Last week, we hosted the SSS By NAIS Leadership Forum.  With over 120 school leaders from across the country, and reflecting many roles within schools, the forum brought a multi-faceted set of perspectives to discuss and envision new thinking around the confluence of tuition-setting, financial aid budgeting, and demographic analysis as schools tackle the critical question about sustainable affordability (apologies for the abundance of catchphrases).I’m still working on a more comprehensive report/summary of the event to post in the SSS Knowledge Center’s resource library, but I thought some nuggets might be worth sharing to spur some of your own thinking on ‘what’s next’ for your school.

The Forum kicked off with NAIS President Pat Bassett providing a provocative overview and discussion based on some key points from his article “The New Normal.”   Times have changed and many of the assumptions/realities that helped schools prevail in the past may no longer hold sway.  The economic times and other forces present ample opportunity to re-consider and re-imagine some of our long-held practices, approaches, and designs.  He pointed the group to some really useful resources like the MSNBC/Moody’s Adversity Index which shows the degree to which a state and metro areas within the state are in recession, expansion, or somewhere in between.  It helps give an indicator of the economic strength of an area and region that could inform your process for establishing and supporting your tuition and financial aid strategies (not to mention giving expectations).  Pat, as always, challenges school leaders to ask:  What assumptions does your school hold dear that need to be revisited?  What was true about your school community ten or twenty years ago but no longer applies today? Have you adapted adequately to that evolution?  If not, is it too late?

I then sat in on a presentation by Mike Connor and Vanessa Wassenar on tuition and value.  One of the primary takeaways being that setting tuition is a PROCESS, not an event.  Be sure that the process includes not just the board or its finance committee but also the school’s senior administrative team, including admissions.  They shared a useful calendar of who should be learning/discussing what and when to make an effective tuition-setting decision.  One participant shared how her school moved its decision process so that tuition can be announced as early as October, helping to make the fall recruiting season easier to manage.  She likened their old approach to trying to buy something you want from a salesperson who is unable to tell you its cost for another few months (hey, doesn’t Apple do that when they put out a new iThing?).  I’d never thought about the tuition-setting norms in this way before and it begs a simple few questions worth exploring:  What would it take to have your board settle on next year’s tuition in early fall (September or October), in order to support fall recruitment activity better?  What would be the benefits and new opportunities yielded?  Is there a downside to that timeframe?

The third presentation I saw was on changing demographics, changing schools, facilitated by Rachael Beare, from The Hotchkiss School (Connecticut).  The key takeaway for me from Rachael’s advice and urging is that “if you don’t know where you’re going, any road will get you there” (a popular Lewis Carroll quote).  By examining key (but simple, free, and easy-to-find) demographic and economic data about your market, you can define the path to building the community you want.  One example she gave was of a school that used demographic analysis to realize that an area where a large portion of its students were from was actually projected to decline in population.  Meanwhile, they saw another area from where fewer of their students hailed was projected to significantly grow in school-aged children.  Given that, they could plan right away to begin a new and different focus on where to target marketing messages, transportation choices, and word-of-mouth campaigns.  Rachael’s session implored schools to find out: What do you REALLY know about your market for students?  Are your strategies and investments (in program, financial aid, marketing, etc.) changing in ways that support or preface the changes in the demographic and economic realities around you? 

Last, I sat in on the financial modeling and financial aid session given by Rick England at Lick-Wilmerding High School (California).  From this session a point that is very often mostly rhetorical was brought to life in a very practical way:  to establish the kind of financial aid investment you really need, you have to be very clear about its purpose and why it’s important to achieving your school’s mission. Lick-Wilmerding  was originally founded in the late 19^th century with the mission to teach trade skills.  The school didn’t charge tuition for several decades, until it became absolutely necessary to do so after some endowment mismanagement (another topic for another time).  This history of the school’s founding and its clear mission to serve a diverse and inclusive community inform so much of what they do (in many realms of school life), that they use a budgeting model that funds financial aid FIRST and builds around that (helping over 40% of students with financial aid support, compared to the median 19.7% for a typical NAIS day school).  The school makes financial aid a purposeful priority to ensure the schools serves kids from all walks of the economic spectrum, as it was founded to do.  Are you clear about why you offer financial aid and where it fits in your strategic budgeting priorities?  Does your school mission or history have a clear relationship to socio-economic diversity?  If not, should it?

Of course, the Leadership Forum included more than just these few sessions and each presenter I mention here covered much more than what I’m highlighting (more resources from the Forum will come in the weeks ahead).  I hope that’s enough food for thought to tide you over until then.  Thanks to all the presenters, school leaders, and NAIS staff who attended for helping us think out loud about these things collectively as a community of professionals.

In college, I loved this song called “Been Caught Stealing” by Jane’s Addiction.  It’s about a guy who has enjoyed stealing things his whole life and has only been caught once, when he was five years old.  Even his girlfriend loves thievery just as much.  The verse below describes their joy at having absconded with yet another haul and just having a good ol’ time as criminals:

We sat around the pile —
We sat and laughed.
We sat and laughed and we waved it into the air.
And we did it, just like that!
When we want something, man, we don’t wanna pay for it.

