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Strategies: Explaining Aid

By Net Assets posted 20 days ago

  
Explaining Aid

Enrollment & Financial Aid |

Three tools to communicate financial aid decisions more clearly may help mitigate families’ confusion and bargaining.

Article by Vincent Quirk, Shady Hill School

From the November/December 2019 Net Assets magazine

Feature image courtesy of Shady Hill School. 

Shady Hill School has a long-standing commitment to access and socioeconomic diversity. For fiscal year 2020, the board of trustees committed almost $3 million to financial support, which assists approximately 20% of our families. Although new and returning families receive proactive communication about the financial aid process, a small number of parents every year question and even push back as they try to better understand the process in general and their particular awards.

Since every school handles the financial aid process a little differently, families need to be aware of the nuances of each school’s process. We clarify that at Shady Hill, our first priority for financial aid dollars is returning families, and the remainder is awarded to new families.

Explaining Aid Decreases

Returning families usually expect to pay the same amount each year, so an explanation of any decrease in aid will help ward off confusion. Families asked to pay substantially more tuition than the prior year receive a generic letter enclosed with their award, which details the reasoning behind the increase. The most common reasons are

  • Income increased substantially from the prior year.
  • Family will have fewer children in tuition-charging schools in the coming year versus the current year.
  • Unusual expenses in the prior year not incurred in the current year.
  • Assets have increased over the prior year.

I find that sending this standard explanation form eliminates many questions and sometimes brings to light errors in the aid calculation. For instance, a family might say, “My income didn’t increase; I meant to put that on the ‘unusual expenses’ line.”

Explaining the Affordability Range

Managing expectations is critical when dealing with new families. We use School and Student Services (SSS) to calculate an “affordability range” that tells prospective families — and even current families — the general income range that qualifies for aid. We recently did an affordability range calculation for our grades six through eight tuition, which is $41,220. For a family of four with one child in a tuition-charging school, the income range is $67,560 to $224,072. In other words, a family with an income below $67,560 is considered a full-need family (subject to our $400 minimum tuition), and a family making above $224,072 is considered a full-pay family.

 The more comfortable a family feels about costs, the more likely they are to be fully engaged in the admission process. 

This range can be a useful talking point for presentations or initial discussions with families. Families new to the process may assume that their income is too high to qualify for aid, therefore publicizing a range might encourage a family earning $175,000 to apply for aid. You can also run the scenarios with various assumptions — number of children in tuition-charging schools, tuitions at various grade levels, etc.

We encourage all prospective families to discuss financial aid with us. We find that being as transparent as possible about the process helps clear up the many misconceptions about financial aid. The more comfortable a family feels about costs, the more likely they are to be fully engaged in the admission process. To help families in the process, we use SSS’s Expected Family Contribution (EFC) Simulator tool, which roughly calculates how much financial aid a family qualifies for. Prospective families bring their prior year tax return and come prepared to discuss their income, assets, liabilities and relevant personal information. In fewer than 30 minutes, I can give them a pretty good estimate of how much they’ll be asked to pay if their child attends. This information is very useful for families reluctant to commit the time and effort to formally apply for aid.

Not only does a monthly cash flow worksheet help paint a detailed picture of a family’s cash flow, it can also further the discussion about what truly is affordable for a family.

I learned the hard way to always keep a copy of the calculation of whatever I tell a family because they will hold you to it when they actually go through the aid application process. When the actual calculation differs from what they heard a year or two ago, you can point out the various differences between the original assumptions and the actual figures used when applying for aid.

Clarifying Cash Flow

Once our awards have gone out to new families, families who believe they need more aid can appeal. When appropriate, we ask families to fill out a monthly cash flow worksheet. This worksheet spells out exactly what a family brings home each month and exactly where they are spending their cash. Not only does it help paint a detailed picture of a family’s cash flow, it can also further the discussion about what truly is affordable for a family. We’ve found that this level of detail is necessary in some instances when families and the school are far apart on their numbers or in instances when the SSS figure just doesn’t make sense given the circumstances. Once the monthly cash flow worksheet is analyzed, the financial aid committee meets, discusses the award and revises it if necessary. 

All these tools and processes help us manage enrollment and retention while working within our budget parameters.

Vincent Quirk is the controller at Shady Hill School, a 520-student preschool-grade 8 school in Cambridge, Massachusetts.
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