Picture a group of business officers having dinner, when one asks the others about the state of their schools’ financial aid programs. You can bank on the topic overtaking the dinner conversation, past dessert and into after-dinner drinks at the bar. By the time the night is over, they will have covered everything from increasing demand to war stories about “gaming” the process to, above all, the amazing children they were able to assist in their efforts to “get it right” — that is, to offer world-class educations, within their schools’ budgets, to deserving families who otherwise could not afford them.
The truth is, “getting it right” is fraught with challenges. Schools may inadvertently allocate precious and limited resources to families with less need, awarding well beyond their financial means.
Financial aid was created as a mechanism to enable access to independent schools by families of all socioeconomic backgrounds. Later, it became a critical and necessary component of efforts to increase the ethnic and racial diversity that were once largely absent in many schools. Today, financial aid meetings sound closer to Russian Roulette, with business officers, enrollment professionals, heads of school and others in the room aspiring only to survive long enough to make it to next year. And we’re not alone. According to the NACUBO Tuition Discounting Study, nine out of 10 college freshmen received institutional financial aid in 2017-18, with the average award covering 56.7 percent of the listed tuition and fees.
For independent schools, financial aid, tuition remission, merit scholarships and other “tuition offsets” present one of the biggest challenges toward long-term financial health. Recently, NBOA and the Enrollment Management Association announced a partnership to explore these systemic challenges, which a survey of business officers and enrollment managers brought into stark focus. As reported in the cover story of the November/December 2018 Net Assets, "Overcommitted," many schools provide more aid than budgeted and thus create a financial domino effect they must manage for the remainder of each school year.
Q: What do you think are the biggest misconceptions regarding financial aid?
A: Many non-business administrators do not understand that financial aid is largely supported in the operating budget. In teaching the NBOA Budget Meets Mission online course, I’ve learned that many believe either the endowment or auxiliary programs support their financial aid allocations to families. As for parents, they often don’t understand that, in most cases, even the full tuition they pay for their son or daughter does not cover the full cost of their education. They don’t realize that basically, everyone is on financial aid. We must help stakeholders understand how schools fund financial aid.
Q: Is there a specific financial aid model that supports most schools?
A: Well, independent schools are INDEPENDENT. There is no one-size-fits-all model. I appreciate and value all the business partners that help support schools’ financial aid programs. The program I like best is the one that is aligned with a school’s mission and resources and helps the greatest number of students.
How can schools employ mission-fit financial aid allocations without harming their financial health? As I travel the country, I’m gratified to learn that some of you are embracing transparency and charging what it actually costs to educate a student. Some schools are implementing strategies to reduce those actual costs by designing programs and staff structures that align with the tuition their markets can afford. Others still are deploying a wide range of different strategies, such as using “indexed” tuition to more transparently offer financial aid to all students, dramatically slashing tuition through “resets” and moving tuition closer to net tuition revenue targets.
The best advice when it comes to financial aid, shared by several NBOA/EMA survey respondents, is to create a program that aligns with your school’s financial conditions and your prospective market of families. Then, if you truly believe you are “getting it right,” help families understand how financial aid advances your school’s mission and provides a richer learning community. Commit to these goals, and all independent schools, as well as all students and families, will benefit.
Overcommitted: The Future of Financial Aid
Strategies: Tackling a Shared Challenge
Show Them the Money: Six Trends in Financial Aid
The Art and Science of Assessing Financial Need
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