I’m going to say something that might hurt some feelings, bruise some egos. I have to because I care about student financial success more than not ruffling feathers. Here goes: financial aid outsourcing is dead and sacrifices student experience for labor-intensive processes.
The sooner financial aid outsourcing takes its long-awaited retirement, the better off everyone will be. How do I know? I worked for years in that very industry.
Very early in my career, I had the privilege of structuring and managing the largest student financial aid outsourcing in the history of the universe (no lie). Then I went on to build a company that today drives student financial success at more than 500 colleges and universities across the U.S.
I know the awful truths about financial aid outsourcing–where they’ve buried the proverbial bodies–and it isn’t pretty.
Awful Truth #1: Outsourcing Doesn’t Make Your Student Experience Better
Nobody cares as much about your students as you do. A winning financial aid process is one that drives student financial success and puts the student first every.single.time. Outsourcing contracts are generally labor-driven propositions—and that doesn’t yield the best experience for today’s students. Well-designed, mobile-friendly, highly personalized, student-centric software makes this possible.
Awful Truth #2: Outsourcing Inherently Leads to Under-Investment
Outsourcing vendors follow a model I call “Your mess for less.” Schools that outsource usually do so because their processes are broken or they don’t have the right people or technology in place. Outsourcing contracts almost always have fee caps on them so vendors make more money when they spend less on labor. It is a rotten equation and ALWAYS leads to under-investment. The future of financial aid is in mobile, highly-personalized, student financial success enablement.
Awful Truth #3: Outsourcing Equals Captivity
Most outsourcing contracts are multi-year arrangements with stiff penalties for early termination. That means you’re stuck. And when you do decide to take your processes back in-house and want your data back, you’re going to find out how unmotivated and unhelpful your outsourcing vendor really is. Before you enter into an outsourcing arrangement, check references of schools that have left that provider (not just current customers) and ask them how their exit worked out.
Awful Truth #4: Outsourcing is Always More Expensive Than You Think
Schools are always surprised at the amount of nickel and diming that goes on with outsourcing vendors. Yet it’s completely rational. Every time an outsourcing company does something, they have labor costs that they need to cover….which means they bill you. A mobile financial aid process is the best alternative to a transaction-based solution because you have total predictability around your costs.
Whew! It feels good to get that off my chest.
If financial aid outsourcing is dead, what’s your next move? That’s easy, really. Take advantage of today’s technology and replace outsourcing with technology-driven, mobile-friendly solutions that actually put the student first.
And when you do, feel free to give mad props to your inside guy.
Outsourcing’s Awful Truth Infographic