This amount, he explains, would give Southwestern an additional $4 million a year to spend enough to meet the current gap between demonstrated need and available financial aid.
Until that happens, however, Southwestern is faced with some very tough choices. How should its limited amount of financial aid dollars be distributed? Its a question that colleges across the country are wrestling with as well.
At one time, financial aid dollars were distributed largely on the basis of need to help low-income students attend college. But as pressure to do well in the U.S. News & World Report rankings increased, many colleges focused on trying to recruit students with higher test scores who would increase their rankings. This often meant offering merit scholarships to talented middle and upper class students who might not really need the aid.
Recently, the pendulum has begun to swing back again, with several leading liberal arts colleges announcing this spring that they were going to start phasing out merit aid and offer only need-based aid. Some, such as Davidson College, have gone so far as to promise that no student will have to take out loans to earn a degree.
Going to totally need-based aid is a very costly proposal, says James Gaeta 87, director of financial aid at Southwestern. Im not sure how many more schools will be able to do that.
This coming year, Southwestern plans to spend $13 million or about 22 percent of its total budget on financial aid. Approximately 64 percent of this will be given out in the form of need-based aid and 36 percent will be given out as merit-based aid.
According to the College Board, this is about the average for private, four-year institutions such as Southwestern. In fact, many private universities Southwestern included are increasing, rather than decreasing, the percentage of financial aid that goes to merit scholarships.
Schools like Harvard and Yale have the market position to do what they want and still get their class, but schools like us have to strategically use our funding to get the classes we want, Gaeta says.
In a typical year, about 28 percent of the students who are offered admission to Southwestern in the spring will actually enroll in the fall. While there are many reasons for this, including fit and location, one of the major factors is financial aid. In one-third to one-half of the cases where students go elsewhere, it has to do with merit scholarships, says Tom Oliver 89, vice president for enrollment management services. In a growing number of cases, Oliver says, accepted students are choosing to attend less prestigious schools that offer more merit aid.
Our competition in this region is very aggressive with merit aid, Oliver says. Thus begins what admission professionals refer to as the arms race for students.
In the late 1990s to early 2000s, families developed the expectation that if you want my child, you have to pay for him/her, Gaeta says. Thats the world we live in now.
After students receive their financial aid offers each spring and are trying to decide which college to attend, Gaeta says many students come to him and say the same thing: I really want to be at Southwestern, but such-and-such college is offering me a discount, and I cant ignore that.
Southwestern officials say they would simply not be able to recruit the classes they want if the University offered only need-based aid.
Its not our goal to be just a good college, Oliver says. We want to be a great college. We want students with lots of different talents to come to campus. Thats why its so important to appropriately shape the class.
Gaeta says that if Southwestern were to pull back from offering merit scholarships, it would run the risk of not getting the size classes it wants or not getting the quality classes it wants. The reality today is that financial aid policy determines a class as much as admission policy, he says.
Still, those who work in admission at Southwestern say the issue of merit aid versus need-based aid is one with which they struggle philosophically. The topic hits particularly close to home for Gaeta, who received need-based aid to attend Southwestern.
The issue really touches my heart because I personally realize the impact it has on student success, he says. But as enrollment services professionals, Gaeta and others have to face the reality of the marketplace as well as tight budgets.
Every dollar of merit assistance often takes away from our ability to meet need, but there has to be a balance at Southwestern between students who are helping advance the institutions quality and meeting the needs of students whose families cant afford Southwestern, Oliver says. Were trying to do two things at the same time with one pool of money. Its not practical for a school like Southwestern to abandon merit aid.
Oliver says he and his counterparts at other colleges in Texas have talked theoretically about how wonderful it would be if they could just target financial aid money to those who need it most.
All of us know that the minute we do that, market forces are such that we will lose what we have worked so hard to attain the last 30 years, he says. There are enough schools in other parts of the country who are interested in Texas for a whole lot of reasons, and we would see some of our best and brightest students going elsewhere because other colleges will make it cheaper for them to go to their institutions.
Oliver says any initiative to eliminate merit scholarships would have to come at the federal level and that will never happen.
Twenty years ago, Southwestern was able to meet all of the demonstrated financial need of students and their families. But as college costs have increased over the past two decades, the University has not been able to keep up.
Today, Gaeta says, Southwestern is only able to meet about 73 percent of students demonstrated need.
This is not unique among schools of our type, Oliver says.
At the same time, the federal and state governments have both been cutting back on the amount of money available for needy students. This leaves lower-income students with fewer and fewer options when it comes to college.
Many of these students are forced to attend community college with the hope of later transferring to a four-year institution, or attending colleges that are very regional in character not Southwesterns stature, Oliver says. He adds that because of the way wealth is distributed in our country, this has a disproportionate effect on students of color and first-generation college students.
To help address this problem, Southwestern is developing new partnerships and programs to encourage community college students to transfer to the University.
This could help students who couldnt come to Southwestern as first year-students, Oliver says.
Even if Southwestern received the $80 million that President Schrum dreams of, aid officials say that would not meet the Universitys financial aid needs for long.
Eighty million is a good starting point, but that will need to grow to keep up with demand and rising costs, Gaeta says.
While Southwestern cant meet all the financial need its students have, the University is still much more affordable than people think. Overcoming this perception is another challenge that national liberal arts colleges such as Southwestern face.
Many students write off private colleges because they think they cant afford them, says James Gaeta 87, director of financial aid. A Southwestern education is much more affordable than many families imagine.
While the actual cost of providing an education to each student at Southwestern is more than $40,000 a year, the Universitys endowment enables it to set its annual tuition cost at a much lower rate. This coming year, for example, tuition has been set at $25,740. However, after financial aid awards, on average students attending Southwestern will only pay $13,898 in tuition.
To help show prospective students and their parents what it might realistically cost them to attend Southwestern, the University developed an affordability estimator that has been linked off its home page at www.southwestern.edu. This estimator lets families plug in a few simple variables and instantly get an idea of what their financial aid might be.
People were agonizing over sticker shock and not doing the research to find out how much aid they could get, Gaeta says. The estimator provides them an idea of what they could expect.
While the affordability estimator was not put online soon enough to influence this years incoming class, Gaeta hopes it will help attract students for future classes.
While we cant guarantee that every family will get exactly what the estimator reflects, I hope it will stop families from ruling Southwestern out because of cost, Gaeta says. We can make Southwestern possible for a lot of families.
The affordability tool recently won an award from the Council for the Advancement and Support of Education.