Financial Aid in the Time of COVID
n this post, HAI sits down with financial aid expert Nick Jenkins to talk about the still-emerging picture of COVID’s effects on college enrollments. He’ll also review some of the changes in store for college financial aid offices given the government’s recently passed omnibus bill.
The $1.4 trillion federal spending package includes not only funds to keep the government running and provide Americans with economic relief, but higher education provisions to simplify the Free Application for Federal Student Aid (FAFSA) and increase eligibility for Pell grants.
HAI: Hi Nick. Thanks for sitting down to chat with us today!
Nick J: No problem – thanks for having me.
HAI: We thought it would be great for our higher ed readers to hear from you because you have something of a global—or at least national—view of what’s been happening in the college enrollment and financial aid world this past year.
Nick J: I’d be happy to share what I’ve been seeing and hearing. Keep in mind that it’s been a while since I sat in a financial aid office as an acting advisor or director. But my work implementing financial aid management software puts me in direct contact daily with a lot of college aid professionals.
HAI: Understood! So, maybe you could start by telling us what you were hearing from schools when the pandemic first hit U.S. campuses last March?
Nick J: Well for me, about a year ago, everything just stopped dead. Then, when schools did start re-engaging, they were struggling to solve for a very speculative situation, particularly when it came to fall 2020 enrollment. People we were talking about things like how to adjust costs and aid to students, and how to solve for what would become a very speculative housing situation over the course of this year. People we were talking to were floating every idea, like having only freshmen on campus in the fall, because that is when they most want to be on campus, and then only seniors on campus in the spring, because that is when it is important for them--and just hoping that sophomores and juniors stay engaged and still feel like part of the campus community.
Early on, we saw a shift on the part of schools to provide the most exact cost and aid scenario for the forced situation. And of course, everyone was hoping that the plans they were making would only be necessary for the fall, and that, by the spring of 2021, things would be back to normal.
HAI: So how did all that creative thinking and resourcefulness pan out?
Nick J: I worked with some schools that completely missed the mark for enrollments, and others that were just fine. The line fell on whether the school served a more local/regional population, where the options students have are a bit more limited. The bigger and more national schools often took the bigger hit because traveling internationally or farther from home wasn’t something that people wanted to do. All of the uncertainty had people staying closer to home.
HAI: What are schools trying to do now to adjust to the aftermath of that?
Nick J: Schools who didn’t make their class last year are trying to make it up the coming year. You know full well—because this is exactly what you do—that this is one of those “which end of the scale is better or worse?” quandaries for the college. They are asking themselves, is it that we are under enrolled, and therefore the revenue isn’t there; or do we overspend to bring in a class to try to make-up for last year, knowing that we will be saddled with at least that four years of having overspent a ton to bring in the class (and having that spend be a disproportionate percentage of your overall enrollment)? I can tell you that I am seeing some level of “stay the course” with aid, and some level of “panic spending” to get the enrollments back up. I think the general assumption for next year is that everything will be back to normal for the traditional school year... that everyone will have had the opportunity to be vaccinated.
HAI: Let’s hope so! So, going back a bit to what you were saying before about the effect of the pandemic on enrollments at regional vs. less regional schools, it’s interesting because we also saw regional schools taking less of a hit on enrollments. It makes perfect sense in hindsight, but typically the more national a school is the better they do and the easier it is for them to meet their goals. So, that was strange. And one of the things we are seeing is that yield is beginning to recover as everyone anticipates that life will have returned to normal, for the most part. But, many schools saw a drop in their applications for 2021, so even if yield bounces back, they still may not be able to hit their enrollment targets.
Nick J: I do wonder if all of this is going to spark up the “not everyone needs a college degree” conversation again. Contrary to what we all thought at the time, it doesn’t appear that there was any skyrocketing in community college enrollments due to the pandemic. So, what did those students coming out of high schools really do if they didn’t go to college?
HAI: That’s a great question. What do you think happened to at least some of them?
Nick J: Well, we know that it takes a lot of effort for students to complete the financial aid eligibility process - especially those not supported throughout. It’s especially tough to get first generation and high need students to complete the FAFSA. And this year, there were no high school financial aid nights; no in-school incentives. We had a year without those touchpoints, and doing those things virtually is just not the same. I remember at the beginning of the pandemic doing a virtual financial aid night for a rural school. There are usually around 100 students when it’s held in person. But there were maybe 30 people, at the most, on the Zoom call this year. All of the nudges that push people along were not there this year, so of course we are down.
HAI: This year really showed us how important that personal stewardship is for families, didn’t it?
Nick J: It really did. Those of us in higher education think of the admissions process as being really high touch—and it needs to be. But we don’t think of the FA process being that way. This year showed us, however, how high touch that process is and needs to be.
HAI: Yes, definitely a lesson to be learned there. Moving on, we’re curious to know if there are other issues that seem to be coming up a lot in your conversations with financial aid offices.
Nick J: Yes, sure. Even though my job these days is more technical (setting up software), verification seems to be a hot button issue at every school. You’ve got some schools who will not send out an FA offer until they verify the student. Depending on how much institutional money you are awarding, I can understand that. But, at the typical school, verification is just a barrier to enrollment. Basically, if you are going to say, “I won’t even tell you what it would cost to come here until you finish that process,” it’s a barrier and students will just turn away.
