When was the last time you looked at the Financial Aid line on your budget? I mean, really looked.
Financial Aid seems like a stepchild in school finance circles— too big to ignore, and yet, because its inner workings are carried on behind closed doors to protect the identity of families, never really brought out into the light of day and really talked about. And it IS too big to ignore. For the vast majority of schools, this is the second biggest budget line, only behind compensation.
What does that mean? Well look at your own budget. It's easy to glibly say: “Oh, well, it takes up about 10% (or 12% or 15% or 18%) of our budget.” But in raw numbers, that translates into a big number. For a $3 million budget, that means between $300,000 and $540,000! Let’s clarify what the impact of that is. A school with that size budget has 200–300 students, which equates to 20–35 faculty. Given that the average faculty salary is about $55,000, what that means is that financial aid is reducing faculty salaries by 10%! That's enough to make most schools pretty competitive. That's just one possible implication. But there are lots of questions around this budget line. How do we determine what a “good” award is? How do we get the right people to apply? What are the ethical dimensions of financial aid? Is financial aid a competitive advantage – should we lure students in using this money?
We think it’s time to pay more attention to this critical budget line and have more robust conversations than we may have had before. Learn more about financial aid formulas, customization for your area, and how you can take things like business income and imputed income into account using FAST, ISM’s financial aid processing service, at a series of free luncheons across the country. Go to ismfast.com/events for a luncheon near you.
Additional ISM resources of interest
ISM Monthly Update for School Heads Vol. 10 No. 3 The Importance of Knowing Your Financial Aid Formula
ISM Collection: Financial Aid
ISM Recorded Webinar: Creating Financial Aid Policies to Reflect Your Mission
Additional resources for ISM Consortium Gold Members
To The Point Vol. 12 No. 9 Before the First Financial Aid Application Arrives
Ideas & Perspectives Vol. 35 No. 15 The Real Cost of Financial Aid
Ideas & Perspectives Vol. 36 No. 4 The Three Types of Need-Based Financial Aid