This image reminds me of why I’d often feel queasy as an financial aid officer, worried that Richie and Regina Rich were at home in their McMansion laughing about the $25,000 grant I gave the family while they pigged out on caviar and Dom Perignon with the accountant that got their taxable income to minus $12,500.
  
It took years to convince myself that if I’ve done everything I could possibly do based on a thorough review of legitimate information I had, 99 times out of 100 the best result will play out.  Indeed, most people do not enjoy stealing and do not sit, laughing, around a pile of ill-begotten loot.  And indeed, sometimes someone slips through the cracks  —  but you can’t pinpoint exactly why you shouldn’t give them what they qualify for, other than operating on a hunch.

But what do you do when you know for sure that someone cheated on their financial aid application?   How do you handle the one in a hundred who, through their dishonesty, basically steals money away from truly needy families? What to do when a family’s “been caught stealing?”

How do you know they cheated?

If you suspect a cheating situation, have proof and documentation whenever possible, such as the actual copy of the tax return they filed with the IRS, compared to the falsified version they gave you (this is indeed the value of collecting and using the IRS Form 4506 or 4506T).  This situation is too serious to rely on rumor, hunch, or intuition to make an accusation.  You have to have accurate information.  It’s okay to trust your instincts to ask for, or seek, more information about a case, but it’s not enough to accuse someone solely based on that.  You might submit the Form 4506 because you don’t ‘feel right’ about the 1040 they gave you, but you should stop short of accusing them of submitting the wrong form until you can prove it. Point out inconsistencies and ‘mismatches’ that are tangible and objective — such as differences between what the 1040 reflects versus what was provided on the PFS.

What to do about it?

Ensure Support of Key Players
At a minimum, be sure that the head, Financial Aid Committee members, and possibly the board chair (at the head’s discretion) are aware of the situation.  With this group, you should examine your strategy for assessing and delivering the consequences so that a group decision is made and supported by all the key decision makers.  You should also determine, as much as possible, whether there are possible contingencies or other circumstances that might warrant any potential ‘wiggle room’ in meting out the penalties.

Communicate Clearly, Firmly
Explain your position, using a clear, unequivocal statement of the facts that you’re able to document; provide opportunity for ‘rebuttal’ so that the family has a chance to clear the air, perhaps to correct a wrong assumption and/or clarify any misunderstandings.  Remind them that the PFS certification they sign states that they “recognize that intentionally providing false or inaccurate data may impact our ability to receive any financial aid and/or our ability to maintain a contract with a school.”  Consider whether your enrollment contract and financial aid letters have similar language. There should be no surprise when someone is exposed for falsifying information – they signed on to the consequences.

Speaking of That, Have Consequences
Once the dishonesty is confirmed, and with insufficient reason to overturn that confirmation, don’t waver on handing out the punishment decided by the stakeholders above.  Maintaining integrity of the aid process and your own credibility is paramount.   Among the options of consequences, you could do the following, starting from least punitive to most punitive:

Reduce the aid granted based on the actual true findings
(“you still qualify, but less than we initially gave you, but don’t let this happen again”)

Revoke or withdraw the current aid offer (“you can stay, but we cannot reward your deceit”)

Prohibit the family from applying for aid in future (“fool me once, shame on you…fool me twice, shame on me”)

Require the family to repay past aid (“were past applications equally fraudulent but just not caught?”)

Expulsion from school (“do we want clearly dishonest parents as part of our school community?”)

Of course, keeping the details of the matter private and confidential is critical.  However, it’s also important for the community to understand that there are ramifications for families who do not participate in the process honestly.  If the family is ask to leave the school or cannot return because the aid is withdrawn, consider the possibility that the reason why might become fodder for community chatter and be prepared to deal with it in a way that doesn’t expose the particulars but also confirms for others that falsifying financial aid information is not tolerated. 

Then, hopefully, someone who gets caught stealing once will not do it again to anyone else and will serve as an example to others.

Let's hear your story of how you handled someone you caught cheating on the financial aid application.  What did you do?

So, last April 30, the Financial Aid Blog was on “What Happens to Financial Aid During a Recession?”  The quick sound bite was that the spending on financial aid grants increased 1.5 to 2 times the normal year-over-year jump in financial aid spending, in order to handle newly needy families and help keep enrollments stable.  What happened for 2009-2010?  Using some early data from the latest NAIS StatsOnline survey, as reported by Pat Bassett at the NAIS Annual Conference in Denver, we know that the median amount given in need-based financial aid for the 2009-2010 academic year was 17.4% higher than the aid granted for the 2008-09 academic year, reaching about 15.8% more families seeking aid.  One of the key questions vexing schools now is whether this kind of boost is to be expected again.  As soon as you have completed making aid decisions for 2010-2011, take an early look at the offers you’ve made to compare the grants you’ve given (average, median, total) and financial profiles of aided families (average income, net worth, family size, parent contribution) to last year.  What does that indicate?

