 (though this will also show up in next year’s accounts).

    And it is also worth bearing in mind that income from fees paid with respect to students registered at the provider but studying somewhere else via an academic partnership, or involved in a franchise arrangement (something that has seen a lot of growth in some providers) shows up in this budget line.

    Other movements

    Quite a number of providers have drawn down investments or made use of unrestricted reserves. This is very much as you would expect, these are very much “rainy day” provisions and even if it is not actually raining now the storm clouds are gathering. Using money like this is a big step though – you can only spend it once, and the decision to spend it needs to link to plans not to need to spend it in the near future. So even if your balance looks healthy, a shift like this speaks eloquently of the kinds of cost-saving measures (up to and including course closures and staff redundancy) that you may currently see happening around you.

    Similarly, a provider may choose to sell assets – usually buildings – that it does not have an immediate or future use for. The costs of running and maintaining a building can quickly add up – a decision to sell releases the capital and can also cut running costs. Other providers choose to hang on to buildings (perhaps as assets that can be sold in future) but drastically cut maintenance and running costs for this reason. Again, you can (of course) only sell a building once, and a longer term maintenance pause can make it very expensive to put your estates back into use. I should note that the overall condition of university estates is not great and is declining (as you can read in the AUDE Estates Management Report) , precisely because providers have already started doing stuff like this. If the heating seems to be struggling, if the window doesn’t open, that’s why.

    In some cases we have seen decisions to pause capital programmes – not borrowing money and not building buildings as was previously planned. Here, the university makes an on-paper saving equivalent to the cost of finance if it was going to borrow money, or frees up reserves for other uses if it was using its own funds. Capital programmes don’t just include buildings – perhaps investment in software (the kind of big enterprise systems that make it possible to run your university) has been paused, and you are left struggling with outdated or unsuitable finance, admissions, or student record systems.

    Where we are talking about pausing building programmes it is important to remember that these exist to facilitate expansion or strategic plans for growth. The “shiny new building” is often perceived as a vice chancellor’s vanity project – in reality that new business school and the recruitment it makes possible may represent the university’s best hope of growing home fee income faster than inflation.

    What’s next?

    We see financial information substantially after the financial year ends – and for most larger providers this comes alongside the submission of an annual financial return to their regulator. We know for instance that the Office for Students is now looking at ways of getting in year data in areas where it has significant concerns, but financial data (by dint of it being checked carefully and audited) is generally historic in nature.

    For this reason what is happening on your campus right now is something that only your finance department has any hope of understanding, and there may be unexpected pressures currently driving strategy that are not shown (or even hinted at) in last years’ accounts. Your colleagues in finance and planning teams are working hard to forecast the end of year result, to calculate the KFIs (Key Financial Indicators) that others rely on, and to plan for the issues that could arise in the 2025 audit. The finance business partners or faculty accountants – or whatever name they have where you work – will be gathering information, exploring and explaining scenarios, and anticipating pressures that may require a change in financial strategy.

    The data I have presented here is drawn from published accounts – the data submitted to regulators that eventually ends up on HESA may be modified and resubmitted as understanding and situations change – for this reason come the early summer figures might look very different than what are presented here (I should also add I have transcribed these by hand – for which service you should absolutely buy me a pint) – so although I have done my best I may have made transcription errors which I will gladly and speedily correct.

    However scary your university accounts may be, I would caution that the next set (2024–25 financial year) will be even more scary. The point at which the home undergraduate fee increase in England kicks in for those eligible to charge it (2025–26) feels a long way off, and we have the rise in National Insurance Contributions (due April 2025) to contend with before then.

    There are a small but significant number of large providers looking at an unplanned deficit for 2024–25, as you might expect they will already be in contact with their regulator and their bank. Stay safe out there.

    If you are interested in institutional finances, I must insist that you read the superb BUFDG publication “Understanding University Finance” – it is both the most readable and the most comprehensive explanation of annual university accounts you will find.

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  • Rethinking the Financial Challenge of English Universities

    Rethinking the Financial Challenge of English Universities

    By Adam Habib, Vice-Chancellor at SOAS University of London, and Lord Dr. Michael Hastings of Scarisbrick CBE, Chair of the Board of Trustees at SOAS.

    The business model of English higher education is broken. We are not sure that this simple fact is sufficiently understood by all stakeholders in higher education. Do not mistake us: we all recognise the serious financial crises that most English universities are confronting. But this is not the same as understanding its causal features and what to do about it. The latest financial report from the Office for Students (OfS), released in mid-November, suggests 72% of English universities will be in deficit by the end of the academic year if they continue as is. It does not suggest much about how to address it. In fact, it does not even ask why the other 28% of universities are not in deficit. Is this because of their historical endowments or their specific student profile, or are they doing something the others are not?

    But the OfS is not the only stakeholder reluctant to ask the hard questions: how we got here and what to do about it. This malady afflicts almost all other stakeholders. Let’s begin with the basics. Almost three decades ago, the British government committed to massifying education and ensuring that at least 50% of their school-leaving population had the privilege of going to university. The challenge was how to pay for it. They introduced fees, first as a small proportion of the actual cost in 2006, and then to cover the entire cost in 2012 (at least for Business degrees, Humanities and the Social Sciences). The popular backlash this generated, especially since almost all universities rushed to implement the maximum permitted fee, led the politicians to subsequently avoid increasing fees in line with inflation. The net effect was that within a few years, the actual cost of university education outstripped the fees.

    The solution followed by most universities was to increase international fees and their intakes of foreign students. To attract more of these students, universities borrowed heavily, built shiny new facilities, expanded their pastoral services and grew their student numbers. This was assisted in part by the removal of student number caps on home students. Costs increased, and to cover these, more income was required, which led to even higher international fees and more foreign students.

    All higher education stakeholders were complicit in this. The Government initially supported this solution because it obviated the need for more government subsidies and enabled foreign currency earnings. Vice-chancellors and higher education executives deluded themselves in thinking that the international postgraduate masters students came to the UK universities because of their institutions’ research reputations, even though survey after survey demonstrated that these students were increasingly attracted by the prospect of employment prospects and the post-study visa. Unions, both academic and professional service ones, acquiesced given that these international fees enabled higher salaries and subsidised greater research time for academics. There was even broader public support as it contained the fees for domestic students.

    Until of course, a new breed of ethnically oriented right-wing politicians mobilised on the chauvinistic instinct of there being too many foreigners in Britain. This first manifested in Brexit, then China and subsequently all foreigner-bashing, and finally visa restrictions on dependents. The net effect was a dramatic fall in applications and enrolment of international students, with the ensuing financial crisis of universities in the UK. A positive spin-off of this state of affairs is that almost all stakeholders now recognise the flimsy fiscal foundation of universities. The negative feature is that it still has not generated an honest reflection and behaviour on the part of all stakeholders or a sufficiently deep deliberation on the business model of higher education in the UK and what to do about it.

    Take, for instance, the stance of government. The Secretary of State for Education announced in the House of Commons on 4 November 2024 the first university fee increase for undergraduate students in eight years. Yet the Chancellor had increased the Employer National insurance a few days before from 13.8 to 15 percent. The net effect is a further loss of £59 million for universities in the UK from the 2025/26 academic year.

    Neither is the debate in universities more imaginative on what to do about the financial crisis and the business model of higher education. University vice-chancellors and Universities UK have recognised the need to revert to greater public funding for higher education, although there is a broad recognition that this is an unlikely solution in the near future given the fiscal crisis of the state. They have suggested through individual vice-chancellor advocacies that universities would require the financial equivalence of £12,000 fees, but again, almost all recognise the political challenge of achieving this during a cost-of-living crisis. The reluctant fallback back? A retreat to international student fees by retracting or reforming the visa restrictions, thereby allowing for further increases in income from foreign students.

    But this is just not a feasible solution for the long term. Higher education in the UK has priced itself out for ordinary international students looking solely for a higher education qualification. The only rationales for postgraduate master’s students accessing UK universities, given their high-cost structure, are either post-study employment or the learning of a specific qualification not available in alternative higher education settings. The former is increasingly becoming politically unfeasible, and the latter is not a sufficiently large market to financially sustain British universities.

    This is in addition to the moral and commercial challenges of this business model. As we have suggested elsewhere, there should be serious objections to this model, which is effectively directed towards sucking out resources from countries far more impoverished than the UK, to essentially cross-subsidise domestic citizens. Moreover, it accelerates the brain drain, weakening institutional capacities and human capabilities in the majoritarian world at precisely the moment when such societies require an enhancement of capabilities to address the local manifestations of transnational challenges like climate change, pandemics, food insecurity and war.

    Where to go from here, then? First, there is an urgent need for an honest conversation led by government without any smoke and mirrors on the fiscal latitude available to it and the consequences thereof for the financing of higher education. Second, there is a need for a thorough reflection on what has fiscally worked, and what has not in the recent past on the management and executive stewardship of universities in the UK. Third, there is a need for an honest discussion in universities on the fiscal viability of excessively small classes and unduly low staff-student ratios, 40% research time for all teaching and research contracts, and the importance of institutional differentiation in mandates and how these should speak to the former two elements. Finally, we need to think through the limits of cross-subsidising from international student fees and what new opportunities are opening up globally for fulfilling our institutional mandates.

    One opportunity, that has not been sufficiently explored by British universities, is how to assist in the education and training of hundreds of millions of young people in the majoritarian world. This is an urgent necessity not only for the economic development of these societies but also for enabling societies across the world to manage the transnational challenges of our time, without which we may not survive as a human species. Obviously, this will not be possible on the existing cost structures or business models of higher education. But partnering with universities in the Global South, involving the joint development of curricula, co-teaching and co-assessment, could bring down cost structures of higher education. This could then feed into more reasonable fees being charged, thereby opening up new higher education markets for British universities. Cost structures could also be reconsidered in relation to scale. The more students there are within a program, limited to pedagogical requirements, the more cost per student is reduced, and the more competitive fees can become. New technologies involving online teaching and global classrooms, many of which were pioneered for our own students during the Covid-19 Pandemic, can make this equitable transnational teaching even more feasible.

    Some forms of transnational teaching are already underway in UK universities. But these often take the form of online learning, overseas campuses and franchise models of higher education, all of which are only directed at obviating the financial challenges of British universities. While we would be reluctant to take rigid positions against these models – they may indeed be relevant in certain contextual circumstances – we do hold that the equitable partnership model identified above holds the pedagogical benefit of enabling learning that is both globally grounded and locally relevant. It also does not pit the financial security of British universities against that of universities of the majoritarian world. Essentially, these equitable teaching partnerships can pioneer one element of a new business model that enhances collaboration and mutual benefit for universities in the UK and the majoritarian world.

    Such a model of higher education could also become part of the soft power arsenal of the UK. Increasingly, government has broached the idea of a global Britain. This would be a Britain recognised as a collaborative partner of other nations, enabling them to achieve their national objectives, while enabling itself to be economically competitive and socially responsive to both its own citizens and its international obligations. An equitable orientation to its higher education system would assist this strategic national agenda.

    We are by no means suggesting that equitable transnational learning should replace all other forms of teaching in UK higher education. This would be unrealistic and, frankly, would violate the responsibility of British universities to be nationally responsive. Instead, we recommend that in the pursuit of a financially sustainable higher education system, a diverse set of income strategies – subsidy, domestic fees, international fees, ODL, executive education and equitable transnational educational partnerships – is required. This final strategy not only opens up a new higher education student market at a different price point but also enables us to square our imperative to be financially sustainable with our commitment to be socially and globally responsive.

    The strategic challenge of managing higher education institutions in the contemporary era is the management of tensions between competing imperatives. It also requires thinking outside the box, innovating and finding new markets, and servicing these at new price points, while continuing to meet the social obligations implicit in the mandate of universities. This is what we believe is sometimes missing from the deliberations on making British universities financially sustainable. The debate can only be enriched and the recommendations made more robust if we are prepared to think beyond what we are comfortable with.

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  • Making Higher Education More Affordable: The Role of Financial Aid Strategies

    Making Higher Education More Affordable: The Role of Financial Aid Strategies

    Key Takeaways:

    • Financial aid optimization transforms financial resource allocation into a strategic enrollment tool, aligning affordability for students with institutional goals.




    • By leveraging real-time data and tools like Liaison Othot, institutions can craft tailored financial aid strategies that address individual student needs and enrollment strategies.




    • Optimization enables proactive adjustments to financial aid strategies, ensuring accessibility while supporting student retention and institutional sustainability.




    • Strategic financial aid leveraging balances affordability for students with long-term enrollment and revenue objectives.

     

    The rising costs of higher education and fear of long-term debt have left many prospective students and their families questioning whether they can afford to pursue their academic dreams. For institutions, this presents a dual challenge: attracting diverse students and ensuring enrollment goals align with their mission. An effective and aligned financial aid optimization strategy offers a powerful tool to meet a campus’s enrollment goals. By combining institutional funds with federal and state resources effectively, colleges and universities can increase access and affordability in higher education while achieving broader enrollment objectives.

    From offering enough aid to make tuition manageable to continuously refining financial aid strategies based on real-time information, optimizing plays a pivotal role in strategic enrollment management (SEM). It transforms financial aid awarding from a static process into a dynamic tool that not only attracts and enrolls students but also supports their retention by effectively meeting their financial needs.

     

    What Is Financial Aid Optimization?

    Financial aid optimization transforms the allocation of financial resources into a critical enrollment tool. By aligning the overall enrollment leveraging strategy—regularly and in real-time at the individual level—optimization allows campuses to address student affordability needs in a unique and tailored way.

    At its core, optimization is a dynamic, data-informed process. Institutions develop annual plans for allocating financial aid (leveraging), basing decisions on previous cycles’ successes and challenges. Unlike traditional static leveraging models, modern optimization approaches incorporate continuous adjustments informed by real-time data. This lets colleges and universities respond proactively to shifting enrollment trends and keeps their financial aid strategies effective throughout the year.

     

    How to Make Higher Education More Affordable and Accessible

    More accessible higher education starts with understanding the financial challenges students face. For many undergraduates, the cost of tuition, housing, books, and other expenses can make college seem out of reach, even with federal and state aid. For example, a student from a low-income household may find that even the maximum Pell Grant award leaves a significant financial gap. Similarly, a middle-income family might struggle to cover tuition despite not qualifying for significant need-based aid.

    Financial aid leveraging allows institutions to tackle these challenges head-on by creating tailored aid packages that remove financial barriers for students. This approach relies on a mix of need-based and merit-based strategies, often informed by tools like FAFSA data and predictive analytics.

    One of the key advantages of financial aid optimization is its flexibility. Institutions can use data to fine-tune aid offerings based on unique student needs and behaviors. For instance, Liaison’s Othot platform, a cloud-based predictive and prescriptive analytics tool designed specifically for higher ed, can analyze factors such as a student’s location, academic profile, and campus engagement to build aid packages thatneeds. This granularity ensures that the financial aid awarding strategy not only meets the affordability threshold for students also aligns with the overall enrollment strategy being employed on the campus. An aligned optimization approach ensures that the affordability component is integrated into the strategy for specifically targeted cohorts or students, maximizing the likelihood of their enrollment.

    Optimization also lets institutions adapt aid policies for entire cohorts or demographic groups. For example, schools can address rising inflation in high school GPAs by recalibrating merit-based awards to prioritize equity and maintain fairness in their financial aid distribution. This adaptability keeps aid plans relevant as the dynamics of higher education continue to shift. By relying on data and continuously streamlining their financial aid models, institutions can make higher education more attainable for all students while maximizing their impact.

     

    The Strategic Impact of Financial Aid Optimization

    Financial aid optimization goes beyond simply helping students cover tuition—it’s about achieving a delicate balance between affordability for students and sustainability for institutions. By carefully crafting aid packages that meet the financial needs of students without overextending institutional resources, colleges and universities can enhance their enrollment efforts while maintaining financial health.

