October 2008 Lawlor Focus

Retention Tactics for Tough Economic Times

Our past few issues of Lawlor Focus have emphasized how important it is for colleges and universities to communicate their value propositions effectively to prospective students and their families—especially in light of evidence that the economic crisis is causing more and more students and their families to limit their college choices to options they perceive as less expensive. But it’s not only prospective students whom you must persuade of your institution’s affordability; more current students and families are being forced to confront their ability to pay for continued enrollment at their chosen college or university. A new NAICU study reveals that among the private colleges reporting that some of their students have been denied private loans, 46 percent observed that at least some of these students are taking time off of school or switching to part-time status.

Fall breaks and Thanksgiving holidays have typically been times when the families of traditional-aged, first-year students evaluate worth (that is, they discuss whether the educational experience is indeed justifying the required financial investment), so now is a key time for colleges and universities to focus on retention efforts among not only these first-year students, but all current students, as well. Since, as the adage goes, it's less expensive to keep a customer than to get a new one, employing even simple tactics that immediately communicate value and affordability to current students and their families can be a wise institutional investment during troubled economic times. Here are a few ways colleges and universities are doing just that this month:

Aiming for transparency—Augustana College (Rock Island, Illinois) made its tuition increase announcement (a 3.9% hike, its smallest percentage increase in 25 years) six months earlier than many other colleges and universities, saying that making the announcement this month was the best way to give prospective and current students the information they need now for budget planning and making a more informed value/price decision. Going a step further, Benedictine University (Lisle, Illinois) decided to freeze tuition at its current level through Spring 2010 for current students.

Providing "talking points" to alumni and other gatekeepers—In the fall issue of its university magazine, which is sent to alumni, parents and friends, St. Lawrence University (Canton, New York) included a feature that directly addresses why it costs so much to attend St. Lawrence. In addition to justifying overhead costs, specifying the subsidy each student receives, and explaining the investment in a lifetime of learning, the article also pointed out that the average daily cost of attending the university is about equal to a night at a hotel, "and you get an education besides."

Helping families "explore financing avenues"—The George Washington University (Washington, D.C.) sent a letter to the families of current students that outlined several "current opportunities available to prevent the existing economic conditions from adversely affecting your continued enrollment." It noted programs like the monthly payment plan, loans that are not dependent upon one's income-to-debt ratio, work-study jobs, and the willingness of the institution to help families find "affordability solutions."

Enacting emergency financial aid measures—Shenandoah University (Winchester, Virginia) reportedly is offering no-interest loans to bring students back for the spring semester and establishing an emergency fund for textbooks and meal plans.

Surveying the parents of current students—A small Midwestern private college is taking the temperature of its parents to head off any issues that might cause them to question their investment (and thereby their willingness to continue paying for their sons and daughters to attend the college).

These tactics can offer actual affordability solutions for those returning students whose families are losing their ability to pay. But these tactics also address all families' willingness to pay by (1) acknowledging students' and families' anxieties regarding their financial situations and (2) helping to assuage those anxieties simply by demonstrating a commitment to addressing these concerns.

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During times of financial difficulty and economic uncertainty, people want to feel they're getting their money's worth from the purchases and investments they make. And the greater the required financial sacrifice, the higher the expectation is for satisfaction. So as the cost of attending an institution begins to approach a figure that's prohibitive (perceived or real), students and families have a heightened sensitivity to things they would normally ignore if the stakes were not so high. For example, poor advising, the difficulty getting classes, homesickness, cost of travel home, a bad roommate situation, a poor experience with a professor, or a rude encounter with the financial aid office or business office may become more than "these things happen," venturing into the realm of "this isn't worth what I am paying."

The point is that colleges and universities must be proactive and anticipate current students' and families' concerns now. Not only does this group of people refer your institution to others, but they are also constantly assessing the value of their own experiences. Therefore, colleges must:

• Ask what potentially could be undermining a current student's or family's sense of educational value; conduct satisfaction surveys.
• Respond and communicate accordingly to reinforce the worth of the financial sacrifice and investment families are making; communicating empathy and responsiveness with current students will only reinforce institutional value, and that means you may have just reduced the cost of recruiting new students.
• Incorporate the feedback into your future planning efforts; be proactive in removing potential barriers to willingness to pay.

In the news

The University of Wisconsin-Madison has designed an online Payback Calculator that quantifies prospective students' financial payback from a UW-Madison degree. The formula considers how much more a student is likely to earn over her lifetime if she graduates from college, the expenses she will incur while earning her degree, and the value of the financial aid she may be offered.

Did you know?

Findings from the 2008 Student Loan Survey indicate 50 percent of college students polled would be more likely to accept a job that offers higher pay, but less career satisfaction, in order to repay their student loans.