Understanding parent behaviors and attitudes in making ‘big ticket’ purchase decisions in this economic climate will also help you consider whether it’s necessary to rethink how you talk about tuition price, plan for financial aid increases, and express value differentiation in the next year or two.  Last July, the blog “Financial Aid and the Cosmic Reset Button” began this type of discussion to a small degree, touching on issues of how parent anxiety and rules for making spending decisions seemed to be shifting.  Are there patterns to those attitudes and behaviors that have implications for how we anticipate working with families in the financial aid process moving forward?  Absolutely. 

We recommend you read this report on a recent survey of Americans, conducted by Communispace and Oglivy:  Eyes Wide Open Wallet Half Shut:  The Emerging Post-Recession Consumer Consciousness.  While the key insights explored in the report are geared toward corporate brand marketers, many of them have direct implications for the financial aid process, communication, and planning.  Nearly all of them have important lessons for school admissions, marketing, and enrollment management.  Here are three (among many) key implications this study has for financial aid administrators to consider:

     1.     People will take longer to decide.  They will use more resources at their disposal to make an informed, conscious, and deliberate choice.  Particularly, this forebodes an increase in prospective families’ inclination to apply to multiple schools in search of the “best deal” and connect more with friends and peers for word-of-mouth guidance beyond what the school will tell them.  This may mean you could see more appeals for reconsideration of the aid offer and later returns of enrollment contracts and deposits.  Plan for more time to convince families to value the return on their investment and to convince them that they are making a wise big ticket purchase.

     2.     What I found to be the most interesting survey question relates to the seven deadly sins (wrath, sloth, lust, gluttony, greed, envy, and pride).  Over half of Americans (58%) said they were less envious of others during the recession, and 73% said they were less prideful.  The recession may have lessened the stigma of applying for financial aid for some families, as they are somewhat less envious of others’ stations in life and much less prideful about their own state of being.  Further, the fact that tuitions rise much faster than families’ incomes (even at the higher income levels), continues to push increases in aid applications from higher income families (including current full-payers).  Think carefully about how to serve them while not doing disservice to lower-income, high-need families.  By the way, 60% of people said that they felt more wrathful during the recession.  It would behoove you to be prepared to deal with an increased propensity for anger (e.g., if a family is denied the aid they think they deserve or need) by having clear explanations for your decision, practicing/role playing difficult conservations, and having another person present if you schedule a meeting with a particularly angry parent.

     3.     A set of findings, taken together, suggest that high-quality independent school education will remain among the top priorities for families, even when times get tough, as other studies have shown.   People are reconnecting in new ways with what it means to spend wisely, not just what it means to spend less.  Much in the report points to increasing emphasis on rethinking what people prioritize to increase their quality of life:  values, family, security, peace-of-mind.  Higher-priced, higher-quality services (like independent schools) that are effective at providing trustworthy and transparent information that reinforce those concepts will continue to find success in this environment. Families still want to choose independent schools that will provide this comfort.  But they will still want to be assured that they are getting that at the lowest price that they feel is reasonable to pay (but not necessarily the lowest price).  Be earnest and honest in your assessment of need and appeal, not to concepts of their need to sacrifice, but to how their contribution will increase the quality of the important intangibles of their life. 

In the end, it seems that consumer behavior shaped or influenced by the recession is coming around to affirm the values-added posture of independent schools:  safety, security, and success.

As the economy struggles to recover and consumer confidence remains shaky, families all across the income spectrum are  examining their own spending habits and asking questions such as “Is this worth it?,” and “How can I reduce this cost?”  While families paying full tuition may agree that the value is there, more and more may be questioning what’s making it so high, and can it be lower?  One oft -heard conclusion is: “If the school didn’t give out so much financial aid, my own tuition should be lower.”

A few weeks ago, a school head and I exchanged some thoughts about how he might approach the increasingly irksome attitudes that some full-pay parents are expressing about why their tuition dollars are partially subsidizing families unable to pay tuition on their own.  Here are a few points we discussed that I thought might be useful for you to discuss with your leadership team and/or board, and find ways to share with parents.

The Value Proposition:  How Financial Aid Investment Improves the Learning Environment

When a parent “buys into” your school community, he/she is helping to build all the things you think are important aspects of a rewarding and challenging educational experience.  Tuition subsidizes everything:  the cafeteria, the athletic fields, the best teachers, the computers, the library, etc.  I always think it’s interesting that a parent wouldn’t question subsidizing a Spanish or Mandarin teacher’s salary if their child has only ever taken French (maybe they do?).  They’re still buying into the recognition that providing multiple foreign languages is an important part of the learning experience, even if their child doesn’t “benefit” directly from each of the languages offered.

A culture inclusive of socio-economic diversity is as important to “buy into” (literally and figuratively) as is the science curriculum or college placement expectations.   If socio-economic diversity is important to your educational vision and mission, building that environment comes at a price that everyone pays, including the families who do receive financial aid, who are making significant financial sacrifices to buy into the same thing.  So, even if they don’t receive financial aid, all parents still should understand its important role in making the school what it is.

Articulate how that diversity contributes as much to student learning and character development as anything else parents pay for.  Be prepared to illustrate how students receiving financial aid contribute to school leadership positions, win academic awards, qualify as National Merit/Achievement Scholars or Finalists, etc.  One school leader in California tells me that the awards assembly makes her cry because just about all the winners are financial aid recipients that she has helped over the years.

