10/15/2001

Mark J. MitchellTeam Leader

Information and Research

Affordability Challenges in the 21st Century

10/15/2001

““To give away money is an easy matter, and in To give away money is an easy matter, and in any man’s power.any man’s power.

The First Financial Aid Administrator?

-- -- AristotleAristotle

But to decide to whom to give it, and how large and But to decide to whom to give it, and how large and when, and for what purpose and how, is neither in when, and for what purpose and how, is neither in every man’s power nor an easy matter.”every man’s power nor an easy matter.”

10/15/2001

Impact on enrollment and retention to keep revenue stream steady

Financial aid represents second-largest budget line at the typical NAIS school

Must actively manage two sensitive family issues: money and children

Why Professionalism Matters…

10/15/2001

And yet…

Only 77 schools reported they have a full-time financial aid administrator

Median salary for financial aid administrators ranks 20th out of 24 positions gathered for NAIS survey

More than 70% have less than 10 years experience (over half have less than 5 years experience)

Source: NAIS Statistics Volume II, 2000-2001 http://www.nais.org/serve/admin/research/statsvol1/statlinks.html

10/15/2001

1999 NAIS Public Opinion Poll

Public asked to rate accuracy of descriptors of independent Public asked to rate accuracy of descriptors of independent schools and their studentsschools and their students

Tested adjectives commonly used to Tested adjectives commonly used to describe schoolsdescribe schools

– ““Affordable” and “diverse” were least descriptiveAffordable” and “diverse” were least descriptive

Gauged perceptions of the type of students Gauged perceptions of the type of students schools serveschools serve

– Students seen by many as “rich,” “snobby,” “bright,” Students seen by many as “rich,” “snobby,” “bright,” “intelligent”“intelligent”

10/15/2001

Rise in Median Tuition at NAIS Day Schools

0

2000

4000

6000

8000

10000

12000

1955 1960 1965 1970 1975 1980 1985 1990 1995 1998

TuitionIndexed w/ CPI

"Access and Affordability",NAIS

10/15/2001

Rise in Median Tuition at NAIS Boarding Schools

0

4000

8000

12000

16000

20000

24000

1955 1960 1965 1970 1975 1980 1985 1990 1995 1998

Indexed w/ CPI

Tuition

"Access and Affordability",NAIS

10/15/2001

Family Income Highlights

Real median income--$50,891--rose by less than 1 percent between 1999 and 2000.

Real median income for married couple families rose just over 1 percent to $59,187.

Single dad families’ median income actually dropped 2.9% between 1999 and 2000 to $37,523

Single mom families’ median income showed greatest gains (5.1%) but still far lower than other family types ($25,787)

The 2000 median family household income:White non-Hispanics--$56,442 Blacks--$34,204 Hispanics--$35,050Asians and Pacific Islanders--$55,521 (all household

types)Sources: US Census Bureau Historical Income Tables--Families http://www.census.gov/hhes/income/histinc/f07.html and Current Population Survey, Annual Demographic Survey March Supplement, www.census.gov.

10/15/2001

Income Distributionby Household Type

0

10

20

30

40

50

60

White Black Hispanic Single Moms All

Less than 25K 25 - 50K

50 - 75K 75 - 100K

100K or more

Source: Current Population Survey: Annual Demographic Survey, March Supplement, U.S. Census Bureau website

10/15/2001

Population Projection

0

10

20

30

40

50

60

70

1995 2000 2010 2020 2030 2050

White Black Asian Hispanic Native American

Source: Source: American DemographicsAmerican Demographics, Oct. 1996, Oct. 1996

10/15/2001

1999 Consumer Spending(in % of after tax income)

Housing31.4%

Alcohol & Tobacco1.7%

Transportation18.4%

Personal Insurance/Pension

11.1%

Apparel4.8%

Food13.3%

Entertainment5.0%

Education 1.5%

Health Care5.2%

Other7.3%

Source: Bureau of Labor Statistics, Consumer Expenditure Survey, 1999 http://www.bls.gov/csx/1999/share/income.pdf

10/15/2001

Affordability Ranges(using SSS 2001-02 methodology)

Tuition Full Need Income No Need Income One Two

$ 5,000 day $65,573 $84,355

$ 7,500 day $75,082 $101,685

$10,000 day Until $ 43,318 $84,355 $118,425

$12,500 day $93,315 $136,556

$15,000 day $101,685 $154,125

$20,000 day $118,425 $190,615

Assumptions: Family of four, two parents, two children, parents age 45, both work, no assets - parent or student, state taxes for Georgia, COLA = 1.000

10/15/2001

Income Distribution(U.S. Families)

Under $25KUnder $25K 22.6%22.6%$25K - $50K$25K - $50K 28.3%28.3%$50K - $75K$50K - $75K 21.2%21.2%$75K - $100K$75K - $100K 12.7%12.7%$100K+$100K+ 15.2%15.2%

Source: Current Population Survey: Annual Demographic Survey, March Supplement,

U.S. Census Bureau website

10/15/2001

Shifting Aid Applicant Pool

0

5

10

15

20

25

30

35

0-20K 20-40K 40-60K 60-80K 80-100K 100K +

99-0000-0101-02

Income RangeIncome Range

% o

f F

ilers

% o

f F

ilers

Source: School and Student Service for Financial Aid (SSS) processing system data

10/15/2001

What is “Middle Class”?

