One might think that the main job of a Vice President of Enrollment Management is, well, enrollment and recruitment. While that’s definitely true, these enrollment leaders cannot, and must not, operate in a vacuum. Finding a VP of Enrollment who has a deep understanding of—and interest in—finances is crucial to building an enrollment strategy that truly works.
Statistics to Consider
The financial situation in higher education is complicated for everyone involved, from instructors to institutions to the students and families. It’s also one of the most important factors in college decision-making – so it needs to be one of the key factors on which enrollment teams keep a keen eye.
According to one CNBC report, 74% of respondents representing colleges and universities said that the most significant challenge facing their school is financial constraints. It’s even cloudier for smaller institutions: 79% of schools with under 5,000 students cited financial issues as their top challenge, as compared to just 52% of schools with over 30,000 students enrolled. Overall, 60% of respondents indicated they are very concerned about the overall financial stability of their institution.
Financial aid is key for both institutions and students, but it’s also a source of many concerns on both sides. CNBC’s report notes that a significant majority of institutions (79%) said they worry about meeting the increased financial aid needs of students because of the pandemic; this is true across all sizes of colleges, not just smaller ones. Meanwhile, 56% of students and parents expect college costs to rise this year, by $8,700 on average, making financial aid even more of a factor.
“A number of institutions just won’t survive this,” Ken Simek, a partner at management consulting firm Mercer, told CNBC. “They’ll either merge with other institutions or close their doors altogether.” To avoid this fate for your institution, it’s important to have a strong VP of Enrollment who is well-versed in financial strategies and has the creativity and adaptability to figure out a way to survive and thrive.
Where’s the Money Coming From?
Funding for colleges and universities is a complicated system encompassing federal, state, and local governments, other institutions, donors, families and students, nonprofits, and other sources. It’s important for a VP of Enrollment, along with other leaders, to understand this financial ecosystem, where the stresses originate and emerge, and where new sources can be found.
For public institutions, government funding – particularly state and local funding – plays a major role. The raw numbers, however, don’t tell the whole story; it’s the relationship between different statistics that’s much more revealing. Pay attention to both the dollar amounts and percentages of overall funding for a more complete picture, not just one or the other. If actual dollars from government sources increase, but their percentages of total funding decrease, it could indicate that the dollars aren’t being spent on core (research and instruction) functions. Institutions often have a fair bit of spending discretion, albeit with some exceptions and earmarks, so decreasing percentages being spent on actual instruction needs to be noted.
This is very much in the realm of concern for the enrollment team. After all, it’s much harder to attract top faculty without financial support, and it’s much harder to meet enrollment goals without a track record of great faculty and other learning resources.
Tuition, of course, is also a major source of revenue for most institutions (even more so at private institutions that can’t lean as heavily on government funding). A VP of Enrollment needs to have a thorough understanding of the relationship between their institution’s enrollment goals and projections, the decisions made on setting tuition and fees, and the structure and factors of the admissions process.
Keep in mind that tuition does not typically cover the full cost of students’ educations, and many students, with the help of financial aid from institutions and outside sources, pay considerably less than “sticker price.” In fact, the American Council on Education (ACE) estimated that, on average, students directly pay around one-third of the actual costs. This means that enrollment numbers are only one part of the financial puzzle, but a crucial one nonetheless.
Regardless of the fact that many students ultimately don’t pay full price tuition, those “sticker” prices still impact enrollment strategies. When governments cut their budgets, public institutions raise tuition to cover shortfalls; meanwhile, private institutions are constantly raising expenditures (and thus need to raise income) to remain competitive. There is a direct inverse relationship between the level of state appropriations and the level of tuition increases, which means that the enrollment team must find ways to attract students who may be frustrated or intimidated by rising tuition costs.
For example, in 1980, states provided 46 percent of the operating support for public colleges and universities. By 2005, that amount had fallen to a dramatic 27 percent. During the same 25-year period, tuition’s “share” of the revenue pie increased from 13 percent to 18 percent. Essentially, for public colleges and universities, tuition increases aren’t raising more net funds – they’re just offsetting budget cuts.
Because of this, enrollment leaders need to have a deep understanding of other income and funding sources as well. Endowments, for instance, may be a significant source of income, especially for private institutions, but it’s important to truly understand how these do (or don’t) contribute to the regular operating budget, and what the decision-making process is behind that. Endowments can help offset tuition challenges and maintain access – which in turn is important for enrollment teams looking to maintain or increase diversity and access for a wider array of students – but your enrollment leadership needs to have access and understanding of how much investment/endowment income was anticipated in budget planning, and how any funds are actually allocated.
What Does Success Look Like?
The simple truth is, enrollment and financial priorities are inextricably linked. Finances are a major factor in college decision-making for students and families. The balance between access and quality is a tension that every institution, private and public, is constantly trying to figure out.
So what can – and should – a VP of Enrollment be doing? Understanding the data means understanding what the institution’s enrollment and recruitment practices need to look like. Keep in mind questions like the following:
- What kind of aid packages can the institution offer?
- What makes the institution attractive to students?
- Where does the money come from, and where does it go – and how can your institution find a strategy that sits in the middle?
- How can your institution balance competitive offerings and quality of education (which is tied to how to attract high quality instructors, not just attracting students), while also looking for sources of revenue and how enrollment goals factor into the overall budget?
By staying on top of the details of finance, an excellent VP of Enrollment won’t be taken by surprise and will be able to find flexible solutions to meeting enrollment goals, which are so often tied to financial benchmarks. Stay informed and get innovative, and you’ll be ahead of the game!
By Ruben Moreno
About the Author
After a 25-year career in Corporate Human Resources and HR Executive Search, Ruben and his two partners co-founded Blue Rock Search based on a simple but ambitious vision of creating a firm that would “Change Lives and Organizations One Relationship at a Time.” Ruben leads the Blue Rock HR Executive Search and Higher Education Executive Search practice specializing in identifying, assessing, recruiting, and onboarding key executives in HR, Diversity, Enrollment, Student Affairs, and Advancement. Ruben is a thought leader who has helped place hundreds of executives. His clients consider him a trusted partner who takes the time to understand their organization and add value beyond executive search.