Wednesday, May 2, 2012

What does growing economic inequality mean for enrollment management?

The Occupy movement has coaxed economic inequality from a quiet, hidden corner of American civic discussion to the center.  By all measures, it is growing in the United States.  And it has sharpened the discussion about access, tuition rates, and the value of higher education.

The big questions about higher education are important ones.  In this post, I want to focus on something narrower, though--the impact of growing economic disparity on enrollment management.  This is a topic about which there has been little discussion, and about which there should be serious concern.  Here is why:

Growing economic inequality means three things:

  1.  Children from families at the top of the economic heap will have ever greater educational opportunities because socio-economic status correlates with academic performance.  And in enrollment management, strong academic performance is linked directly to high discount rates, as schools compete for top students.
  2. Children from families at the bottom of the economic heap, a growing proportion of American society, will require ever more need-based aid in order to go to college.  And in enrollment management, high need correlates to high discount rates, as schools try to make it possible for those students to attend college.
  3. Therefore, enrollment managers will see increasing demand for both merit and need-based aid, and hence growing pressure on the discount rate from both ends of the spectrum.
The key question for enrollment managers, then, is how to face this dual challenge while bringing in enough revenue to meet the institution's need.  I don't know the answer, but I do suspect one thing--that schools who do it successfully will focus on narrowing the economic band from which they recruit students, because they can no longer count on one end subsidizing the other.

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