Processing financial aid records is one the most important yet complex steps for many financial aid offices. When not administered correctly or efficiently, it can create compliance risk or delays in students receiving their awards which has real enrollment and financial consequences. The recent staffing shortages throughout the industry have only magnified these challenges.
Many university presidents and CFO’s are exploring a new model – outsourcing their financial aid processing services. Those university leaders are discovering outsourcing is a better model for 4 reasons.
- It is a better economic model. University leaders can better control their costs in an outsourced model rather than carrying high costs associated with large staffs with frequent turnover. In addition to the cost savings, an outsourced processing model creates greater ROI. When financial aid is administered sooner, students receive their awards earlier which creates a real recruiting and retention advantage. Even a 2% gain in admit yield or a 2% increase in retention equates to noticeable gains in headcount and significant gains in net tuition revenue. The cost savings combined with greater ROI is why university leaders are discovering the outsourced partnership is a better economic model.
- It is a better strategic model. When the back office processing work is outsourced, financial aid staff are unconstrained to do what they do best – counsel students and parents. Key financial aid staff can focus on higher priority strategic initiatives that achieve operational, enrollment, and student experience goals. Those strategic priorities make a significant impact on the university.
- Students are better served. When financial aid files are processed sooner, students receive their financial aid awards earlier increasing their propensity to enroll as new students or return as current students. Parents and family members are more engaged and satisfied in the process. Student experience is directly correlated to recruitment and retention. Most financial aid leaders entered the profession, in the first place, to help make college affordable and accessible and to serve students. This model supports that goal.
- Peace of mind that the university is always in compliance. Besides the benefits of timely and accurate financial aid administration, university leaders who find a trusted strategic partner can rest assured their financial aid is administered in full compliance with the Department of Education.
Important factors to consider
- As a best practice, have the outsourced processing work completed in your student information and financial aid management system. Select a partner that is experienced and proficient in your technology system.
- Find a partner with deep industry experience and a long-standing track record of success with their clients and who is fortified by highly experienced consultants and team members. These are the strategic partners you want.
- Ask potential partners about their audit history. Those companies are audited each year just like universities.
- Ask potential partners about their quality control measures and processes. The best companies will quickly respond, providing the detailed quality control measures they have in place to ensure full compliance.
- Inquire whether the outsourced partner will just replicate your current processes or will they listen and work with you to make your current processes more efficient. Will they merge their best practices with your client-specific needs? If so, that is a good partnership.
At FAS, these are a few of the tenets and best practices we built our model on.
Financial aid processing is one of the most important steps in a financial aid operation. The current staffing struggles in most financial aid offices only makes this more challenging. Those staffing challenges show no signs of lessening anytime soon. But there is an alternative. It’s a better model too. From the initial application until the last dollar is disbursed, the right outsourced partner will make a significant impact on your financial, operational, and student experience goals.