Higher education is evolving rapidly, with changes in student demographics, new business models, and a sudden shift to remote learning reshaping the industry. The most vital need in today’s higher education landscape is that of ensuring all academically qualified students have access to postsecondary education, but a steady rise in the total cost of college attendance year over year since 1981 has made this task increasingly difficult.
To fully support student success, cutting these costs, combined with the transformation of the financial aid process and access must be the key components of any institutional strategy. A 2020 report from the National Center for Educational Statistics revealed that 75 percent of Americans believe that college is not affordable for all people. With wages stagnating and state appropriations to higher education diminishing, institutions must look to innovation to solve higher education’s affordability crisis.
Simplifying complex financial aid processes with student-centric technology is the first step for higher education institutions to fundamentally transform financial aid, with an emphasis on meeting the needs of the market and remaining relevant in the years to come. Currently, the process of applying for financial aid is arduous and daunting for most students and their families. For higher education to move to a model of lifelong learning, financial aid must embrace technologies that make processes more seamless for students. In addition, it must also evolve from merely being another administrative department to a strategic institutional focus area.
Successful transformation in any industry requires the use of data to answer key questions related to the health of the business, and higher education has a wealth of important data at its disposal. When used correctly, this data can be turned into powerful insights that inform the institution’s future strategic direction and increase its agility in response to shifting demands, and it can highlight innovative paths to removing financial barriers for students. However, higher education faces a challenge in being able to collect and process its data quickly enough to make use of it before it becomes obsolete.
Another problem that has been plaguing higher education for decades is the disparity between wealthy and economically disadvantaged students. As institutions have become increasingly reliant on tuition for revenue, they tend to court wealthier students and entice them with aid that could otherwise benefit disadvantaged students. Instead, institutions need to build programs to help low-income students manage their finances while at college.
While there is no one-size-fits-all approached to lowering the cost of attendance for students and their families, higher education should invest in tools that will provide a clear picture of success or failure of experimental models and programs. By regularly reviewing available data, institutions can be more agile, thoughtful and critical with financial aid innovations.
Technology can also play a key role in reducing the cost to deliver postsecondary education by refocusing staff on mission-driven priorities. For example, institutions can reduce avoidable overhead where possible by leveraging technology that integrates and streamlines manual processes.
Lastly, institutions focused on building a sustainable future need to establish and develop funding sources that are not dependent on student tuition. From research funding to gifts and endowments, other sources of revenue enable institutions to lower the cost of learning with the same standard of educational excellence.
Financial aid reform will continue to be a topic in the years to come, but institutions must set changes into motion. The ideas outlined above and more are explored further by Nicole Engelbert, vice president of higher education development, Oracle, Steve Hahn, senior director, Huron, and representatives from Butler University, The Pennsylvania State University, and University of Wisconsin-Madison in the whitepaper, "Leveling the Playing Field: A Student-Centric Approach to Higher Education’s Affordability Crisis".