The Financial Proposition…Three Angles of Vision

Everybody benefits from the largesse of others.  A reality often noted is that almost no school charges the full cost of education in tuition.  Tuition itself, for a typical school, covers 80-90% of the per student cost of education.  Since you fill some of your budget needs with endowment and gift income, even full-pay families receive a subsidized tuition break, so, in essence, all families receive financial aid to attend.   This argument doesn’t work for the full-payers who are also big enough donors to cover their own subsidy.  One might expect that those givers wouldn’t give so much if they didn’t believe in what that gift allows the school to build, including socio-economic diversity.

Financial aid is not just funded by tuition dollars.  Depending on the size of your financial aid budget, you should consider how annual giving (and other assets, like endowment draw, perhaps) actually supports the bulk of financial aid, even if indirectly.  If you give $1 million in financial aid, but take in $50,000 in annual giving, it’s a weak point to go for.  But if you give $1 million in aid, and raise $1 million in annual giving, it’s a credible point.  At NAIS schools, the average amount of annual giving raised is about $900,000, while the average need-based aid spending is about $1.3 million.  But examining that relationship between what makes revenue less than it needs to be and what typically fills that void can yield useful insight.

Financial aid spending saves full-payers money. Let’s say you have 735 full-pay families and gave $345,000 in financial aid to 109 families, who paid $500,000 in tuition.  If the $500K net tuition revenue you received from the aided families were lost, and that loss did not result in reductions in program or staff (the 109 aided families spread across several grades, for example), the full-pay families would have to pay $680 more tuition to absorb the shortfall. This is most compelling if people believe that you couldn't fill those 109 spots with other qualified, full-paying (or mostly paying) students and/or couldn't get it through fundraising (and it’s best to be prepared to show why accomplishing that is unlikely).
 
Showing and describing a combination of value-driven and finance-driven perspectives and realities can help parents who push back on your financial-aid spending gain a broader understanding of how that truly impacts them and their children.  Avoid defining your school as two separate communities (aided and full-pay).  Do what you can to emphasize that yours is one community of teachers and learners from all backgrounds that bring value worth buying into. 

In financial aid policy, among the questions that cause the most angst are those related to home value and home equity. The reality is that the housing market has been in such a state of flux from town to town, block to block, and family to family in the past couple of years, it's difficult to establish a rule of thumb that applies to everyone. Families on the same block can have vastly different home values, vastly different abilities to tap into it, and vastly different reasons for wanting (or not) to do so. So, what are some of the key considerations for deciding how you should treat home equity as you review financial aid cases?

Do we expect a family to sell its house? For better or worse, access to home equity has long been used by families as a means to fund everything from retirement to a new house to a new sofa. If a family has home equity, recognizing, at a minimum, the potential to access some of it to help supplement income is important. This doesn't mean selling the house but it could mean that a family may be able to help pay some of its costs with its some of its equity rather than with (or in addition to) some of its income.

What if the family can't access its equity? SSS only uses the amount of home equity up to three times the family's income. If you don't want to use home equity in the assessment for a family, you can remove it from the calculations and recalculate the results. In the student's "Professional Judgment" section of your Comp*Assist Online account, simply select the setting "Remove Home Equity from Calculation" and change it to "Yes." Doing so will allow you to recalculate the SSS results without regard to the equity they report.

How can I trust the market value a family reports? A wise man once told me, "No one knows how much their house is worth until they sell it." Anybody can make a bad guess about their home's value or give you a tax-assessed value different, potentially, from market value. If you want an alternate estimate (or if the family simply doesn't provide one), there are some tools you can use to get other figures against which to compare what the familyreports. Try www.zillow.com and the home value estimator at the www.eloan.com website for some comparison points (but how can you trust them, too?).

What is the HIM that SSS provides? You can use the SSS-provided Housing Index Multiplier (HIM) as well to get another estimate of current home value. This projects current value based on year of purchase and purchase price. It applies an index of how much that home has appreciated since it was purchased based on national housing value trends. As such, it may be less reliable than something like the zillow or eloan tools, which base estimates on local and recently comparable sales, but it's more reliable than an arbitrary estimate based on nothing.

How much impact does the equity actually make on the family contribution? Depends on how much equity there is but, generally it does not weigh inordinately in the determination of ability to contribute. The SSS formula recognizes that assets, like home equity should be primarily protected for future use, such as retirement or emergencies, so significant protection allowances against home equity are given.

Here's a simple example of the relative impact home equity has on parent contribution:

• Two parents, both at age 44, earn $50,000 each and report zero income from their side business. They have two children and no net worth. Their parental contribution (PC) is about $9,040.
• You discover that they actually have $50,000 in home equity (and no other assets). Their PC goes up by $78. This is equivalent to 0.16 percent of the amount of equity. Further, this extra $78 represents only 0.86 percent of the new contribution. But if you discovered $50,000 in business write-offs to add back to income, their PC goes up by about $14,850.
• Of course, as home equity increases, it matters more, but the impact on the bottom line is still relatively cushioned by the protection allowances for assets. If our sample family has $100,000 of home equity (and no other assets), the initial PC would go up $1,085 (or 1.09 percent of the equity, but now about 10.7 percent of their new PC). This is where significant change in EFC begins to emerge for an individual family, but still represents a small fraction of the amount of equity to "convert."