    For example, reallocating funds for strategic distribution among students could result in higher net tuition revenue (NTR) without sacrificing enrollment numbers. This demonstrates how strategic adjustments can yield significant results when financial aid decisions are guided by data, tailored to meet institutional priorities, and aligned to overall enrollment strategies.

    Retention and persistence are critical factors to consider when determining how to optimize financial aid. An effective leveraging model doesn’t stop at enrollment and the conclusion of a successful first year—it considers the long-term success of students. By analyzing which cohorts are more likely to persist and graduate, institutions can refine their aid offerings to improve outcomes for all students. This approach ensures that financial aid strategies not only attract students but also support their success throughout their academic journey.

     

    Aligning Financial Aid With Student Success and Institutional Goals

    Financial aid optimization is a powerful way to make higher education more accessible while helping institutions achieve their objectives. By combining institutional, federal, and state resources with data-driven optimization tools, colleges and universities can craft aid strategies that address affordability, bolster student retention, and maximize their impact.

    Institutions looking to enhance their financial aid and enrollment can benefit from Liaison’s suite of solutions, including Othot. Whether your team is just beginning to explore financial aid leveraging or has years of experience, Liaison’s tools provide the flexibility and insights needed to meet your unique goals. From devising an initial plan to optimizing existing processes, our solutions are designed to assist schools at every stage of their journey. Contact us today to learn more.

     

     

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  • Financial Aid Conversation Strategies for Enrollment Success

    Financial Aid Conversation Strategies for Enrollment Success

    The decision to enroll in college is significant, and students rely on institutional guidance to make informed choices. Financial information, particularly regarding tuition costs and financial aid, is often one of the first things they seek. Unfortunately, many higher education institutions struggle to initiate the conversation early in the enrollment funnel, which can lead to student frustration, decreased enrollment, and potentially higher student debt.

    Engaging in financial aid discussions with prospective students early on in their enrollment journey is a crucial opportunity to alleviate concern and create a smoother experience. We’ve put together actionable strategies to help higher ed professionals initiate these conversations, better manage the student experience, and remove a significant barrier from their decision-making process. Explore strategies for how and when to have these conversations and highlight the key differences between traditional students and online adult learners, providing insights to increase enrollment and student success.

    Gain additional insights into effectively managing financial aid discussions in our latest recorded webinar.

    The Importance of Early Funnel Financial Advising

    As consumers in today’s digital age, Modern Learners are accustomed to having information instantly accessible at the click of a button.  Before committing to a program, students seek transparency about tuition costs and financial aid directly on the university’s website. According to EducationDynamics’ Online College Students Report, 90% of online college students begin their search on a college’s website, with 60% specifically looking for cost and financial information. However, only 36% report being able to easily find this critical information. The report also reveals that 58% of students prefer to learn about costs when they first visit a school’s website, while 26% expect this information after their initial inquiry.  Only 10% are willing to wait until they hear back from the school post-application, and just 6% after acceptance. These findings identify a critical gap in the student experience.

    Addressing this gap is vital for effectively guiding students through their enrollment journey. It’s also important to acknowledge that not all students have the same familiarity with navigating college financial processes. For example, the Online College Students Report found that 36% of online college students are first-generation college students, who may lack experience with navigating the college enrollment process, making conversations centered on financial aid even more critical.

    Additionally, many online students have already incurred student loan debt from prior enrollment, which can impact their ability to finance their education through federal aid alone. This existing debt often influences their decision to re-enroll. Therefore, engaging in financial discussions and understanding the impact of various factors, such as debt and previous financial experiences, is essential.

    Tailoring financial information and support to meet diverse needs is just one part of the broader conversation about enhancing financial literacy for prospective students. Financial literacy is an important component of their overall student journey, and by prioritizing this education and personalizing the approach, institutions can better support their students’ success while also improving enrollment outcomes.

