Admit/deny happens in the context of schools that do not promise to meet full need. With a full-need school, the financial aid often comes up short for various reasons, but I think the admissions committee would not know details and would assume that the need will be met.
So the phrase “admit/deny” refers to a situation where the ad com makes a decision to admit a student but short them on need based aid. How does this happen? Many schools leverage their need based aid, and I think in those cases the admissions office will inform the financial aid office of some sort of priority ranking that in turn determines aid. At some schools the admissions & financial aid are more closely tied-- and may be managed by a department with a name such as “enrollment management”.
Now back to the situation where admissions is separate from financial aid – if admissions is “need blind” then the admissions office may know how they want to score a particular applicant in terms of financial aid priority – but not know the details of how much that student actually needs. NYU is an example of a school that is notorious for the way that it leverages aid-- it really assigns each student to a tier with identical need based grants to all students within that tier, regardless of need.
So, as a hypothetical example, they may be offering all “tier 3” candidates who have need an award that includes a $15,000 grant. Doesn’t matter whether the family EFC is 0, or 15K or 30K or 50K – the ad com has assigned that kid to tier 3, and the financial aid office will put together package including that grant. And it works fo NYU, because every year we see families willing to sign the dotted line for huge PLUS loans so that the kid can attend their “dream” college. I know about NYU because my daughter was admitted and offered a small grant — I don’t know the specifics about tier level but at the time my daughter was admitted there seemed to be about a 4 level breakdown – of course the top tier got generous awards.
I think in that situation it really is an expectation that it will pay off in PLUS loans. I found stats recently showing that NYU receives a humongous amount of $$$ every from PLUS loans, and is the second highest institutiional beneficiay in the nation from PLUS loans - the highest is Penn State --but Penn State has more families borrowing, but lesser amounts. Average PLUS loan at NYU is above $30K a year, and they have thousands of borrowers. And NYU has continually expanded offerings, so that it can enroll more and more students. Many of the students in the “admit/deny” category are also denied admission to their first choice school at NYU, and instead offered admission into the “liberal studies” program at one of NYU’s international campuses. So more of a deny/deny/admit scenario. And still plenty of those students sign up for the ride.