The term “financial aid” typically elicits misunderstandings at best, and outdated stereotypes at worst. As schools move into financial aid season, we want to equip you with clarifications and answers to the most commonly asked questions about how a financial aid program can best support your school’s strategic plan.
When building or re-evaluating our financial aid model, what should be our top priority?
In addition to having clear goals for your financial aid program, you should never undervalue the education for full-pay families. A common benchmark measurement for school value is a Net Promoter Score (NPS®)—a one-question survey that measures overall satisfaction.
(ISM offers numerous survey options depending on the data you need to collect and the constituents you need to survey.)
Should we consider automatic discounts or levels of remission?
No. While automatic discounts or remissions can be beneficial tools for attracting faculty, it will ultimately impact your bottom line if you automatically give money to those who don’t have a demonstrated need.
There is a stigma around financial aid limiting our pool of middle-income applicants. How can we better engage them in the process?
Many schools are interested in increasing middle-income financial aid applicants. While a school may give out more total awards, they are likely to award fewer total dollars while increasing the socioeconomic diversity on campus.
To start, it’s important to understand what middle-income parameters look like for your school. The Pew Research Center’s Income Indicator uses the following variables to classify household income levels:
- State
- Metropolitan Area
- Household Income
- Number of People in the Household
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For example, two families in the same metropolitan area who net the same income may still fall into different brackets based on the number of people in their households. Family A might land in upper income because they have one child, while Family B lands in middle or lower income because they have three children.
Once you have identified who your middle-income families are, capturing their interest and reversing the negative financial aid stigma might mean switching from a financial aid program to a sliding scale or indexed tuition program.
In this scenario, the messaging becomes less about the school giving an award and more focused on providing a customized tuition reflective of the family’s circumstances as a means of celebrating what the family can offer the school community.
It seems like a simple shift in words but generally schools spend a year or more making the transition—time required to train the team and update materials.
Can we anticipate how the economy will impact tuition and budget?
Yes and no. Inflation alone, which is what we’re experiencing right now, doesn’t impact schools greatly because everyone is experiencing the same inflation rate. If the economy dips into a recession, we may see job changes and losses that can greatly impact a school’s budget.
Want to talk about formulas and spreadsheets?
Financial aid model formulas should vary based on your school’s goals, tuition, and location. Discover how ISM can help strengthen your school’s financial aid strategies. To learn more about how our consulting services can serve your school, email schoolsuccess@isminc.com.