In fact, this sample family needs about $44,500 in home equity before the "income-only" PC moves at all. Among PFS filers in the 2007-08 year, the median home equity reported was $45,000, meaning that half of all filers reported less home equity than the amount that seems to kick in as minimally impacting their contribution analysis.

While reviewing home equity for families is important, resist the urge to get it EXACTLY right every time. Home values are hard to pinpoint, even under the best economic conditions, and the changes in what you might find versus what the family reports may not yield much difference in the end for most families. The impact of a "found" $50,000 in equity can be much less than adjusting income or allowances by just an extra $1,000 for a typical family. When dealing with home equity issues, be sure to keep these considerations in mind for a balanced and sensible approach.

I’m sad that the holiday season is over because I really love the spirit of the gift exchange; not just of presents — but of time, stories, and nourishment (spiritual and, of course, gastronomical).  To me, it honors what we love about our loved ones, it symbolizes what it means to sacrifice something to make another happy, and it signals the appreciation we feel to be part of a family that helps make us who we are.

This is also the ‘big picture’ purpose of the financial aid season.  Financial aid investment is a gift that schools (and others) give in order to help families and the school achieve mutual dreams, building a family community that has multiple talents, making the whole greater than the sum of its parts.  Now that the financial aid season is fully upon us, how do we make sure that we have what we need to make that sacrifice and investment of time, tears, and money really pay off?

To invigorate this spirit of exchange and investment in community-building, SSS By NAIS staff conducted six two-day financial aid training workshops, connecting over 400 financial aid professionals around the country with each other to learn new skills and exchange ideas on how to solve common challenges.  One of the discussions held in each of the six locations was “What Does It Take To Make a Good Financial Aid Decision?”  The responses of the attendees fell into three categories:

1. Good Information
    a. Clear sense of school culture/mission:  what is valued and what isn’t
    b. Clarity of purpose of the financial aid program and its tie to school mission
    c.  Forms and documentation from families that is timely, sufficient, accurate, clear, and trustworthy (PFS, 1040, W-2 statements, etc.)
    d. Clear communication channels between the school and families that promote trust and openness in the process
    e. Clear picture of family’s financial and household situation as it relates to ability to pay tuition
    f.  Reliable data about the school’s financial aid trends that illuminate whether the school is on the path it wants to be on
    g. Understanding demographic realities/projections and how they relate to the school’s affordability for families
    h. A clear sense of the total demand for financial aid from the entire applicant pool and how to prioritize limited funding

2. Good Funding
    a. Aid budgets that allow meeting 100% of demonstrated need
    b. Aid budgets that encompass non-tuition costs
    c. Awareness of financing alternatives beyond what the school can provide
    d. Ability to assess how having too little funding affects school culture, enrollment, or both
    e. Ability to assess how having adequate funding improves school culture, enrollment, or both

3. Good Support
    a. Resources (tools, software, people, training, time) to help make the rough patches smoother
    b. Clear and comprehensive policies and procedures for administering aid dollars
    c. Educated and committed financial aid committee to share decision-making and/or workload
    d. Head and board leadership that sets and honors clarity in:
            i. Mission and purpose of financial aid program investment
           ii. Policy and priority guidelines
          iii. Lines of authority and decision-making
          iv. Financial aid budget-setting processes
          v. Assessing whether the goals of the financial aid investment are being met
                    1. If so, plan for sustaining or growing
                    2. If not, plan for rectifying where it falls short
    e. Discipline to remain fair and equitable in the face of sensitive, difficult situations
    f. Faculty and staff that understands the value of financial aid and respects confidentiality protocols
    g. A network of colleagues who can be objective in helping you find solutions to difficult challenges

The list could go on.  But it highlights that the best financial aid decisions come when you’re equipped with good information for determining how to allocate scarce funding, with good funding that enables you to operate along an intended path, and with the good support of people and processes needed to guide your work to the best possible outcome. 

Use the outline above as a sort of checklist for where you think you do — or do not — have good information, good funding, and/or good support.  If you’re lacking in any areas, have a conversation about what you need in order to address how that deficiency impacts your ability to meet the goals of the financial aid program and, by extension, the mission of the school.

When these things are aligned in proper balance, the investment in building community and making dreams happen that we value so much in our schools and our lives will be more readily achieved.

Recently, on the Financial Aid listserve,  there was a conversation about identifying “middle class.”  It was a surprisingly brief exchange.  I think, in part, that is because defining “middle class” is a difficult exercise, and because it is steeped in subjectivity and difference of opinion.  Even the Census Bureau doesn’t define it. 

So, how should you define it?  For starters, grab some data:

1. NAIS Demographics Center.  NAIS members and SSS subscribers can access data (for free) from the Demographic Center to see a snapshot of median income of households in a city, state, ZIP code, etc.  Using the Detailed Report, for example, you can find median household incomes easily and see them compared to the national median ($54,180 for 2009).