    Building a Comprehensive Financial Aid Conversation Strategy

    When a prospective student inquiries and connects with an advisor, it presents an invaluable opportunity to provide a comprehensive review of tuition, costs, and all available financial options. At this stage, it’s important to ask questions that allow for individualized support, offering personalized answers tailored to each student’s specific financial situation. Remember, many students may already feel frustrated after struggling to find this information on the website. To address this, proactive financial conversations are key.

    Despite the importance of financial clarity, many enrollment interviews with prospective students fail to delve deeply into financial options. Instead, students are often directed to only the FAFSA, which limits the students access to information on other options. Discussing other options, such as scholarships, grants, and payment plans, can help reduce the greater debt load and give students a clearer understanding of how financial decisions impact them each academic year.

    Student Journey Mapping

    Student journey mapping is a strategic process that helps institutions visualize and optimize the student experience from initial inquiry to enrollment. When integrated with financial advising, student journey mapping becomes a powerful tool for identifying gaps in existing financial aid conversations and ensuring students receive the support they need early in their enrollment process.

    To start, assess your current student journey map by identifying all pre-enrollment touchpoints where financial advising is currently provided. Consider where financial discussions are taking place and how they are being conducted.

     Ask questions such as:

    • Where is financial advising currently provided?
    • How is financial information currently provided?
    • What gaps exist in these conversations?

    Once you have reviewed your existing student journey map, create a revised version that reflects a best-case scenario student journey. Consider the following:

    • Has the party responsible for financial advising changed or evolved?
    • Is the current system access still relevant?
    • Are there training or knowledge gaps that need to be addressed?
    • What specific questions should be asked during pre-enrollment advising to better address students’ financial needs?

    By addressing these considerations, institutions can create a more seamless and supportive financial advising experience that meets the unique needs of prospective students.

    For more detailed guidance on student journey mapping, visit our Student Journey Mapping page.

    Training Enrollment Teams

    Effective financial aid conversations are instrumental to student success, and well-trained enrollment teams can make a significant impact. With well-trained enrollment teams, institutions can provide clarity and support while fostering trust in the financial aid process. Here are four strategies for ensuring your team is prepared:

    1. Sell the Vision: Communicate the importance of financial aid discussions in shaping the student experience, motivating your team to approach these conversations with empathy and purpose.
    2. Solicit Feedback: Ask your enrollment team for input on their challenges and needs to ensure that training practices directly address their concerns.
    3. Create or Outsource High-Quality Training Content: Develop or outsource engaging training content that covers financial aid topics. Consider leveraging professional support, such as our Financial Aid Advising services, to ensure your team is thoroughly supported.
    4. Incorporate Relevant Resources or Data: Integrate current data and resources into your training materials, such as insights from the Online College Students Report to help your team understand the specific financial challenges students face and how to address them effectively.

    By implementing these strategies, your team will be better equipped to guide students through complex financial decisions, ensuring they feel supported from the first conversation through to enrollment.

    Beyond FAFSA

    While the FAFSA is a starting point for financial aid, it’s important to explore a range of financial aid options to better address varying student needs.

    Students may benefit from alternative financial aid options such as tuition reimbursement programs, employer-sponsored education benefits, scholarships, grants, and flexible payment plans. These resources can help reduce their reliance on loans and alleviate stress throughout their academic journeys.

    Through presenting a range of financial aid options, institutions can empower students with greater access to financial support, increasing their chances of enrollment success while minimizing financial stress.

    Monitoring and Adapting

    To better understand the effectiveness of your advising strategies, consider tracking key performance indicators (KPIs) related to financial aid conversations. Monitoring these KPIs allows you to identify areas of improvement and make necessary adjustments to ensure students receive the best possible support.

    Relevant KPIs to track include:

    • FAFSA Submission Time: Measure how quickly students are completing their FAFSA applications after engaging in financial aid conversations.
    • Packaging to Direct Cost: Track how effectively financial aid packages cover direct costs, such as tuition and fees.
    • Revised Award Letters/Packages: Monitor the frequency and outcomes of revised award letters or financial aid packages based on ongoing financial aid discussions.
    • Increased Payment Plans: Look for a rise in students adopting flexible payment plans due to better financial aid conversations.
    • Tuition Reimbursement: Track the usage of tuition reimbursement or employer-sponsored education benefits as alternative financial aid options.

