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UM cuts scholarships as it struggles to find winning formula

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The list of reasons more prospective students aren't choosing the University of Montana has been the subject of much discussion across campus. Fewer Montana high school graduates, a rape scandal and poor recruitment have all been mentioned as contributing factors to declining enrollment. This year, Main Hall added academic offerings to the list, challenging UM programs to adapt to today's job-oriented students.

But only once during this era, in fall 2011, has UM actually asked applicants why they didn't enroll. And the answer students gave then was clear: UM just wasn't a good deal.

In a survey of 468 "nonmatriculants," 38 percent said they didn't receive enough financial aid or scholarship money. Thirty-six percent said they got a better offer elsewhere and one in three said UM was too expensive. The out-of-state students UM relies upon for the bulk of its tuition revenue cite cost factors as the top three reasons they chose another school.

Five years after the survey, UM's aid system is still in flux, without a long-term strategy and now forced by budget constraints to reduce scholarships, even as the sticker price for out-of-state students continues to increase. On its face, it doesn't look like a winning formula. How can UM expect to attract more students with less money to entice them?

"You better make sure you maximize the dollars that you do spend," says Sharon O'Hare, associate vice president for enrollment and student success.

UM hasn't leveraged scholarship awards efficiently in the past, according to one report. An independent analysis of the university's recruiting completed in January 2014 found there was "not a culture of evidence" in admissions, particularly with regard to its financial aid strategy, which consultants said was designed around spending limits instead of revenue goals. "Clearly these practices need to change," the report's authors wrote.

O'Hare ran the university's retention and student affairs programs before she was assigned in fall 2013 to help revamp UM's recruiting. Now she's preparing to hand off admissions oversight to whoever fills a restructured vice president position geared toward "enrollment management." That hiring is expected to be announced soon.

The new VP will inherit a recruiting system that has been modernized over the last three years, including software that helps university planners see how scholarship strategies might affect enrollment and net revenue, O'Hare says.

Cost factors such as scholarship packages were the top reason students in a 2011 survey said they didn’t enroll at the University of Montana. Officials say it’s probably time to do another survey.
  • Cost factors such as scholarship packages were the top reason students in a 2011 survey said they didn’t enroll at the University of Montana. Officials say it’s probably time to do another survey.

In public higher education, scholarships for out-of-state students are most frequently used as discounts to convince students to attend who otherwise wouldn't, at a tuition rate that still brings a profit. The "art and science," as O'Hare calls it, is to award just enough aid to as many applicants as possible to obtain the most overall tuition revenue. In other words, it's about getting the most bang for each buck.

Competition for these students is increasingly fierce as universities nationwide look to nonresidents' high tuition rates to shore up their budgets. Some analysts have referred to this as the "merit aid arms race," worrying the trend is at odds with keeping college affordable to those who need the aid. UM appears to have joined the race, perhaps unsuccessfully, a 2015 study by the New America think tank indicates. UM gave merit aid to a whopping 29 percent of freshmen without financial need in 2013-14, ranking 19th out of more than 400 public universities. Each student received an average discount of $3,250.

The same year, UM's independent analysts recommended further boosting awards to out-of-state applicants, which O'Hare says the university did for the following two recruiting classes. The yield fell anyway, leading officials to rethink the approach.

For the current cycle, UM has become much stingier with its awards, in part because the modeling software showed that "in some cases we were over-awarding," O'Hare says. General nonresident merit awards were cut in half, with UM instead targeting its best offers to students in western states and converting other awards to a need-based system.

But the change was chiefly prompted by the university's budget situation, O'Hare acknowledges, with President Royce Engstrom directing recruiters to cut waivers and scholarships by 15 percent over the next several years. The move comes as UM already trails its cross-state rival in the total aid it awards. For every student at Montana State University, the university expected to spend $1,704 on scholarships this year, state data shows. UM spends $1,226.

Tracy Ellig, MSU's executive director of university communications, doesn't view the situation as a direct competition.

"Quite frankly, we think the pie is big enough that everybody's slice can grow," he says.

O'Hare says the continued trimming of scholarships isn't necessarily set in stone. The new VP will spearhead creation of a long-term approach, something a campus work group called for in 2013. O'Hare says the overarching plan took a backseat to the more immediate changes she's been tasked with.

"No, the president did not ask me to do a strategic enrollment management planning effort," she says, "but he was aware that down the line it was something that we desperately needed—not desperately, but we really needed to do to be a modern player in enrollment management."

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