On the other end of the spectrum, there are schools that don’t verify until the student has committed to attending, and this seems like it doesn’t serve the students very well. Handling it this way means that some students are going to end up with an unpleasant surprise in May, which to me also seems counterintuitive.
HAI: Agreed. What do you see as a more productive option?
Nick J: My recommendation would be that schools take the student at their word on the FAFSA, put together their package, then get them to complete the verification process during the admit phase. During my time as a financial aid director, I looked at the data for a few years and found that we verified no more than 30-40 students total who DIDN’T end up enrolling. It’s a little self-fulfilling, really. Students aren’t going to complete verification at seven different schools. They are only going to complete that process at a school that they are really interested in attending. Verification is a very good indicator that they intend to enroll.
HAI: And yet we make it so hard for students to navigate the process!
Nick J: Unfortunately, that’s very true. I remember when families had to get a copy of something called a tax transcript, which is a special form issued by the federal government to verify earnings. Students (or parents) would have to go the IRS’s website, fill out a form, wait for this transcript, and then provide it to us. There was no IRS infrastructure to handle these requests, and the system would constantly crash. It was a nightmare. Now, at least, we can go back to accepting 1040s, which people are more familiar with. But there are probably some schools that still ask for the tax transcript, which is much harder to get. It’s a disservice to the student. There are people who take things like verification and compliance very seriously (which they should). But sometimes they almost seem to see themselves as an extension of the federal government. And then things become a series of hurdles that their students have to go through to get to their financial aid.
HAI: Is that kind of issue compounded at schools with needier populations?
That is, do schools with needier students have more who are flagged for verification? When I think of all of the schools that we have worked with, it seems like the schools who serve needier populations have smaller FA staffs, when in fact it should be the opposite of that.
Nick J: Yes, that situation exists and is definitely backwards. Schools serving a needer population of students actually need MORE help with the process and getting through the forms and hurdles. Yet these are typically the schools with a smaller FA staff and that smaller staff is doing a ton of loan processing and verification.
HAI: It’s funny, we often find that the financial aid staff is resistant to our help when we are brought in to optimize financial aid. Why do you think that is?
Nick J: Well for one, it’s more of the exception than the norm that financial aid leadership is brought in on the strategic development side of things. And keep in mind, financial aid (as a field) is all about rules and order. In comparison, Admissions is the Wild West. It is far less common for a family to call the Admissions Office to argue that their daughter should be admitted because a daughter’s friend was admitted. But FA gets all the calls about why someone got aid and another person didn’t. The rules help FA people respond those questions.
HAI: OK, we’d like to ask you one final question that we think will really help our higher ed readers. Can you talk about changes to the federal Expected Family Contribution (EFC) formula?
Nick J: Absolutely. In December 2020, the government’s omnibus bill for pandemic relief also included some financial aid simplification. Starting in the ’23-’24 FAFSA year (so this would affect families applying in October of 2022) a student would start filling out the new FAFSA using 2021 tax data and the EFC will become the Student Aid Index. It will largely be the same calculation, but hopefully by changing the name it helps change the conversation around it. The idea is that the new index will act more like a score than an actual expectation of what a family will pay for college. Pell will shift from being derived from the EFC to being based on the number parents in the household and the family income as a percentage of the federal poverty level. Theoretically, this will allow families to relatively easily determine if they are Pell eligible without completing the full form. Also, the Student Aid Index formula, as it stands now, allows a minimum value of -$1,500. This means that families could be eligible for $1,500 in aid above the cost of attendance. The federal government hasn’t clarified yet whether schools will be able to do that. It will be an important detail for schools to understand so that they can accurately project how much they will be awarding in institutional aid.
HAI: Got it. Are there any other major changes??
Nick J: One of the other big changes is that, historically, in a one-parent household, the student included the parent with whom they lived most of the time. That will change to being the parent with the highest income. Again, that is probably one of these things for which we are going to need clarification, but I think that it is likely an attempt to pull out from the shadows situations where the non-custodial parent had a much higher income than the custodial parent.
Also, if the student has a parent who is unwilling to share financial information, historically our hands have been kind of tied. But this change would give schools the ability to at least give an unsubsidized loan to students in that position.
Lastly, there is some language in there that kind of indicated that the Department of Education may develop some sort of metrics for cost of attendance (COA). There may be a range in which your cost of attendance items has to fall, or you may get specific numbers, such as “books should cost this,” or “transportation should look like this.” So again, when we look at leveraging institutional aid, that is another thing that could be impacted. Because if you are looking at building a model off of COA and the school wildly swings in one direction or the other because of this new guidance, that’s the kind of thing that makes jumping from ’22-’23 to ’23-’24 a challenge for you.
HAI: So many changes! Thank you for keeping our readers informed, and especially for your time today.
Nick J: Totally my pleasure! Thanks, and take care.
About Our Guest
Nick Jenkins began his career in financial aid at Lenoir-Rhyne University in a shared admission/financial aid counselor position. When he became director of financial aid, he worked to automate and optimize the use of PowerFAIDS, a financial aid software platform that helps financial aid offices automate aid packaging and maximize productivity while maintaining 100% compliance. In 2018, he joined Apple Pi Consulting, where he provides expert PowerFAIDS implementation and support services to schools across the country.
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