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The state of the enrollment market:
Where are we now and what does it mean?

Remember how things felt at this time last year? There was much fear that college choice patterns would alter radically. Some predicted dire consequences, even that the economic crisis would compel many students and families to forgo college altogether.

While much trepidation remains this year, there is an eerie public silence about the economy and its implications for higher education enrollment. Some of last year’s loudest doomsayers seem to have retreated. More importantly, however, the relative quiet may simply reflect the very natural tendency to adjust to the “new normal.”

As we approach critical moments in the complicated fall 2010 enrollment cycle, we still need to consider the similarities and differences from last year’s emotionally charged environment and ask, “Where are we now and what does it mean?”

Five market observations

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Here are five observations on the general state of affairs in this recruitment cycle:

  • Admission applications are up at a wide variety of institutions. Moderate application growth is the norm, from the most selective to non-selective, across public and private institutions. News reports have underscored these increases and many of our clients are showing gains, as well.

  • Families are banking on financial aid. Students seem to be applying to even more institutions this year, likely placing even heavier weight than last year on their financial aid awards in making enrollment decisions.

  • Demographics are cresting. The United States still has the most students ever graduating from high school, essentially unchanged from last year. This college-going population is expected to be the largest ever in this country, but these numbers have peaked for the immediate future.

  • Families and institutions are in the same boat. The economic downturn has institutions trying to figure out how they will afford doing business this year and in the years to come.

  • Endowment income and donor giving won’t bail out the ship. Private giving to higher education was down dramatically in 2009 and endowment values declined by historic amounts – rebounding the least at institutions with smaller endowments that can least afford the losses.

This season understandably feels like the second year of an economic crisis, following the overwhelmingly difficult fall 2009 recruitment cycle. Of course, we know that the recession technically began in December 2007. While the fall 2008 recruitment cycle was nowhere near as painful as last year's, we can see in hindsight that abundant signs of trouble were evident even back then.

Interestingly, Kristin Tichenor, Vice President of Enrollment at Worcester Polytechnic Institute, told a Maguire Associates Symposium audience last fall that her analysis of WPI’s historic data shows that the third year of a recession can be the toughest (see symposium video at right). Well, this is the third year!

So, given these five market observations, what advice can we offer for the third year of a tough economy? Here are three thoughts:

1. Third year, third rail?

We were reminded last cycle that higher education is not a discretionary expenditure for most families. It is woven into the fabric of the American dream in ways that can transcend economic stress. That said, where someone chooses to enroll remains an entirely different matter.

This year, we are all working with families who have had much more time to internalize the full brunt of the “Great Recession.” This may be the third year of economic crisis, but last year’s high school seniors and their families – as well as the media and our political leaders – were not completely overwhelmed by it until partly through the recruitment cycle. This year’s class has marinated in instability for a longer period of time than their predecessors, and it’s not yet clear how this will affect their college decision making (More from us on this topic, coming soon).

In terms of our abilities to navigate the environment, there is good news about the predictive power of statistical models created or re-built this year. They are based on a very challenging cycle – recruitment for fall 2009. Predictive models of all sorts – from the very simple to the very sophisticated – rely, in general terms, on data from the past to predict the future. Whereas last year, the climate was quite different from one year to the next, this year the changes may be more subtle.

While all is not well, there is something to be said for pulling back on the reins of the crisis mindset and calibrating this cycle’s final touches with a calm and steady hand. Inarguably, the third year has the potential to be the third rail for some institutions, but not if you use your hard-won experience and knowledge from last year to guide strategically sound decisions over the coming months.

2. Apps Up, Yields Down

Let’s start with the trend of the moment: “fast applications” are everywhere. The trend has been expanding for several years, but there has been a particular spotlight on the topic this winter.

“Fast applications” are specially designed admission applications, often distributed to a wide net of inquiring prospective students, typically for the purpose of expanding applications in existing markets or establishing new ones. Usually, they are free (waived fees), quick (partially filled out for the student), and easy (often there is no required essay, just a graded writing sample). Given this strategy's objective of reaching tentative candidates or those beyond the institution's typical applicants, “fast application” students tend to be less interested in the particular institution overall, and yield at lower rates. However, there is no indication that “fast applicants” who enroll are any less qualified than students who apply by other methods.

Next, some simple arithmetic: There are approximately the same numbers of high school graduates this year as last year and there is no marked difference expected in the overall college-going rate. If you and your competitors are experiencing application increases in the vicinity of 10 percent, then something has to give. What’s likely to give in this scenario is yield.

Taking strong cues from last year’s experience, digging aggressively into your application pools to admit more qualified students than in the past will be central to achieving enrollment targets. Last year’s yields may have been below historic norms, but another decline is still possible. Your success with yield will depend in part on your financial aid awarding strategies. That’s because, though there are more applications, there aren’t additional students. Be cautious about letting selectivity be a top goal in this environment.

3. Sustain, Retrain, Retain

With state appropriations to public institutions being cut, private giving to higher education down 12 percent (and more to smaller private institutions), institutional endowments eroded, income from endowments unlikely to rebound any time soon, and financial aid commitments rising, budgets are tight – and will stay tight in the near term. Creating sustainable management processes within these constraints is a complicated, multi-faceted challenge.

  • Sustain: It is essential in this environment to analyze and adjust financial aid policies on a continuous basis. This necessity is due to the presence of two powerful and competing forces. First, financial aid has become an indispensible tool for delivering your class. And yet, using very aggressive financial aid awards alone to reach your enrollment targets is not a financially sustainable strategy. Even at some of the most highly selective institutions with no-loan policies, there is pressure to pull back. On January 31st, Williams College became the first institution to overturn its no-loan policy, and was followed a week later by Dartmouth College.

  • Retrain: Sustainability also depends on generating streams of prospective students from heretofore unlikely sources. For example, it’s an important time to retrain recruitment staff to focus substantial energy on transfer students. Simply creating a recruiting and enrolling environment where transfers feel welcomed and appreciated can make a huge difference.

    Providing a promise similar to what is offered to first-year students – housing, entry to courses, and orientation – alongside a clear and easy credit-transfer policy, is an important step. There may soon be a boomerang effect with some students who flooded to community colleges last fall transferring to four-year institutions this coming fall.

  • Retain: Lastly, “recruiting to retain” means aligning your marketing messages with the services you can deliver to your students at the highest quality. It is essential to ensure that promises are fulfilled and that what students experience at your institution matches the expectations your recruitment process generates.

    A welcoming, service-oriented environment, complemented by authentic – and not generic – pre-enrollment interactions can create the optimal circumstances for retaining students whom you enroll. Additionally, a long-term strategic effort to recruit the kinds of students who have a natural tendency to retain at higher rates is an important process to undertake. The financial and reputational costs associated with the dissatisfied students who leave you can be staggering. What may be worse, however, are the costs associated with highly dissatisfied students who stay. It is essential in this regard to focus on both satisfaction and retention.

To another finish line

At January’s Council of Independent Colleges national conference, attended by more than 350 private college presidents, some leaders expressed deep concerns about fall 2010 enrollment. The Chronicle of Higher Education reported that one president, reinforcing the “third year, third rail” sentiment, said, "There is a theory that fall 2010 is going to be the hard one.”

Well, this is hard! And you are right in the thick of it, too. What helps each and every one of us get to the finish line, however, is the reminder that we share a unifying mission that is central to improving the quality of life for individuals, families, and communities. Above all else, that is the laudable state of today’s higher education market and is why we dedicate ourselves to it.

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