Quick Takes:
- In our recent poll, Financial Aid was identified as a stress point for principals and administrators in Catholic education.
- There are two keys to administering financial aid at your school:
- Use financial aid as a tool to meet the needs of families, not as a way to attract more students.
- Over-communicate with families and financial aid recipients as to how need is calculated, and how much aid is available for that year.
- Financial aid doesn’t have to be an ambiguous stress point, but instead a tool to meeting the needs of families in your institution.
In a recent poll by our firm with current principals and school administrators, a majority of respondents told us that financial aid was a major stress point each year for their institution. The reason for this stress is the difficult reality administrators face each year: the need for aid is greater than the funds available.
This imbalance between need and resources leads to the pivotal question – how does your institution make tuition assistance an effective tool without devaluing the education your school(s) provide?
The first step in making financial aid work for your institution is to use the right tools to calculate need and distribution. One recommendation is to use a system to receive applications that can analyze and sort data. Data analysis is key, and a best practice is to anonymize financial data to avoid (even the perception of) favoritism.
Administrators can also learn a lesson from late-President Reagan—trust, but verify. Income and finances for families should be validated against objective sources like pay stubs, W-2s, etc. There should also be an in-depth understanding of the formula used to calculate need.
My most memorable lesson in how these cost formulas should be correlated to regional realities comes from my work in the Bay Area of California. After looking at the financial aid formula for a school in the region, parts of the equation seemed a little off—the presented model had only $1,400 in housing costs allotted in an area where families were spending double that, or more, each month.
Inaccurately accounting for the real day-to-day costs of living can leave Catholic education unobtainable for families, meaning less students in the classroom receiving faith-centered education. It is important to understand, and accurately reflect, the specific costs families face in your area to best serve each need and the unique situation of each family.
Once you have the steps above completed, you’re now facing how to distribute financial aid for your institution.
There are two key components to a successful distribution of aid each year. These tactics not only ensure that the needs of your students and families are met, but also that the education offered is not devalued in the aid distribution process.
The first is to use financial aid as a tool to meet the needs of families, not as a way to attract more students. Administrators have to be careful to meet needs, and not chase enrollment. While it is true that as long as marginal revenue exceeds marginal cost you should add the family, administrators should also make sure that aid is extended to families that truly need it – not families that do not value the education you provide enough to change spending patterns.
For example, families that are unwilling to change certain lifestyle habits in exchange for education expenditures may not be the best candidates for financial aid. This fundamental difference in values can make the rest of their time at the school difficult for both the family and the financial aid office.
Administrators should also be cognizant of how word travels through communities, creating even greater issues for financial aid offices not adhering to standardization and policy in the financial aid process.
Second, it is vital that administrators and school officials over-communicate with families. Leaders should make sure to communicate the steps involved, the efforts to make distribution fair and equitable, and, most importantly, the total financial need vs. the total financial aid amount available.
There was a moment when I was working in the aid office for a school, and I had a family that wanted the financial office to extend past their demonstrated need. In response, I showed the family how the school only had total funding for 80% of all demonstrated needs.
I told that family that if the financial aid office extended past their demonstrated need that other families would then not have access to the funds for their own needs, which is unfair to both these families and the institution. This kind of transparency in terms of need and communication builds solidarity in the community and invites each family to do their part.
Financial aid is an effective tool to make sure Catholic schools meet their mission to serve all families. Using the right tools for applications and analysis, applying aid to meet financial need and not chase enrollment, and over-communicating your process and successes are the ways schools can make financial aid awards an advantage.
We know that financial aid disbursement can seem ambiguous, stressful, and overwhelming. At StJFS we work with all of our clients to support the financial aid process – and we’ve seen just about everything at this point. Reach out about how we can help you.