Tuesday, January 1, 2008

Hot topic: financial aid

Most private schools offer some financial aid to middle class families. They do this because it creates a student body that represents all socioeconomic backgrounds. Do you think it's fair for a middle class family, especially one who owns a home and has savings, to receive aid?

Here's a little background info: Most private schools are members of the National Association of Independent Schools (NAIS), and the organization handles tuition assistance applications. The association's Web site says: "For the academic year 2005–06, 972 NAIS members awarded $957.7 million in financial aid. These same schools reported that 18.7 percent of their students received some financial aid. The average award for boarding school was $17,295 and for day schools, $9,232." (I'm assuming this figure is for both elementary and high schools.) The NAIS doesn't provide any information on salary cutoffs or whether or not you can still receive aid if you own a home—it simply says, "The amount of aid a family receives may vary considerably from school to school. The size of its endowment, its tuition costs, and its philosophy of awarding aid affect how much a school offers."

The Hamlin School's brochure on financial assistance, which includes helpful financial aid case studies to portray the range of eligibility. For example, there's a family with a gross taxable income of $163,000. They own a house and have savings. They receive $9,000 a year toward tuition for two children. And there's a family with a gross taxable income of $73,000, no house, and no savings. They receive $20,000 toward tuition for one child.

A dated (2002) yet informative article in The New York Times, Schools Extend a Hand to Middle-Class Parents. It specifically states that many private schools offer assistance to middle-class families who own homes—and in fact schools are trying to attract these families to help maintain socioeconomic balance. Schools don't want a student body that consists of just rich and poor.

What do you think?

31 comments:

  1. The whole thing seems like such a black box. What does it mean to "have a home" and "have savings?"

    For example:

    Family A has a house valued at $2 Million. They paid for it in cash. They have $2 million diversified in savings and other holdings. Only one parent works and makes $180,000/year.

    Family B has a condo valued at $750,000. They have a mortgage that requires a payment of $3500/month. They have $100,000 in savings. Both parents work and together make $180,000/year.

    Does the system view them the same? Would A complain that they shouldn't have to finance their house?

    It seems like people can game the system. So whether or not the system is "fair" I guess depends on how good the schools are at seeing the difference between A and B I guess. Who knows.

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  2. I just blogged about the new trend in financial aid by top colleges -- providing huge tuition discounts up to $180,000/year income, plus not counting home equity. It seems somewhat relevant to the questions about K-12 private school financial aid policies.

    Harvard just announced this new policy, and the other high-end private colleges are under pressure to do it too. But many say it means the middle class will now displace the lower income. Here's the blog item, with links to NY Times stories on the issue:

    http://www.collegeadmissionsbeast.com/2008/01/harvards-gift-to-non-super-rich-may.html

    If that direct link doesn't work you can just find it on:
    www.collegeadmissionsbeast.com

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  3. Here is a direct link to the entire NY Times article that was excerpted and editorialized by the Taming the College Admissions Beast blog:
    http://www.nytimes.com/2007/12/29/us/29tuition.html
    Harvard’s Aid to Middle Class Pressures Rivals

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  4. Wow, this is a tricky one. I apologize in advance to anyone I offend as I'm not sure it is possible to discuss this issue in depth without that happening. Please just know that no offense is intended. To anonymous: I think home equity and investments should considered in the case you provided. Looking at Caroline's link, it does not appear that Harvard would care about the home equity part. I believe NAIS does take savings and investments into consideration. I'm not sure about the particulars, though. Without getting into the whole private vs. public school debate (please!!!), I know several families with very low incomes who want to send their kids to private school but are only considering parochial schools, in part because they feel uncomfortable with the wide income disparity at many independents. (Not that there is anything wrong with parochial schools, mind you.) Is it possible that better middle class respresentation at independent schools might lessen that barrier? Also, with the current situation, many middle class families feel completely shut out from independent schools -- not enough money to pay tuition without serious financial hardships but not low enough income to qualify for aid. Taking aid money away from low income kids is clearly not what anyone would want to do. However, effectively shutting out the middle class also does not feel right. Again, without getting into the public vs. private debate but simply honoring the choices these families want to make for their kids, I think that increasing the amount of aid available to middle class families is a good thing on balance. How much to increase it by is a whole extra can of worms. Do I think it is good to take aid away from low income families? Absolutely not. Is the system fair? Of course not. With limited financial aid money, families will be shut out, and it is never fair no matter who it is. I would hope, though, that NAIS would be able to see the difference between Family A and Family B. If not, forget everything else I've said! Ok, let the slings and arrows begin if they must.

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  5. No slings and arrows here. I'm also wondering, what does "gross income" mean? A person can greatly reduce their taxable income by max'ing out 401K and IRA deductions. E.g. Mom makes $115K a year, takes out $15K for 401K, counts as $100K; Dad owns his own business, puts $50K in IRA and pulls out a 75K salary; now the family income is $175K/year, but the family saves $65K/year for retirement, and has about $500,000 in savings ..... seems so easy to hide income.

