College 2005 November 2005

The Best Class Money Can Buy

The rise of the "enrollment manager" and the cutthroat quest for competitive advantage. The secret weapon: financial-aid leveraging

I asked Bob Bontrager what he thought about eating other people's lunches.

"I personally prefer kicking their ass," he replied. "It's a zero-sum game. There's a finite number of prospective students out there. Are you going to get them, or is your competitor going to get them? You face the pressure and say, 'That feels burdensome to me; I don't want to deal with that.' Or you say, 'That's a pretty interesting challenge; I'm going to go out there and try to eat their lunch. I'm going to try to kick their ass.' That defines people who are more or less successful and those who stay in the position."

Bontrager, who works at Oregon State University, is the school's head of enrollment management—a relatively new but increasingly essential post in higher education. Three quarters of four-year colleges and universities employ an enrollment manager to oversee admissions and financial aid. The position is standard at private schools, and is spreading quickly across public institutions.

Eating the other guy's lunch is one of several turns of phrase (most involving some sort of predatory snacking) used to evoke the competition for prestige and revenue that has led to the rise of the enrollment manager. If you've snatched up another school's top prospects or leapfrogged it in the U.S. News rankings, you've eaten its lunch.

Over the past twenty years, often under cover of the euphemisms with which the industry abounds, enrollment management has transformed admissions and financial aid, and in some cases the entire mission of a college or a university. At its most advanced it has a hand in every interaction between a student and a school, from the crafting of a school's image all the way through to the student's successful graduation. Any aspect of university life that bears on a school's place in the collegiate pecking order is fair game: academic advising, student services, even the curriculum itself. Borrowing the most sophisticated techniques of business strategy, enrollment managers have installed market-driven competition at the heart of the university.

With their ever-expanding reach, enrollment managers are inevitably dogged by controversy. But it's the way they have changed financial aid—from a tool to help low-income students into a strategic weapon to entice wealthy and high-scoring students—that has placed them in the crosshairs of those who champion equal access to higher education. Adopting data-mining and pricing techniques from the airline and marketing industries, they have developed a practice called financial-aid leveraging that allows a school to buy, within certain limits, whatever class it wants. Often under orders from a president and trustees, enrollment managers direct financial aid to students who will increase a school's revenues and rankings. They have a host of ugly tactics to deter low-income students and to extract as much money as possible from each entering class.

All this, understandably, has given the enrollment-management industry a black eye. "It's a brilliantly analytical process of screwing the poor kids," says Gordon Winston, an economist at Williams, and an article last year in The Chronicle of Higher Education included a warning that "enrollment managers are ruining American higher education." But some in the industry use its techniques responsibly—to guarantee enough revenue to support the academic mission, or even to expand low-income access to higher education. Indeed, the sophisticated methods of enrollment management may be the only way for schools to hang on to their principles while surviving in a cutthroat marketplace.

Bob Bontrager offered his paean to ass-kicking over drinks at the annual meeting of the American Association of Collegiate Registrars and Admissions Officers, which over the past ten years has made itself the center of the enrollment-management industry. AACRAO publishes how-to guides for enrollment managers, and hosts national conferences at which they plot strategy, while consulting firms offer promises of greater profits and prestige.

I had met Bontrager the day before, at a session of his Enrollment Management 101: The Basics in Best Practices, where the industry's troubled conscience was very much in evidence. The first person I spoke with was there because her school was considering "being more strategic with institutional aid"—a euphemism for financial-aid leveraging. When I asked for her name, she flipped over her badge and hid it against her chest.

At another session Cliff Sjogren, a well-respected former director of admissions at the University of Michigan and the University of Southern California, had packed a room for a presentation in which he called for an end to financial aid that isn't based on a student's need—merit aid, as it is called, which goes largely to higher-income families. It's wrong to give money to people who don't need it, he said, if that means turning away students who do.

Then the audience started pushing back.

"A lot of us would agree with most if not all of the things you said," said Rob Seltzer, the director of admissions at the University of Wisconsin at Madison. "But as a director of admissions I have a hard time with unilateral disarmament. I'm really concerned, even if I could talk my institution into doing these items, that I can't do it without losing serious competitive advantage."

Roger Thompson, the associate vice-president for enrollment management at the University of Alabama, which has jumped twelve spots in the U.S. News rankings of public universities over the past four years, stood up. "Merit scholarships," he said. "I hate it. It's almost like buying a car. But the rankings are driving so much of that. You have to have X number of National Merit Scholars and all that. The rankings thing is out of the barn."

Financial-aid leveraging is the enrollment manager's secret weapon. It has become highly sophisticated since it was first developed, in the 1980s, but the underlying logic remains simple: targeting financial aid will further the interests of a school, typically by bringing in more net revenue or higher-scoring students. Take a $20,000 scholarship—the full tuition for a needy student at some schools. Break it into four scholarships of $5,000 each for wealthier students who would probably go elsewhere without the discounts but will pay the outstanding tuition if they can be lured to your school. Over four years the school will reap an extra $240,000, which can be used to buy more rich students—or gifted students who will improve the school's profile and thus its desirability and revenue.

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