Tea Leaves, Causality, and Consistency: What Should We Do About Financial Aid Appeals?

Mike Keane Apr 19, 2023 Mike Keane SVP, Modeling + Client Strategy Persona The Influential and Resilient Energizer

Enrollment professionals at colleges and universities are accustomed to April being a month of uncertainty. Admission teams read the tea leaves of deposit progress, yield event attendance, email open rates, and any other available indicator of interest and engagement, knowing that a significant portion of first-year student commitment deposits will arrive in the days preceding May 1. Even institutions without a May 1 deadline know that first-year deposit flow typically slows considerably after early May. April can be a “make or break” month for enrollment outcomes.

In the midst of this anxious and busy period, few indicators are a greater source of frustration than the volume of requests from students and families for reconsideration of their financial aid, or what we’ll put under the broad umbrella of “appeals.” At many institutions, appeals are growing in number—especially those without a clear basis for a change to financial circumstances. Enrollment teams struggle to process appeals in a timely fashion and struggle even more to determine whether approving appeals is part of an effective enrollment strategy.

Appeals are hard; admission professionals are trained to recognize interest and affinity for their institution and then nurture that interest through a commitment deposit. An appeal is an expression of interest—sometimes a strong one—and declining an appeal feels like closing a door. Especially in April, and especially if deposits are tracking behind goal, it takes a strong stomach to say “no” to a student and family who have requested reconsideration.

How does the financial aid optimization team at Carnegie advise our clients on appeals strategy? As with all our work for our partners, we seek to combine quantitative analytical expertise with deep experience in enrollment strategy. As we near May 1 and your team struggles with appeals, here are a few pieces of advice from our perspective.

Accept that it’s not possible to know whether approving appeals systematically improves your enrollment outcomes (especially net tuition revenue)

Bear with me here—let’s talk about research design for a bit. I promise it will be worth it.

Analysis of financial aid appeals suffers from a fundamental problem: It’s based on what scientists call observational data, as opposed to experimental data. With observational data, we observe that the subject (in this case, a prospective student) has received treatment (an approved appeal and a funding amount), and we know lots of associated financial, academic, and demographic information about the student, but we have no way of knowing confidently whether there’s a causal relationship between the intervention (the approved appeal) and the outcome (enrollment), and we don’t know how much an approved appeal changes a student’s probability of enrolling. Many students enroll despite having their appeals declined each year, and many others choose not to enroll despite an approved appeal.

There’s a way to test appeals using experimental data. It requires randomly assigning approvals and denials and systematically varying the amount of the approved amounts, which, if done correctly, would result in experimental data that could establish a causal relationship between appeals and enrollment. Of course, institutions would (and should) have deep ethical concerns about randomizing appeal approvals. The enrollment leadership at institutions with which I work each year are used to rolling their eyes every spring when I make my (joking) request to just let us randomize them!

If you got this far, thank you for entertaining me! Of course, by now you’re saying, “Sure, maybe there’s no clean statistical relationship between approved appeals and enrollment outcomes, but you can’t be telling me that giving students more aid makes them less likely to enroll.” And you would be correct! It’s perfectly reasonable to expect that approving an appeal and granting additional funding would have a causal relationship with a student choosing to deposit.

That’s what we’d call a strong hypothesis. In fact, a positive relationship between gift aid and the probability of enrollment is the foundation of the predictive models we design for institutions to help them make the best use of limited aid resources. Only a long and tortured chain of logic (maybe this student thinks we aren’t exclusive or prestigious enough if we grant this appeal!) would suggest otherwise. But that’s not the analytical challenge. The real challenge is: Does approving appeals result in enough headcount growth to offset the loss of net tuition revenue associated with the approved appeal?

The only honest answer with observational data is: We do not know. Knowing that would require a detailed understanding of the exact relationship between approved appeals, the amount of funding, and the probability of enrollment. Students who submit an appeal are an even more difficult population to study because the act of submitting the appeal often means they have a stronger interest in your institution in the first place (which means their baseline probability of enrolling is higher). In other words, even when we have a very strong understanding of the relationship between gift aid and enrollment probability, the reasonable assumption that more interested students are more likely to file appeals changes the nature of that relationship.

