The purpose of our work in this area is to build a model to help predict revenue,
discount rate and enrollment for a number of years in the future.
We have developed a technique to use historical aid and admission data from the
last four or five years 2002 to build a simple “spreadsheet” picture of how
family income, tuition and costs, and need, are related to your tuition discount
rate and net tuition revenue for first-year students. The spreadsheet model captures
these patterns using relatively stable historical relationships among these variables
as a guide to judge what the future will look like. Included in the model that we provide
our clients is a table of assumptions that allow the users to change different economic
conditions of the incoming class or a change in the institution’s policy toward
financial aid and class size.
Using reasonable projections for family-income growth, future tuition and cost increases
and financial-aid packaging initiatives, we can calculate total aid costs and compare
that to tuition revenue year-by-year. We use the models under different scenarios to see
what happens (to revenue or the discount rate, etc.) if any underlying trend assumption changes.