Telling Our Financial Aid Story

The financial aid plot is shifting as dollars increase and diversity numbers fall.

Nov 3, 2023  |  By Jeff Shields, FASAE, CAE

From the November-December 2023 Net Assets Magazine.

Jeffrey Shields, FASAE, CAE
NBOA President and CEO

In September, I had the privilege of attending and presenting at the Enrollment Management Association (EMA) 2023 Annual Conference. As always, when dozens of admissions, financial aid and business leaders gather, the conversations are enlightening and thought-provoking. While the takeaways were numerous, my largest one was that we as independent school leaders can better tell our financial aid story, to continually improve our processes and outcomes. How can we do this? I suggest focusing on four Ds: dollars, data, diversity and dialogue.

Dollars and Data

Let’s look at dollars and data first. At the conference, Jennifer Osland Hillen, NBOA’s chief learning officer, and I shared NBOA’s Financial Aid Fact Sheet as part of our presentation on “Securing Financial Health: A Business Perspective on Enrollment Management."

The fact sheet is a visual summary of key findings from NBOA’s analysis of 750 independent schools in the NAIS/NBOA DASL-BIIS data set for FY22. The data provide valuable insights into the state of financial aid programs in independent schools and the impact on financial sustainability and mission alignment. My hope is the levers we highlight provide a starting point to examine how your own school’s financial aid programs align with your financial sustainability and mission goals.

Most financial support is coming directly from schools’ operating budgets, rather than endowment or gifts. So we need to ask ourselves: What is the impact of that unfunded support on the financial stability of our independent schools?

One standout statistic from our analysis is that independent schools invested heavily in financial support in FY22 — $2.2 billion. This includes need-based financial aid, merit scholarships and tuition remission. That’s a huge outlay in dollars alone, and is a 17% increase from FY21 in dollars spent on financial support. Median net tuition revenue (NTR) per student — by far the greatest source of income for independent schools — is up, too, but only by 4%. Most financial support is coming directly from schools’ operating budgets, rather than endowment or gifts. So we need to ask ourselves: What is the impact of that unfunded support on the financial stability of our independent schools?

Megan Fangmeyer, K12 product manager for FACTS, sees another plot twist from the expansion of school choice programs in form of the vouchers, ESAs and tax credits that many U.S. states offer. In states like Florida and Ohio, the programs “are universal, while other states are adding new programs and increasing eligibility and amounts significantly,” she said. “Consequently, schools are having to think about what those programs mean for their financial aid programs.” The new laws are pushing more schools to accept or consider accepting vouchers than ever before. Schools that handled Title IX compliance after accepting a PPP loan during the pandemic may be more confident going this route.

Will families still need to apply for financial aid, and will the state assistance mean the school can adjust where its financial aid dollars go? Fangmeyer said some schools are changing the focus from the award amount to the tuition the family will pay. “If a family gets that state scholarship, for example, that doesn’t change the agreed-upon tuition. It simply helps the school fill in that gap of unfunded aid.” She also pointed out that other schools are considering families ineligible for their financial aid programs if they receive state program funds. In other words, if your school decides to accept vouchers — which we all know is a complex decision — and families overall require less financial aid, don’t change the tuition pricing. Rather consider how you might allocate financial aid dollars to best fulfill the school’s mission.

Diversity Dive

When talking about financial sustainability in our schools, we often quip, “We are all on financial aid.” By this we mean that most schools don’t charge families what it costs to educate their students, relying on fundraising and endowment draws to balance their budgets. The other side of the story, though, is that increase in NTR I mentioned earlier, up from 74% as a percentage of revenue in FY21 to 79% in FY22. Schools perhaps are getting closer to charging what it costs, but are they also becoming more tuition dependent and less diversified, in terms of both financial status and race?

The answer seems to be yes. The 2023-2024 NAIS Trendbook’s chapter on equity, co-authored by NBOA Board Member and NAIS Vice President Mark Mitchell, reports that nationally, higher income families have replaced lower income families as a proportion of aid applicants. Those earning $200,000+ now make up 23% of all applicants, up from 10% in 2012, for example. Meanwhile, the total percentage of students of color is just over 33%, down from a high of 37%. While these are two different factors, they both suggest less diversity in our schools at a time when many schools are committed to improving diversity, equity and inclusion.

“Financial aid plays a huge part in accomplishing our goal to reflect not only the population immediately outside of our walls in center city Philadelphia, but also the ever-evolving world that our students currently live in and will live in.”
—Rohan Arjun, Friends Select School

I talked with my friend and colleague, EMA Executive Director and CEO Heather Hoerle, about how she sees these trends. She noted that while she sees “good news for enrollment leaders in terms of enrollment growth for the majority of schools,” the decline in students of color bears watching. “It’s concerning when public schools continue to post growth numbers in students of color, mirroring the national landscape in K-12.” She hopes independent schools will not be content “losing ground in an area in which we have invested so much work.”

I asked Rohan Arjun, director of enrollment management and financial aid for Friends Select School in Philadelphia, about the importance of investing in diversity. For Friends Select, it’s an essential part of their mission. “Financial aid plays a huge part in accomplishing our goal to reflect not only the population immediately outside of our walls in center city Philadelphia, but also the ever-evolving world that our students currently live in and will live in.”

Schools increasingly employ more user-friendly terms to describe financial aid, like flexible, sliding scale or customized tuition. Could this be a driver for the increase in aid to higher income families, seeking to “make a deal” and one cause of the aid redistribution shown in the data? Fangmeyer sees those changes in terminology in a positive light. “They’re about removing the stigma of financial aid and talking more about how schools are going to help families determine what they can pay and how schools can help make education affordable.” (For our latest feature on flexible tuition, see page 16.)

Dialogue That Makes a Difference

Independent schools are increasingly using data to make informed choices about the structure and goals of their financial aid programs. From Fangmeyer’s perspective, a focus on data is making a positive difference for independent schools. “Leaders are doing a good job of deciding what financial aid programs should look like and setting goals.” Considering the data leads to smart decisions around any changes ultimately made.

Working with CFO Matt Rosen, Arjun has prioritized closing the gap between tuition and families’ demonstrated need. The two are also collaborating to create a financial aid playbook that will ensure equal treatment in aid decisions. “It will give us a foundation we can reference to say this is how we handle 529s, divorced families, assets, etc. — so it’s not a guessing game and biases don’t creep in.” His goal is to eventually share that playbook with other independent schools.

That collaboration is a big part of our financial aid story. I hope it is happening within your individual school, among your head of school, CFO, admissions and enrollment leaders and trustees. Get together, gather the data, assess your goals and get on the same page to give your financial aid story a financially sustainable, mission-meeting ending.

Jeff Shields signature

Jeffrey Shields, FASAE, CAE
NBOA President and CEO


Jeff Shields

Jeffrey Shields, FASAE, CAE

President and CEO


Washington, DC

Jeff Shields, FASAE, CAE, has served as president and CEO of the NBOA since March 2010. NBOA is the premier national association serving the needs of business officers and business operations staff at independent schools. Shields, an active member of the American Society of Association Executives, has been recognized as an ASAE Fellow (FASAE) and earned the Certified Association Executive (CAE) professional designation. His current board service includes serving as a director for AMHIC, a healthcare consortium for educational associations in Washington, DC, as well as a trustee for the Enrollment Management Association. Previous board service includes serving as a director for the American Society of Association Executives, as a director for One Schoolhouse, an innovative online school offering supplemental education to independent schools, and as a trustee for Georgetown Day School in Washington, DC. Shields holds a BA from Shippensburg University and an MA from The Ohio State University.

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