Financial aid in danger

The amount of financial aid supplied to students in order to marginalize tuition costs at Luther College has become unsustainable at its current rate.

“Our income for the year is getting offset by financial aid,” Diane Tacke, vice president for Finance and Administration, said. “There aren’t enough dollars to cover items we have no control over the cost of: healthcare, utilities, etc.”

This trend is partially a circumstance of increasingly challenging enrollment competition.

“We have more private colleges per capita than any other state,” Tacke said. “We have a decreasing population of students who are eligible to go to college. Recruiting is very difficult. It’s a financial aid arms race.”
“When 90% of our revenues depends on 19 to 22 year olds, it’s a highly competitive market.”

“When 90 percent of our revenue depends on 19- to 22-year-olds, it’s a highly competitive market,” Tacke said.

Furthermore, the economic downturn of the past 2 years has led to Luther extending more financial aid.

“In order to allow students from lower income families, our main impetus had to be financial aid. We’re finding for this year that more and more families are struggling than last year,” Tacke said.

While a formal plan has not been implemented to handle this crisis, Luther College is planning to leverage enrollment by focusing resources on prospective students more likely to actually attend the college, with the goal of making recruiting more cost-effective.

“We spend a ton of money on marketing to students. If we know the numbers of whose coming and who isn’t, then we can more efficiently spend those dollars. What is their willingness and ability to pay? That’s based on predictive modeling.” Tacke said.

The administration additionally has plans to bring in outside consulting regarding enrollment techniques. As far as spending, there is no plan at this point to scale back financial aid packages. Furthermore, the college will look into further cost cutting measures, but Tacke was unable to be specific at this time.

“Do I believe that this is something we can control in next year’s budget? Part of me says no, financial aid is going to be a large part of this year’s upcoming budget. We’re just going to have to look at our reserves that we’ve set aside to help cover some of those costs. We’ll have to evaluate any sort of cost cutting measures,” Tacke said.