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Despite massive investments over the past decade, efforts to improve enrollment and retention still aren’t moving the needle. Today, 1 in 3 students who enter universities won’t graduate. And what’s worse? Students aren’t simply struggling to succeed academically. They’re struggling to succeed financially. Estimates show that more than 3 million students dropped out of college with debt in 2015 and 2016.
Whether it’s finding ways to afford tuition, to afford transportation to and from class, or to afford taking time away from work to be in school—the main reason students say they don’t finish their college program isn’t related to their ability to learn or perform. It’s about successfully navigating how to pay for it.
Many surveys address why students leave or never even attend college, and financial instability consistently ranks as one of the leading factors. But what is the main factor?
CampusLogic recently surveyed nationally representative populations of high school graduates and college students who had never completed and asked them to specifically identify the main reason they left or did not attend college. In both instances, “I did not think I could afford it” was the most selected answer.
For respondents who did not go to college, 30.48% claimed they chose not to go because they didn’t believe they could afford it.
For respondents who didn’t finish college, 19.48% claimed they left because they did not believe they could afford it. Also, 17.26% of respondents claimed that “personal or family health issues” were their main reason for leaving, while only 14.68% of the students claimed that struggling academically was the main reason. What this data shows is that each student’s decision to leave college is unique and complex. Often academic struggles aren’t the main factor, money is.
Other survey research conducted as part of a joint project between Gallup and CampusLogic outlines just how important finances are to students. Frustrating financial aid experiences, which are out of sync with today’s consumer experience, work against student financial success. Nearly three out of four non-completers say a fragmented financial aid process affected their academic performance, as well as access and completion. Plus, almost all non-completers (95%) had some concern about being able to afford the institutions they applied to.
Nearly three out of four non-completers say a fragmented financial aid process affected their academic performance, as well as access and completion.
Students who are worrying about how to pay for college are often unable to focus on the academic training they wanted to pursue in the first place. Two out of every five college alumni who finished in the past 10 years reported that they’d considered leaving their institution due to personal or family stress with paying for college. Institutions that keep education costs transparent and provide students with resources to maximize affordability increase the likelihood that students will complete their program of study.
Virtually all non-completers had some concern about being able to afford the institutions they had applied to, and more than half of respondents said they were “very concerned.”
Today, more than ever, students’ sense of a higher education program’s value is determined not just by the quality of the education, but also by their ability to successfully pay for it. Yet students still struggle to access the funding that’s available to them.
The reality is that for too many students, financial aid is a confusing and frustrating maze filled with complicated pathways and dead ends that lead to higher dropout rates. The Gallup research found that only about one-third of college alumni said they had access to timely information about relevant scholarships, and two out of every three students who did not complete their degree said that the financial aid process was a source of stress. Students everywhere are struggling to navigate the financial aid process while 51% of college non-completers are dropping out for financial reasons.
With a modernized financial aid process, higher education institutions can expect a big return on investment. A better ROI through financial aid modernization comes from five key areas: improved verification processes, a rise in scholarship allocation, an increase in outcome-based funding, the reallocation of time from answering routine inquiries to focusing on students in need, and long-term positive impact on brand affinity.
On average 22% of students receiving federal aid are selected for additional verification. However, 11% of students selected for verification don’t complete the process. Reducing this fallout rate can dramatically increase enrollment and retention.
Using a combination of AI and scholarship management technology, institutions can increase the number and value of scholarships awarded. Many institutions have internal scholarships that go unawarded because students aren’t matched with awards they qualify for. Imagine the difference it would make if 20% more scholarship dollars were allocated internally and externally due to better matching.
With a streamlined financial aid process, public institutions may receive additional outcome-based funding as they demonstrate their impact by enrolling more low-income or minority students.
A significant portion of a financial aid counselor’s day is spent with routine inquiries, verification, and overhead. Modern systems with AI powered chatbots and user-friendly digital experiences can decrease call volumes and reduce the administrative burden, freeing staff to spend more time working with first-generation college goers and rescuing other students in need.
The long-term value of financial aid modernization is the high brand affinity that alumni have for the institution. There is no debate that the student experience is critical to future alumni engagement. Parents and students who have a positive financial aid experience will have a higher overall perception of the institution, making them more likely to engage and donate after graduation.
Improving student financial success is the fastest path to improved outcomes for students and increased enrollment and retention for higher education institutions.
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