Financial Aid Modeling: The What and Why

During your research into financial aid and endowment, you might have come across the phrase “financial aid modeling” This, by itself, sounds boring to the average student, but it actually is referencing the models colleges and universities use to determine how much financial aid they can offer their students. Here’s what you need to know about it, and how it could impact you.

What Are Financial Aid Leveraging Models?

A funnel graphic showing "prospects, inquiries, applicants and admits."College tuition is well above the financial means of most students, and this assistance helps ensure students can attend. However, most colleges and universities can’t afford to give a free ride to every single student. If they did, it would be difficult to afford everything that makes a school great, from the professors to the campus. That’s where financial aid leveraging models come in.

Financial aid leveraging models are resources colleges and universities use to hone their financial aid strategies. The school in question then makes strategic investment of their funds to ensure students can enroll AND so the college can meet net revenue and enrollment goals.

It helps to put the endless amount of data colleges have on students to work, too. This includes historical information, market research, competitor analysis and enrollment predictors. There’s a lot of information that goes into crafting these strategies.

Economic problems can also shape financial aid leveraging models. The 2008 recession, for example, required public schools to start using these strategies. Previously, they had relied more heavily on state funding. And COVID definitely had an impact on financial aid and net revenue for colleges as admissions were down as the economy.

How Do Financial Aid Leveraging Models Affect Students?

While a student might not care about the ins and outs of these strategies, and a lot of it won’t make sense to the average student, the end results do affect each student.

These models can:

  • Improve access to higher education
  • Help ensure financial aid money doesn’t go to waste
  • Help money get where it’s needed most
  • Impact the overall cost of tuition
  • Impact financial aid packages
  • Make the process more transparent
  • Change with the economy
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How Can You Take Control of Your Financial Aid Packages?

You can’t do much to impact these models’ colleges use to determine who gets what. But you can absolutely get insights into the packages you were offered. It’s important to compare the offers you received. Terminology can be confusing, and schools don’t use the same formatting on their offers. It’s extremely easy to get confused.

Our Financial Aid Offer Comparison tool gives you the insight you need to truly see how your offers stack up one another, allowing you to make a more educated decision when it comes to the college of your choice and the financial side of things.

Understanding what financial aid leveraging models are can help you better understand why a college or university offers the financial aid packages they do. If you’re curious about the financial aid offers you’ve received or need a bit more assistance to afford college, check out our Comparison tool and Student Loan Finder.