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.
