The Financial Aid Mistake Your School Must Avoid

The Financial Aid Mistake Your School Must Avoid
The Financial Aid Mistake Your School Must Avoid

Business and Operations

Is your school’s financial aid program producing unintended, negative consequences for your applicant pool and current families? The answer might surprise you.

Schools want and need middle-income families to join their communities. Unfortunately, many schools use a financial aid model that actually discourages these families from applying for admission and aid.

Here’s why and how to fix it.

What Is Financial Aid?

At its most basic, financial aid is a discount program. It is a way to boost revenue by ensuring seats are filled. Further, it promotes socioeconomic diversity, which is a valued, mission-specific goal for many schools.

How do you talk about your financial aid program? Many schools use language similar to this: “We offer financial aid to families who cannot afford full tuition.”

Carefully consider the language you use in your communications. You will discourage interested families from applying for admission if you don't extend a more welcoming message. The language that you use can actually dissuade people from applying to your school by sending an unintended message.

The financial aid process entails a complicated application and detailed financial disclosure. Families are asked to provide their earnings as well as details about their debt, assets, and expenses. The process can feel drawn out, overwhelming, and invasive.

After all of that, the family receives their award letter. This may sound familiar: “On behalf of the financial aid committee, it is my pleasure to inform you that your application has been approved …” Or it might say, “We receive many financial aid applications, and we are unable to meet all demonstrated needs. After evaluating your application, we have awarded you …”

Families apply to your school because they believe your program will change the lives of their children. The language in these award letters does not reflect that.

Many applicant families read these letters as: “A committee has reviewed my information, agreed that I cannot afford your school, and luckily granted me a discount.”


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Middle-Income Families Have a Tremendous Impact

Socioeconomic diversity is vital to the culture of every school. Having applicants from a wider socioeconomic range offers you a stronger applicant pool, giving you more flexibility in shaping the student experience.

From a financial standpoint, more middle-income applicants means you can assist more families. For example, rather than meeting the high need for 20 students, you can meet the moderate need for 50 students. This goes a long way toward filling classrooms, building culture, and ensuring diverse experiences.

How to Increase the Likelihood That Middle-Income Families Apply to Your School

To build a strong program to attract and retain socioeconomically diverse families, we recommend changing your approach and language. Your financial aid program should demonstrate that you value and celebrate what families can pay, rather than touting the school’s generosity to families who “cannot afford” your tuition.

No one is going to apply to a school that makes them feel inadequate because they cannot afford it. Instead of using the terms “discount” or “aid,” we recommend adopting a sliding scale, indexed, or flexible tuition. This approach sets a range that reflects families’ finances, and celebrates those families’ decision to enroll their children.

An indexed tuition program encourages socioeconomic diversity. It removes the concept of giving a discount and consequently changes how your school manages its relationship with parents.

This does not change the way you set or publish your tuition, nor does it impact your mathematical formula for aid determination. Instead, it changes the language you use and the families you attract for aid application.

We cover this topic more in Volume 45, Issue 13 of Ideas & Perspectives, our flagship periodical. We'll show you how to construct a new sliding scale and build a flexible tuition model. If you don’t currently receive I&P, learn more about becoming a member here.

While the changes we suggest may seem radical, this shift in approach will have the effect of bringing more middle-income families to apply for admission to your school. In return, you'll benefit from their involvement in your community.

UPCOMING ONLINE WORKSHOP | STARTS OCTOBER 26

Financial Aid Mastery

Is your school’s financial aid program producing unintended, negative consequences for your applicant pool and current families? The answer might surprise you. In this online workshop, we’ll discuss how schools should approach financial aid today—including a new framework that might be a game-changer for enrollment and retention.

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10/26/2020 — 10/29/2020

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