The Utilization Problem

Amaan Badruddin
Jun 10 2023
5 min read

The Surprising Truth About University Scholarships

If you've been in the trenches of scholarship administration, chances are you've seen it before:

  • Donors getting frustrated about their gifts not getting spent in full, or correctly - then being asked to give more
  • Financial aid not having the capacity or tools to award all scholarship funds, or having errors that need reconciliation
  • Advancement worrying about whether donor funds are being spent in full, compliantly, on-time
  • Students looking for information about how to best afford your institution, but not seeing what scholarships they're actually eligible for

You're not alone. Institutions large and small, public and private across the U.S. struggle with a head-scratching problem: how do we spend all of the donor funded scholarships we have been given?

To the outsider, this question reveals a shocking truth - most people don't realize the amount of donor money at most institutions that sits unawarded every year. With spiraling costs of education, mounting levels of student debt, and a generational college enrollment cliff, one would think that institutions would be scouring their balance sheet to find any source of funds that could help attract & retain their students.

And yet, the schools we've surveyed have reported large variances in their scholarship utilization rates: some as low as 30-40% in some years. On multi-million dollar annual scholarship budgets, we're talking about a massive loss of opportunity costs. At a time where financial access to higher education is the most critical barrier for application and enrollment, schools across the country should be taking swift and immediate action to address this problem. But to do so, we need to understand the roots of the problem itself.

What Causes Lack of Scholarship Utilization, Really

After surveys and interviews with hundreds of scholarship administrators, four key causes of low scholarship utilization have emerged:

1) Lack of Visibility

If your president called you right now, asking what your scholarship utilization rate was across all donor funds (endowed and current use), could you give them the right, precise answer? Do you know what funds are underspent, why, and what's being done about it?

Oftentimes, the answer here is no. And that's a problem. How can you hit a target you can't see? It's imperative to have quick and easy access to see how much is available to spend in each scholarship, how much has been spent or is remaining, and who is eligible for those funds. If these all sit on different excel spreadsheets, especially if those spreadsheets have different version dates and owners, you have a visibility problem.

2) Lack of Accountability

Ok, you've set up a weekly scholarship utilization report - maybe you have a couple dashboards too. All the scholarship administrative stakeholders know where there's unspent funds. But the problem persists. Sometimes, there exists an accountability issue - especially when scholarship awarding is a shared responsibility across multiple departments. While this isn't always the most common problem, the solution begins with a definition of which teams and individuals are involved, their individual roles & responsibilities, key deadlines, and a commitment from everyone up to the VPs that there will be a focused spotlight on scholarships until the desired targets are reached. These initiatives can be instigated from within, or can be overseen with the right vendor partner that takes time to invest in learning your institution's context and working side-by-side to effect the necessary process changes.

3) Lack of Automation & Technology

Lack of automation is the single biggest problem behind low scholarship utilization. Every institution has at least 1 team involved with scholarship management that is under-resourced and overworked. Depending on the institution, you may have to deal with scholarship applications, reviews & committees, manual eligibility verification, complex donor restrictions and preferences, changing student eligibility, stewardship follow-ups and much more. Add that to the fact that most of the time, scholarship management represents a small portion of the overall job description for you and your colleagues. The solution can't be to work more hours, or have more meetings, or ask IT to codify a temporary solution for you.

When dealing with problems that have a multi-million dollar impact on your institution, and a critical influence on your students' success and staff's workload, external technology vendors should be evaluated to boost productivity, attract & retain more students and donors, and expand the operating budget. Hint: Awarded's solution was custom-built for institutions like yours.

4) Donor Restrictions

Beware. Many institutions think this is their primary problem, but mostly it is just the scapegoat. You will likely find scholarships written decades ago with complex restrictions that can only be met by one student every 10 years. But looking up close, there exists significant capacity to meet these donor restrictions when you have a system that a) auto-matches SIS data to donor restrictions to show you what students qualify for each scholarship, and b) allows students to complete optional or required "student profiles" that can help you find eligible students beyond what the SIS can tell you. Further, companies like Awarded will set this up for you and quantitatively demonstrate how many students are eligible for each of your scholarships - so if you have truly over-restrictive scholarships, you have strong data to share with donors or next of kin so they can consider switching requirements to preferences.

Moving Forward

The scholarship utilization problem is a big problem with big ramifications. If you've identified one of the four challenges above at your institution, we recommend reaching out to us to see how we can revamp your scholarship process to save time & headache, and unlock your scholarships to become a strategic advantage at your institution.

Amaan Badruddin
Jun 10 2023
5 min read