2. US Census Bureau Income Data.  Perhaps the most objective way to define it is by putting all the households into equal quintiles.  The range of the incomes of the households in the middle third of that distribution is what we call “the statistical middle class.”  These are the people truly in the middle of the income spectrum.  The US Census Bureau does this in a definitive and useful way in its Historical Income Tables.  These data show that the middle-income range for American families in 2008 was $49,326 to $75,000.

3. Ask your families. If you believe that your community is different from the statistical norm, ask the families in your school into what ranges their incomes fall.  Use a parent satisfaction survey every few years to gather income and other demographic information about the respondents.  Identify the middle income range that you want to gauge, and include that as an income choice in a section on family characteristics.  Knowing how many families identify themselves in that range, you’ll have another measure to consider.

The perception of “middle class” is localized, and often personal, making a universal definition elusive.  Independent schools tend to put the middle class somewhere within $120,000-$220,000 range (sometimes the low end is lower, sometimes the high end is higher).  However, any statistical view (of even the highest-cost cities) reveals that families in this range are not middle income.  Yet, it might be true that families in that range sit in the middle of the distribution within a particular school and when surrounded by wealthier families, they do not feel as upper-income as they really are (what we call “the emotional middle class”).  A key question then emerges:  how relative to the population-at-large (statistical), or how relative to the families within your school community (emotional) do you make the issue?

Once you identify your middle income/middle class range, don’t stop there.  Go further to probe your affordability posture more broadly.  Here are some key questions to get you thinking on that path:

– What are the 5- and 10-year trends on your tuition growth and what drives them?
– How much income does a family need to earn in order to pay one tuition at your school?
– How many families in your vicinity earn that much money?
– Is that income in the range of what you consider “middle income”?
– Do those families value the education that you provide to students?

Often, the issue isn’t really about “middle class” but about broader concerns of affordability (i.e., trends in sticker price compared to income change) and family perceptions of value, wherever they are on the income scale.  How families perceive the school’s value is not only about class and income.  It’s really about what they believe the school is about and whether they want to literally ‘buy in.’ Understand what those families value and what they perceive, or know about their options in schooling, not just what makes them “middle class” by definition.

During the financial aid season, we often hear from families and some school administrators about the complexity of financial aid applications.  “Why is the form so complicated?  It’s more intrusive than completing tax forms.  Is all that really necessary?”

Indeed, this is a common feeling whenever people are asked to provide personal financial information in certain filing processes, such as for mortgages, tax returns, and financial aid.  We can blame it on credit cards.  As credit card applications have been pretty much reduced to “How much do you earn?” (and look where that's gotten us), the expectation for shorter applications for everything is growing.  As we consider simplifying the application, what are some of the key issues at play?  Why is simplification not so simple?

First and foremost, the application has to be designed to help institutions gather the right information to make the best eligibility decision.  Financial aid budgets are too large and the implications of poor stewardship in financial aid management are too great to sacrifice needed information to do the job right in favor of a simplified process. 

It is fair to ask organizations to simplify applications that include unnecessary questions or questions designed for a purpose other than determining need.  In examining the Parents’ Financial Statement (PFS), we ask schools (for whose benefit the form is designed, remember) and consult with our advisory task force of practitioners and school leaders, to identify such useless information.  In my 10-plus years of assessing this issue at NAIS, there has not been clear consensus on what questions need to be eliminated to simplify the form.  Most believe that the existing questions are the right ones to ask.

In fact, we usually get requests asking for more information on the PFS.  For example, each year we consider a few requests to add “race or ethnicity” on the PFS because it would be a convenient way for schools to track it.  While I agree that this could yield useful information, it has nothing to do with determining need and the application itself shouldn’t lead families or schools to think that it does.  Of course, the information that is gathered can be, and should be, used for other research-based purposes, but ultimately it is not designed to be a research tool.

I think it’s common to equate “long” with “complicated.”  Just because a form has a lot of questions doesn’t mean it’s difficult to complete, just possibly more time consuming than if it had fewer questions.  Why is it so long?  Over the years, the PFS has evolved into a longer document based on schools’ collective requests to collect information that they wanted, even if it were not used in the SSS methodology (such as insurance policies and where other children were going to school).

Creating a simpler form would require eliminating questions that schools themselves have asked SSS to collect. If the questions are the right ones and if only the right ones are asked, then it really doesn’t matter if it’s one question or one hundred, if those giving out the dollars are satisfied that we’ve gotten it right. This challenge shouldn’t solely center as much around simplifying the form by reducing the number of questions.  That approach could lead to a less effective application. 

So how to make it simpler for families without sacrificing what schools need to gather?  We think this can be done with a focus on using web technology to take the questions we have and dynamically rearrange them based on family profiles or answers to other questions, creating an “EZ version” on the fly.

