Financial Aid Assessments Series – Part 3: Moving Away from Demographic Discounts

Demographic Discounts
By: Jonathan Boulos, CEO
Edited by: Mary Stange, Client Advisor

Demographic Discounts

Information flows more freely than it ever has in history. Catholic schools have infinitely more information available to them to help families with systems like FACTS Grant & Aid and other financial aid application systems. There is the willingness of families to enter income, tax, and asset information, and the capability of these systems to calculate need. When schools offer parishioner, or multi-child, discounts to their families, it is often a vestige of an era when a family’s actual financial situation could not be determined by the school. The discounts covered a multitude of possible outcomes instead of deciding on tuition assistance based on need.

The assumption can be, “The Smith family has more than one child, they probably have more expenses due to this, so we can offer a discount to recognize those expenses.” Or thinking, “The Jones family attends our parish, and so they are likely giving some form of donation to the parish. We want to encourage that, as the parish subsidizes tuition anyway, loans staff and facilities to the school.” Most parishes are struggling to keep their doors open and ended significant school subsidies a long time ago.

Demographic Example

This reality hit me hard with a school I was involved with and I think the situation is a great example of the inequity of demographic discounts. The school, like many Catholic schools today, was almost exclusively attended by families on both sides of the economic spectrum. We had a lot of kids from the wealthiest parts of town and a lot from the poorest parts of town.

Family A: No Exhibited Need with a Demographic Discount

In particular, a multi-millionaire family that had generations of wealth before them and enough to never earn a dollar again and have generations of wealth after them. They also happened to attend a Catholic parish so they were given $1,500 in discount from their tuition for their child. It’s not their fault. They never asked for this discount. I’m also sure that if it wasn’t there, it would have made no impact on their decision to send their child to the school.

Family B: Exhibited Need with No Funds Available

Because of our funds available vs. our need, we had a cap on how much aid we would provide as a school. One family that had demonstrated full need, but committed to paying $2,000 in tuition. The FACTS calculation told me they did not have the $2,000 to commit. Our cap required them to get to $3,000 as a minimum tuition. Ultimately they were unable to attend the school.

I would have loved to be able to have that $1,500 demographic discount given to a family with no need available for them. Multiply that by your enrollment adjusted for siblings and catholic student rate and you can see how many dollars are not being deployed strategically.

Recommended Action:

What discounts do you offer? Is there any historical context as to why you offer that as a discount? Determine if the underlying facts changed and the discount remained. Check how many families with exceptional resources are receiving a discount and add up the discounts to determine how much is being “wasted” so to speak.