In the previous articles in this series we examined data around rising costs and how those can impact a family’s views around what is and is not affordable for them. And given the subjective nature of the concept of affordability, we also looked at data on income and assets to contextualize the financial situations that families find themselves in and schools find themselves analyzing. 

We have seen that rising costs are indeed real, but we have also seen that incomes have risen, although not uniformly. Positions at the higher end of the income spectrum have seen real buying power rise at a significantly faster rate than positions at the lower end. The distribution itself has stretched significantly. 

And when we looked at the data around assets, we saw that higher net worth is concentrated at higher income positions. However, in looking at the distribution of those assets, we saw that the higher value portfolios also came with a higher risk exposure to interest rates, market fluctuations, and similar factors that could decrease the value of those assets. This may help explain why those at the higher end of the wealth spectrum can still feel uncertain about their financial position — a sense of security depends not just on what you have, but on how stable those holdings feel. 

‍

Affordability as a Question of Perspective

Ok, but how does this help us speak to the question of affordability? Ultimately, it is a question of perspective. Returning to the precise definition, something is affordable to me if I believe that it is within my financial means. And since not everything costs the same amount, we can infer that higher priced items are deemed to be affordable if they are presumed to be “worth it”.  Only a family can decide if it is more worthwhile to them to spend money on your tuition as opposed to the other demands on their dollars once their basic living needs are met. 

‍

When Families Push Back

Some families will recognize this, other families may insist that their version of basic living needs comes at a higher price-point, leaving less and less available for tuition. Clarity’s Financial Aid Client Success team, which I am a member of, is made up of former financial aid practitioners, so this next point comes from experience: questioning the choices that a family makes with their money is not only not our job, it’s also not a great way to make friends. What we can do, however, is talk about the levels of income and of assets at which we determine that a family can, in fact, afford tuition. 

‍

Two Strategies for Helping Families (and School Leaders) See the Full Picture

So how do schools talk to families about affordability in a way that acknowledges these structural pressures without abandoning the methodology that determines aid? Two strategies can help here: explaining where a family sits relative to those receiving aid, and using case studies to illustrate qualification ranges before families apply. 

These strategies are also valuable when reviewing outcomes with your school leadership. DNQ outcomes can be disappointing not only to families, but also to leaders focused on overall enrollment numbers. It is not uncommon for financial aid practitioners to have to defend these outcomes, and the following strategies provide valuable context for internal audiences, as well as external ones.

‍

Showing Families Where They Sit

A concept that many financial aid practitioners use when explaining a DNQ (does not qualify) outcome is to shift the conversation away from the family's own situation and to let them know at a general level where their financial picture sits relative to families who are receiving aid at the school. Explaining that their combination of income and assets puts them outside of the range of any families at the school who are receiving need-based financial aid provides this important context and is a simple statement of fact, as opposed to a debatable premise. This serves to shift focus away from the situation of the DNQ family, and highlights that there are families with objectively different circumstances who are in a less advantageous financial situation, thus reinforcing the idea of perspective. 

‍

Using Case Studies to Set Expectations Early

Many schools are also using case studies on their websites to illustrate who might receive financial aid and at what levels. For example: “Family A has two kids, $150K in income and no assets. Here’s a range of what they might qualify to receive.” Or: “Family B has two kids, $250K in income, and $500K in assets. Here's a range of what they might be asked to pay.” 

By giving a range of examples in which prospective families can reasonably see themselves and where they fall, schools can accomplish two important things: First, they can begin to manage the expectations of families as to what types of financial pictures might (or might not) qualify to receive need-based financial aid at their school, and at what levels.  Second, they  provide much needed context in which a family can see themselves relative to other families. Some families may continue to push back, insisting that their income doesn’t go as far as it should or it used to, and expressing concern about the security of their assets. At some point it may be worth mentioning that the expectation is that families will make sacrifices in order to pay for their children’s education. 

Need based financial aid is built upon the premise that families will commit some portion of their income and assets to tuition. The methodology determines what portion is reasonable; it is not intended to be leveraged in order to discount large portions of income and assets for wealthy, high-income families who do not demonstrate a true need for tuition assistance. The expectation isn't that families work multiple jobs, or exhaust their resources; it's that they participate in funding their child's education at a level determined by a school-specific, mission-appropriate methodology that aims for as fair and accurate an assessment as possible. 

‍

The Financial Aid Practitioner's Role

As you are doubtless aware, one does not have to be in the bottom quintile of earners to qualify for financial aid, especially if one is trying to put more than one child through tuition-charging schools. But managing expectations around who does qualify and at what level matters more now than ever, given how many  price-conscious parents make up the applicant pool. The strategies above are a useful place to start, and being proactive at the front of the admissions andre-enrollment process can mitigate a lot of frustration and disappointment at the end. 

Rising costs are undoubtedly real. The uneven distribution of income gains has created structural pressures that families across the income spectrum genuinely feel. As financial aid practitioners, your job is to frame all of these factors around a family’s choice to send their child to your school. By paying attention to context like the national data referenced earlier in this series, and regional data that may be more immediately applicable to the economy in your area, you can help both your families and your school leadership to gain perspective on what affordability looks like for your community.