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Need-Based Aid and the University Budget


Newly Minted is a monthly series on Head Count following John Gudvangen through his first year as a financial-aid director, at Wesleyan University. We’ll check in with Mr. Gudvangen as he learns the ropes of his new position and faces challenges common to his profession, as well as some unique to Wesleyan.

January

January is a quiet time on Wesleyan University’s campus, with students on break for much of the month. For the financial-aid office, this is the calm before the storm. Before long, it will be time to evaluate need and package aid for students who applied regular decision—work that must happen quickly because Wesleyan sends financial-aid awards with its acceptance letters.

In the meantime, John Gudvangen has been wrapping up his projections for how much the office will spend on aid this year. Because Wesleyan admits students without considering what they can afford to pay and is committed to meeting their needs with limited loan amounts, the aid office can’t do much to rein in costs as it goes through applications.

Even if the university did try to tinker around the edges, say, by adding an extra thousand dollars in loans for each student who borrows, it wouldn’t make a big enough difference to really straighten out the budget, Mr. Gudvangen says. Besides, he says, such a change could result in a drop in the university’s yield (the share of admitted students who decide to attend), especially because Wesleyan already expects students to borrow more than many at its peer institutions do.

If the incoming class ends up requiring more support than expected, the university just spends more than it planned to on aid. That’s what happened last year.

It’s a very different model than the one used at “need sensitive” colleges, which consider the financial need of some fraction of their applicants as they build a class. In that case, a college can meet its aid budget by only admitting those students it can afford at the end of the admissions process.

Even though the amount budgeted for aid at Wesleyan won’t actually restrict what Mr. Gudvangen can spend, it’s still important to get a good estimate, he says, because “we’re not the only budget priority on campus.”

While Wesleyan is better off than many colleges, it does have to make tough choices about spending. If the board doesn’t have a good sense of what aid will cost, it is less able to make wise decisions of what else Wesleyan can and can’t afford. Unlike some colleges, Mr. Gudvangen says, Wesleyan doesn’t have a pool of money to draw from if it overspends on aid. Doing so simply means there is less money for other campus needs.

And there is little reason to expect financial aid to be less costly this year. “We haven’t seen recovery in the economy across enough sectors to think that oh, we should be able to predict a stronger income pool this year,” Mr. Gudvangen says. In other words, making ends meet while holding to the university’s philosophy on student aid won’t be getting any easier anytime soon.

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