    Continuous monitoring and adjusting as needed are key to optimizing the financial advising process. By regularly reviewing KPIs and the quality of financial aid conversations, enrollment teams can ensure that their advising strategies remain effective and aligned to student goals.

    Resources and Next Steps

    Leverage Our Expertise

    At EducationDynamics, we recognize that navigating the financial aid process can be a challenging part of the student journey. Our dedicated financial aid coaches provide your team with personalized support, helping to reduce the workload on your internal teams, allowing them to focus on core responsibilities. By partnering with us, you can streamline the financial aid process, increase efficiency, and improve enrollment outcomes.

    Watch the Recorded Webinar

    For a deeper dive into effective strategies for addressing financial aid conversations with prospective students, don’t miss our recorded webinar. This session offers valuable information on integrating financial guidance into the pre-enrollment experience and enhancing your financial aid conversations. Watch the recording now to access comprehensive approaches that can augment your institution’s financial advising process.

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  • Public Service Loan Forgiveness: Help Employees Achieve Their Financial Goals

    Public Service Loan Forgiveness: Help Employees Achieve Their Financial Goals

    by Julie Burrell | September 17, 2024

    The Public Service Loan Forgiveness (PSLF) program can offer significant financial relief to higher ed employees, but many don’t know they qualify for this benefit. PSLF is open to most full-time higher ed employees of nonprofit colleges and universities who have direct federal student loans.

    HR can spread the word to current employees and use loan forgiveness as part of a retention and recruitment strategy. The average amount of individual loan forgiveness under the PSLF is $70,000, which makes the PSLF an especially attractive benefit to potential employees.

    Here’s what you need to know about who qualifies for PSLF, how to offer a free webinar on PSLF to your employees, and what steps you can take to ensure eligible employees enroll.

    What is PSLF?

    Public Service Loan Forgiveness forgives the balance of direct federal student loans after 120 qualifying payments made by the borrower if they work for a qualifying employer (after October 1, 2007) and are under a qualifying repayment plan. It’s intended to reward and incentivize public service, like teaching, nonprofit work and work in the public sector. PSLF eligibility isn’t about what job an employee does or what their job description is; it’s about where they work.

    Who qualifies for PSLF?

    Full-time employees of a nonprofit organization or a federal, state, tribal, or local government are eligible. Full-time work is defined as 30 hours or more per week. That means most full-time higher ed employees are eligible for PSLF, including those who may work part time at your institution but are also employed at other qualifying jobs (as is the case with many adjuncts). But the PSLF only applies to direct federal student loans. Borrowers with other federal student loans may be able to consolidate them into a direct federal student loan.

    How do I ensure my institution counts as an eligible employer?

    Use the PSLF Help Tool, which will search the federal employer database. The help tool is also useful to recommend to employees since it’s a step-by-step guide through the enrollment process.

    Six Tips for Getting the Word Out

    1. Partner with Public Service Promise, a nonprofit, nonpartisan organization that offers free webinars led by experts.
    2. Encourage HR staff to apply for PSLF. With firsthand experience, you and your team will be able to speak knowledgeably about the process.
    3. Publicize PSLF as a benefit to your employees, especially those who may not know they can take advantage of this program, including adjuncts and non-exempt and part-time employees.
    4. Include information about PSLF on your benefits websites or portal.
    5. Consider appointing a knowledgeable point person on campus, like a financial aid officer, to help answer employee questions.
    6. Involve non-exempt, adjunct and part-time employees in outreach campaigns. Employees can meet the 30 hours per week requirement with more than one job. So if they have multiple jobs at multiple qualifying employers, employees can add those hours up. And the PSLF instructions include how to calculate hours worked by adjunct faculty. Payments do not need to be consecutive, so even adjuncts without summer appointments can still take advantage of PSLF and start to chip away at the 120 payments.



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