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

At the AACRAO conference two members of the University of Alabama's enrollment-management team demonstrated how, in their campaign for out-of-state prospects, they overlaid income data from the U.S. Census on maps of high schools in Texas to target wealthy students. (Alabama's data-mining strategies are inspired by the success of the credit-card company Capital One.) After the presentation I sat down with Roger Thompson and asked him how he approached recruiting at rich private secondary schools.

"Oh, if you're in enrollment management, those schools are fantastic!" he said. "There are some kids there that we'll buy. The National Merit kids, they're going to get a full ride. But if you're sitting at a private high school in Florida, where they pay twenty grand to go, we don't even bring financial-aid material. What's the point? You don't even need to talk about cost."

SAT and ACT scores, both because of their importance in determining college rankings and because the testing services are the main sources for "leads," carry special weight in this process, although their value in predicting a student's ultimate success at college is highly questionable. Brian Zucker, the head of Human Capital Research, an enrollment-management consulting firm, measures the correlation between SAT score and freshman GPA for his clients and typically gets results between .03 and .14 on a scale from 0 to 1. ("I might as well measure their shoe size," he says.) Nevertheless, because the enrollment manager pursues hundreds of thousands of purchased leads rather than waiting for students to come to him (the "gatekeeper" model of admissions has been dead for some time), schools make thousands of decisions based largely on test scores long before students even apply, locking some students out of colleges where they might have thrived.

"It's made schools lazy and stupid at the same time," Zucker says of these tactics. "It's a blunt object, a pre-sorting mechanism, and it's a great labor-saving device. What a convenience! I can look and say you're an 1150, you're going to be all right—instead of having to pore over this thing and wring my hands and justify taking a chance because this kid's got an average of X but I'm seeing things that make the case as an individual. That takes work.

"The real opportunity costs are not the billions we're throwing out in marketing. It's the opportunity cost of looking past literally millions of kids who would do a great job."

Enrollment management has spread so quickly across American higher education because it gives many college presidents and trustees exactly what they want. The major enrollment-management consulting firms tout "before" and "after" profiles of satisfied colleges. Maguire Associates, by shifting from need-based aid to merit aid, has bumped up a school's average SAT score from 1350 to 1380 while increasing revenues by 162 percent. Noel-Levitz has increased an average SAT by fifty points, raised an average GPA from 3.48 to 3.62, and dropped the acceptance rate by 13 percent; it has boosted the number of "no-need" students—those who don't even request financial aid—by 60 to 70 percent, and the number of minority students by 20 to 40 percent; it even expanded one college's freshman class by 3,000 students.

The consultants say they never tell schools what to do—they only present options. After they've worked up a model of how students will respond to different aid packages, the next step is to create a menu of sorts, detailing the different entering classes a school could have if it adopted their techniques. One option will almost always maximize net revenue; others might emphasize total enrollment, academic quality, ethnic diversity, or the enrollment in a specific program, such as engineering. Each potential class on the list comes with tradeoffs; generally, academic quality, revenue, or diversity can each be increased, but only at the cost of the other two attributes. In the business these costs are known as "the price of your principles."

Low-income students often suffer in this process. They drag on both revenue and academic profile, and it's hard for outsiders to tell when their numbers are reduced. Although universities are required to report gender and racial diversity to the Department of Education, their income data can be gauged only through rough proxies—for example, the number of Pell Grant recipients. When David Kalsbeek arrived at DePaul University, where he is the vice-president for enrollment management, he wanted to measure how the school—founded by Vincentian friars—was living up to its mission of educating poor and first-generation college students. He called all the major consulting firms, and none had a satisfactory response.

Though they may dislike cutting the number of poor students, presidents and trustees are held accountable for a school's place in the pecking order. "There's pressure for rankings," says Tom Green, the associate vice-president for enrollment services at Seton Hall. "There's no doubt about it. Presidents get pressure from board members, from alumni. They'll say, You're number eighty-seven. How are you going to get to be number eighty-five?" Eugene Trani, the president of Virginia Commonwealth University, a Tier III school in the U.S. News rankings, carries a laminated card in his pocket to remind him of the school's strategic goal of making it to the next tier. For every year the school stays in the higher tier he will receive a $25,000 bonus—a fact first reported by AGB Priorities, an industry newsletter. A vice-president at Hobart and William Smith was fired when she failed to report current data to U.S. News and the school's ranking dropped from Tier II to Tier III. The incoming president spent the early part of his tenure repairing the damage.

Trustees also bring their own values to the table. "There are trustees who think that scholarships will make a kid's mind turn to mush—after all, they worked their way through school," Mark Heffron says. "On the other hand, they're incredibly rich and can't understand why anybody would think forty thousand dollars a year is a lot to send your kid to school."

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