1980 1990 2000 % Chg of Lower End

Lowest 5th

<20683 <21630 <24000 N.A.

Second 5th

20684-34840 21631-37292 24001-41000 16.0

Third 5th 34841-49346 37293-53978 41001-62378 17.7

Fourth 5th 49347-69243 53979-78951 62379-91700 26.4

Highest 5th

69244+ 78952+ 91701+ 32.4

US Family Income QuintilesUS Family Income Quintiles(in constant 2000 dollars)(in constant 2000 dollars)

Source: U.S. Census Bureau web page, www.census.gov/hhes/income/histinc/fo1.htmlSource: U.S. Census Bureau web page, www.census.gov/hhes/income/histinc/fo1.html

10/15/2001

Wealthiest American Families

The lower end of the income range for the The lower end of the income range for the wealthiest 5% of US families wealthiest 5% of US families

(in constant 2000 dollars)(in constant 2000 dollars)

19801980 $109,436$109,43619901990 $131,425$131,42520002000 $160,250$160,250

% chg since ’80 % chg since ’80 46.4 46.4

Source: U.S. Census Bureau web page, www.census.gov/hhes/income/histinc/fo1.htmlSource: U.S. Census Bureau web page, www.census.gov/hhes/income/histinc/fo1.html

10/15/2001

Major Challenges to Access and Affordability

Changing perceptions of inaffordabilityChanging perceptions of inaffordability

Addressing concerns about the lack of diversity within Addressing concerns about the lack of diversity within independent schoolsindependent schools

Addressing “middle class” anxiety while keeping Addressing “middle class” anxiety while keeping perspective of larger contextperspective of larger context

Controlling steep rate of tuition increases while decreasing Controlling steep rate of tuition increases while decreasing tuition-driven financial aid fundingtuition-driven financial aid funding

Dedicating time and resources to strategic institutional Dedicating time and resources to strategic institutional research to measure effectiveness research to measure effectiveness

Developing ongoing professionalism and career-oriented Developing ongoing professionalism and career-oriented positioning of financial aid administratorspositioning of financial aid administrators

10/15/2001

Assess Your Aid Program How does my school’s financial aid program support the school’s

overall mission?

How does my school reflect opportunity for admitted students regardless of socio-economic status?

In what ways does my school articulate the “how’s” and “why’s” of its investment in financial aid?

Are my school’s financial aid eligibility standards absolute, relative, or a combination of the two?

To what extent should my school “subsidize” certain lifestyle decisions families make?

Does my school’s aid program reflect objectivity and consistency through its policy manual?

10/15/2001

Financial Aid Strategic Planning What are the trends in my school’s aid programs over the last 5, 10, 20

years? How do they compare to trends in tuition and enrollment? How do they compare nationally, regionally, locally?

How much funding do we need to meet our goals? How does our financial commitment compare to other similarly situated schools? Does this impact/explain enrollment or attrition trends?

In what ways does financial aid eligibility affect families’ decisions to matriculate or re-enroll?

How has our aid applicant/recipient pool changed over the years? How might it change in the future?

How do our funding sources for financial aid compare nationally, regionally, locally?

What is the socio-economic make-up of our student body/aid recipients? What percentage receives aid and what does this represent?

10/15/2001

Average Award Levels

0

1000

2000

3000

4000

5000

6000

7000

8000

1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Avg

Aw

d--

Need

Base

d

Need No Need

10/15/2001

0

2

4

6

8

10

12

14

16

18

20

1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

% A

ward

ed

Need

No Need

Percent of Enrolled Students Granted Aid

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Recent Trends in Financial Aid1995-1999

10.6

10.9 10.

9

10.6

10.9

8.3 8.5 8.48.2 8.1

0

2

4

6

8

10

12

14

% Tuition % Budget

All Schools

(Core Sample)

Source: NAIS Statistics

10/15/2001

Resources for Support, Information

Professional development workshops, conferences

Financial Aid Administration for Schools, 2nd Edition

NAIS statistics

Sample materials shared by schools

Scholarship providers directory

Education Financing Resources List

Fee waiver suppliers

State, regional financial aid groups

10/15/2001

““It is less important to redistribute It is less important to redistribute wealth than it is to redistribute wealth than it is to redistribute opportunity.” opportunity.”

-- Arthur H. Vandenberg-- Arthur H. Vandenberg

In the face of these challenges, always remember The Big Picture: