Choose your financial aid committee carefully. This group should include no more than four or five members (but do not include parents of students or Board members). It is a business office function so include members of your business office and/or the Head, who serves at his/her own discretion. Of course, the ideal situation is to have a Financial Aid Director to manage everything from year to year.
Review your Mission Statements. You'll need a separate statement to define the mission of the committee and to answer the question, "Why do we offer financial aid?" Financial aid is not a giveaway. First and foremost it serves the school and its mission, and your committee members must clearly understand that link.
Review or create procedures. How will you compute families’ abilities to pay? Will you do it or will you have an outside company do it for you? It's important to understand how the calculations work and how they connect with your mission. (In other words, do your computations really support the school in carrying out its mission?)
Establish priorities. If there isn't enough money available to cover all applications, consider how you will prioritize requests. Should returning students get the highest consideration, or should the children of teachers and alumni? You can also allocate additional resources where needed in order to encourage enrollment, such as an under-attended middle school.
Set protocols and deadlines. When will you process applications? Will you review each one as it comes in, or will you batch the applications and do an entire subset at one specific time (for example, making returning parents' deadline one month earlier than new parents)? Another option is to review all at once so that you can consider the full range of needs.
How much will you give? Some schools give "100% plus"—tuition, books, and other fees. Others only grant partial awards. ISM recommends that schools meet the demonstrated need to the greatest extent possible within the financial aid budget up to 100%.
To impute or not to impute? Some schools choose to impute income to a non-working spouse; some choose not to do so if there is a child under age 5 in the household. Others wish to encourage stay-at-home moms and dads, and therefore elect not to impute income in this situation—it's all about self-definition.
Define "expenses." No matter how your financial aid is processed, the final equation is always total income minus all allowable expenses. Carefully defining "allowable expenses" before starting the process will give you the philosophical guidelines to follow when you are dealing with actual applications.
Self-employed. Those who are self-employed have the greatest opportunity of all your applicants to hide income. This doesn't mean that they will—just that due diligence for this situation becomes much more important.
How much is too much? Imagine that one of your applicants is a highly paid executive who has recently been laid off. Although he has an income of zero, he has assets totaling over $1 million. What will you do? ISM recommends that you establish a maximum allowable amount for assets, above which you will not provide assistance.