We've created the PFS Online with adaptive components, such as asking an applicant if he or she owns a home.  If the applicant says no, then  questions related to home value, equity, etc. will not appear. The same is true regarding divorced/separated parents, and farm or business owners, making the form as long or as short as is necessary for each family.  Some other ideas in the works for expanding this “family-based” approach include linking to other financial sources (like IRS or tax software imports), and pre-populating entries to make renewal applications easier. 
   
In financial aid assessment, a shorter form isn’t necessarily a better one. But a better method of getting more people to provide necessary information easily and quickly is a worthy goal that we continually strive to meet.  The primary consideration, though, must always be that the form best serve schools’ needs for decision making, not parents’ need for convenience.  Finding the right balance between the two remains an ongoing process (challenge?).

What do you think we can do to simplify the application process for families?  What have you done at your school to make it easier for families to apply for financial aid?

Just inside the main entrance to Sheridan School in Washington, DC, there is a waiting area near the reception desk.  On the wall of the area is a display that includes the photos of each student and teacher at the school.  Along with the photos are four words that summarize core values the school espouses:  caring, challenging, collaborative, connected.  I love this because I think these four words are exactly what all schools should exemplify every day.  Without caring, there can be no cultivation for growth (think about plants...if you don't care for them, they'll shrivel-much to my surprise, even cacti are not indestructible).  Without challenge, there can be no achievement of excellence (think mountain climbing...you're at your best when you've done something you thought you couldn't do!).  Without collaboration, there can be no realization of improvement (you cannot get better at anything without help from others).  And without connections, there can be no awareness of how our own actions affect others, and vice versa, for better or worse (no one, no school exists in a vacuum...connecting to each other is vital to learning how to be better, how to help others be better).

As we embark upon the beginning of this year's financial aid application season, these 4 C's will continually manifest themselves in our collective daily realities.  The degree to which our individual financial aid strategies, procedures, and communications reflect caring, challenge, collaboration, and connectedness, will dictate how successful we will be as a community in balancing the affordability concerns of parents with the fiscal prudence required by schools' budgets.

How might these values become apparent in the financial aid process?

Caring:  This is what the financial aid process is centrally about: caring deeply about helping families attain the best education for their children, even if they cannot afford the price.  In this particular year, like the last one or two, it also means caring about the difficult situations that the limping economy has forced many families into, limiting choices and making sacrifices, new and old, to focus scarce resources on what's truly most important.  It also means that the community of aid professionals must care for each other as a key support network to brace for and manage stress through another difficult aid season.

Challenge:   Challenge families to understand the degree to which your own school's resources are scarcer, while the demand for them grows.  This means that families must meet the challenge to cooperate in the application process with full disclosure and deadline-meeting discipline to demonstrate their neediness appropriately and accurately.  It means challenging families to accept that financial aid is not intended to make paying tuition easy, so much as to make it easier.  It means that each school must continue to rise to the challenge of committing as much as it can to its policies and procedures to ensure professionalism in decision-making.  Lastly, it may also mean challenging the community-at-large through fund-raising and other efforts to help support the financial aid budget in extended ways.

Collaboration:  The financial aid process itself is a network of people and systems that require ongoing collaborations, as various players and partners offer resources, support, guidance, and information to make the right budget and awarding decisions.  Parents, school administrators, school board members, financial aid committees, and  SSS By NAIS staff all play a variety of roles that begin with financial aid budgeting and tuition setting, move through admission/enrollment processes, continue along financial aid need analysis and assessment, carry on to awarding of aid and its acceptance/denial by parents, and end (in most cases) in the contract signing stage.  Strengthening the collaborative nature of this process is critical, so that each is aware of  others' roles and responsibilities in the process and how they must work in a spirit of partnership to effect the best possible outcome.

Connectedness:  It's not just that the variety of players must collaborate to provide what all others need.  It also means that each player must understand the impact that his or her decisions, motivations, limitations, and strengths will have on the others.  If an application is filed late, results are not delivered in a timely way, a financial aid decision gets delayed, and a family will not have the time and information needed to make the best decision it can about its ability to enroll.  Ripple effects are real and meaningful in financial aid work, for better or worse.

In my 10 years of working with SSS By NAIS for schools and families on the financial aid process, I have not seen the spirit of the 4 C's of Excellence embodied in greater ways than during our annual series of SSS Financial Aid Workshops.  These professional development events held for school administrators use a combination of case study reviews that challenge attendees to learn new approaches, encourage small group discussions that foster collaboration in decision making, and create opportunities for sharing solutions to common problems and tough issues that reflect connectedness,  yielding mutual growth.  All of this reflects the central core of such excellence:  caring.  These workshops illuminate brightly that the leaders in this work of access and affordability care deeply about quality stewardship of school resources, to exercise and provide the care that families need to help achieve their need for a high-quality education for their children.  Ultimately, this means that these workshops show us that the extreme care needed to deliver the promise of each school's individual mission lies within everyone committed to this work.

As the new financial aid season begins in this time of extended economic hardship for families and schools, and as NAIS unveils a new set of services and products to strengthen how the SSS By NAIS process supports you, I guarantee that we are committed more than ever to fostering and building the care, challenge, collaboration, and connectedness we all need to be successful in difficult-and in easy-times.