That doesn’t mean we advise institutions to throw up their hands. There are still avenues to a consistent and effective appeals strategy, and those begin with the following:

Track your appeals carefully and plan for them

Acknowledging the challenges noted above with measuring the effectiveness of appeals, the surest way to get no clarity on handling appeals is to fail to track who files them, when they file them, the circumstances cited, approvals, and approved amounts. At a minimum, understanding the total gross (all approved appeals) and net (all approved appeals for students who enroll) gift aid expenditure on appeals will help you build that expenditure into your gift aid and discount planning in future years. If you plan to approve appeals, estimating that net expenditure at the start of the cycle will avoid unpleasant summer discount rate surprises and can improve transparency for institutional leadership (i.e., that appeals aren’t a panic-button approach but a well-considered element of an overall strategy).

Give students and families a clear path to request reconsideration

The admission and financial aid process is long and confusing for students and families, and appeals are no exception. If you fail to publish clear guidance on how students can file an appeal, what documentation you may request to evaluate the appeal, and what types of appeals are typically considered, you guarantee that your admission and financial aid staff will be inundated with emails and phone calls about those exact topics.

We sometimes hear concerns that publishing information about appeals will encourage more appeals. The truth is students and families will appeal anyway. Making that information easily available eases the communication burden for your staff and ensures more consistent and comprehensive information when your team does evaluate appeals. If you’re concerned that publishing appeal paths will result in many more appeals without a strong basis (more negotiating), consider communicating exactly that: Your institution will only consider appeals when application information (admission and/or aid related) has changed.

Align your appeals strategy with your primary institutional enrollment goals and your progress to date

This one might seem self-evident—when are enrollment professionals not aligning just about everything they do in pursuit of enrollment goals? But calibrating headcount goals vs. net tuition revenue goals is an important part of identifying an effective appeals strategy.

Is your primary goal headcount, and are you willing to trade off net tuition revenue per student (or discount rate) to achieve that? If so, a more aggressive appeals approach might be a good fit. Is your primary goal controlling discount and improving net tuition revenue per student, and are you willing to trade off headcount to achieve that (or willing to use waitlist admission to help meet headcount goals)? If so, it’s unlikely that a generous appeals strategy will result in a net-positive revenue outcome. Similarly, calibrate your appeals strategy to your progress during the cycle. If headcounts are running ahead but discount is trending high, you should feel more comfortable limiting appeal approvals.

If you’re in the fortunate position to be focused on cohort composition as a primary goal alongside headcount and net tuition revenue, you can align an appeals strategy with those goals as well—e.g., focusing approvals on Pell-eligible students or families below an AGI threshold.

Draw a distinction between appeals based on a change to financial circumstances and those based only on a request for more aid

Even if you choose a very conservative appeals strategy, ensuring that families have the opportunity to request reconsideration on the basis of a change to financial circumstances is an important part of designing an aid strategy that contributes to access.

Financial aid professionals are trained to exercise what the Department of Education formally calls Professional Judgment. When the income and asset information reported on the FAFSA (which may be nearly two years old by the time students are enrolling in their first year) no longer accurately describes the family’s financial situation, aid officers can request documentation and use that information to adjust the information reported on the FAFSA, which may make students eligible for additional need-based aid, whether federal, state, or institutional.

The Professional Judgment process is a critical part of ensuring that students are eligible for the maximum possible need-based aid from all sources. Even when a change to financial circumstances doesn’t result in additional federal or state aid eligibility, you may wish to recognize those appeals with institutional gift aid, particularly when access is a key institutional goal.

In many ways, appeals are a microcosm of the entire enrollment process—enrollment professionals struggle to interpret appeal volume and develop effective and consistent strategies to address them, while students and families struggle to understand whether, when, and how to file appeals. Like many elements of the application, admission, and yield process, both sides are challenged with trying to act with incomplete information. For institutions, we believe the most realistic and effective approach to appeals boils down to the points reviewed above, and we hope this helps you give an honest appraisal of your appeals strategy.

Want to talk more about appeals or developing more effective and consistent overall enrollment and aid strategies? Contact us!

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