Financial aid management: an optinisation approach

Higher education administrators regularly make decisions regarding the allocation of multi-million institutional dollars in attracting superior students, while trying to maximise certain factors such as net revenue, quality and enrolment. Often these decisions are made based on experience or sometimes in an ad hoc manner. The resulting enrolment management strategies can be far from optimal. We model this decision-making problem via a linear programming problem that can be easily solved to optimality while taking multiple factors into account. Through very representative data, our analysis shows how the optimal allocation of financial aid awarded to the entering class can significantly improve enrolment management. It also shows how an administrator can dynamically assess the various strategies as more information becomes available during the enrolment process. Such a strategy has been successfully implemented with major improvements at the University of Miami.