Last weekend, I learned  that if you're not Tiger Woods or Jack Nicklaus and you want to play golf at St. Andrew's, the famous Scottish destination where golf is said to have been invented, you have to show proof that your handicap is 24 or better.  Among other things, this basically means they want data that suggests you're not coming there to tear up the course or take a fortnight to get through it.  This is not only a way to weed out more serious players from those who really just want to say they've been to Golf Mecca.  It's an interesting insight into one of the many ways that organizations use data to determine who's in and who's out, whom they're trying to serve and whom they're not, since they can't meet the full demand for access for all those who are willing to pay for the privilege.

Sound familiar?  Of course, independent schools are no different in establishing tests, interviews, and other methods to create some measure of a student's "readiness" to benefit from the education they have to offer.  It's equally important to measure and constantly monitor data and information about the conditions and trends that might affect how the school is able to achieve the kind of demand it wants in order to stay fully enrolled.  According to Donna Orem, vice president for strategic initiatives at NAIS, doing even a little research "is like going on a journey:  if you don't take the time to sketch out the map, you might end up somewhere you don't want to be."

She encourages us that this research can also help schools notice strange imbalances in population, as a result of demographic shifts and, if balance is what you seek, to plan accordingly.  For example, if income demographics have changed, and you notice families are growing most at the $200K+ level, and they are more likely to choose a high-quality public school option instead, what will that say about your strategies to fill seats among lower- or middle-income families?  Similarly, getting a snapshot of changes in gender/racial/ethnic balance, proportions of families with school-age children by income, and the number of families choosing private or public schools, can help you plot mid- and long-term actions for rethinking your school's posture in extending access and affordability that are data-informed, not just anecdotal or based solely on the experience of today.

Here's a simple look at what this might mean.  Let's look at the Richmond, Virginia and Los Angeles, California metropolitan areas, using data from the NAIS Demographics Center.  Even a cursory view of just a few of the variables provided in the Detailed Reports show very different realities that the next five years could bring for schools in these cities.

Making plans for growth, adjusting for competition, targeting families at certain income levels, and appealing to the non-White population require decidedly different approaches  based on where you are and what's happening around you.  Just a quick read yields a few critical considerations for schools:

1.       In Richmond, population growth among school-age children is expected to be relatively good, with a projected preference for private school enrollment greater than for public schools.  Not so in Los Angeles, where a decline in the age group could signal an increased competitive environment for students, especially given the slightly larger projected  increase in public school enrollment.

2.       In both locales, among all households with children, those with the youngest children and earning $125,000 to $150,000 in income are the fastest growing.  If you're running a pre-school program, this bodes well in the short-term.  If you're running a high school, it'll take time to see that ripple effect and you have to work to keep those families interested in the value of long-term investment in private school. 

3.       Also, it's interesting to note that for Richmond, projected growth in median and average incomes are about four percentage points lower than the projections for L.A.  Families there might be less able to keep pace with tuition increases that are greater than inflation than families in L.A. may be.  You'll have to look at your tuition increases for the past few years.  If they continue at that rate, think about whether they will outpace the predicted change in family incomes.

I like to use data as one input when asking questions about the environment around me.  Think about the questions you'd like to know the answers to regarding your enrollment and affordability positioning and use easily accessible demographic data to begin a conversation about them.  Here's a set of questions to get you started:

About school-age population trending (among the most important factors in affecting independent school enrollment):  How is the school-age population predicted to change in the next few years?  How does that compare to the past decade?  What does that suggest about where we might experience successes and challenges in filling seats at particularly grades or divisions?  How is the choice of private versus public enrollment changing?  What do we do to reinforce or ensure that families increasingly choose our school over someone else's?

About gender, race and ethnicity trending: How are the gender and race/ethnicity balances shifting, if at all? How does that compare to the past decade? How is growth or stability in the school-age population being affected by the change in ethnic and racial diversity?  Does our programmatic, staff, and/or student diversity need to change to reflect this shifting balance to improve or hold enrollment?

About income distribution trending:  How are income patterns changing? Does the trend in income growth match, exceed, or lag behind our projected tuition change?  How does that differ for different income ranges?  What does it suggest about families' ability to meet our changing price tag?  Do we expect that enough full-paying families will be part of our pool of prospects?  Does our approach to or funding for financial aid programs need to change to improve our affordability?

If you subscribed to SSS this year by July 31, you'll get a metropolitan area report based on your school's location that will provide data to help address questions like these and many more (NAIS members can also access the Demographics Center at www.nais.org/go/demographics). Study the data carefully, relate what you see to financial aid and enrollment strategies currently in place to see what adjustments might be necessary moving forward.  Use these snapshots to step out of what might be traditional comfort zones. Consider new methods to reach new populations or extend new strategies  to increase affordability.  Examine how providing financial aid does or does not mesh with your recruitment needs as average income and preferences for how to spend it change over time.

I'd like to hear about the steps you've taken to study these kinds of data, what you've learned from it, and how you may have adapted or adopted strategies for financial aid or enrollment as a result.  Share your thoughts and experiences by adding a comment below.

First one to respond should treat him/herself to a round of golf at St. Andrews.