    Also, I have heard stories that people who are fortunate to have jobs that allow them to "dial up" and "dial down" hours choose to work only the hours that give them a salary that qualifies them for financial aid. So they will be working, for example, 20 hours a week, when they could be working 40, and they get aid. Is this bad? I have no clue. What are the social benefits that aid is designed to give, and does that sort of formula assist in that quest?

    At any rate, it's such a touchy subject and I hope that we don't judge each other (at least openly, haha) about choices that we make.

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  6. But don't forget that this isn't a black-and-white situation where you meet certain qualifications and boom, you get the financial aid. It's a case-by-case judgment in which your child's and family's attractiveness to the school is a key factor. Private schools can set any criteria they want, and the criteria don't have to be consistently applied.

    The Harvard policy isn't strictly comparable but amounts to the same thing. If Harvard wants the applicant, it accepts, and then it IS hard-and-fast whether the family gets the financial aid. But then, the family's income (and thus qualification for the financial aid) might well be taken into account in the decision to accept or reject the applicant.

    So it's not really possible to calculate your likelihood of qualifying for financial aid in the case of private K-12s, because that all depends on how much the school wants your child and family.

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  7. Private schools are private and they can give money however they please...but the money has to come from somewhere which is one reason I'm not in private schools. We don't have a high income but we don't have a lot of things, and so we have savings and don't have much debt. We wouldn't get financial aid. I know families who have twice the income we do, but are spendthrifts who have nice things, go on nice vacations and have debts. These families receive aid from their schools, and I don't have a problem with that. I would though if we went to those schools and we were the ones subsidizing them.
    Financial aid really provides a disincentive to manage your finances responsibly. I am awed at middle class families who essentially say "we've spent the money elsewhere, so now you have to support/subsidize us..." I wouldn't feel right having other hardworking families support me if I knew I needed the aid only because school wasn't my highest financial priority.

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  8. But again, with applicants to private schools, it's more like "If you really want our kid, you'll have to subsidize us." That's the bottom line -- the actual financial situation is secondary.

    The point is that they can allocate their financial aid as they please, without having to follow consistent policies.

    I have to veer off-topic because I just opened a late holiday card from friends whose job/commute situation forced them to move to Mountain View and move their son to Mountain View High School. The note inside their card expressed their sadness about their move. They really dislike Mountain View; they miss SF itself and their son's school. And the eye-opener for some will be that this is a middle-income (white, educated) family (just the one kid); the neighborhood they miss is the Oceanview-Merced-Ingleside (often considered ghetto, though they live on the Ingleside Terrace side, just south of Holloway). And the school their son -- a high-achieving GATE 11th-grader -- misses is Balboa.

    Not the story you usually hear about moves to the suburbs...

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  9. Caroline, have you been to Mountain View? It's much lower-income than most parts of San Francisco, and the public high school in Mountain View is not as desirable as all of its surrounding suburbs. If you said Los Altos, Palo Alto, Menlo Park, Cupertino, etc ... then I'd be surprised.

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  10. At least when I was growing up in that area both Mountain View and Los Altos High Schools had a great deal of economic and racial diversity. Mountain View has pockets of real poverty, and a lot of middle middle income areas. Los Altos and Mountain View high school districts are unified so that kids on the north side of Mountain View or Los Altos go to Los Altos and kids on the south side go to Mountain View (Awalt before the original Mountain View was closed in the early 80's.)

    So anyway, Mountain View high school may not look that different from a public high school in San Francisco. Every school has its own culture of course, and it's tough to move in high school.

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  11. I know it's not the wealthiest suburb in Silicon Valley, but I looked it up.

    Mtn. View High is 52.1% white compared with Balboa's 5.0%; Mtn. View high has 8.5% low-income (subsidized lunch) students compared with Balboa's 58.8%. So it does still defy stereotypes that a middle-class white kid would be happier at Bal. Though it's true that the transition is tough in and of itself.

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  12. But again, with applicants to private schools, it's more like "If you really want our kid, you'll have to subsidize us." That's the bottom line -- the actual financial situation is secondary. The point is that they can allocate their financial aid as they please, without having to follow consistent policies.

    Caroline, where do you get these ideas? I can assure you that every private school in SF has a financial aid policy. They may not all have the same policy, but whatever it is, it is internally consistent and intended to be fair. What I interpret your comment to mean is that a private school will offer financial aid (money) to, for example, a well-off black family (a hot commodity) as an added incentive to get them to choose the school, even though they don't need the money. Do you truly think it works this way?

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  13. How about basic supply/demand pricing theory. If a school wants to attract more middle income families, why not lower the tuition? Seriously, it seems the private schools are on an endless upwards spiral with tuition. Where does it all go? Do our kids really need every bell and whistle? Couldn't a more moderately priced school provide a quality education with perhaps the added benefit of more diversity?

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  14. I do wonder if they apply the policies consistently, or if they factor in diversity characteristics. I know a couple gay families who mentioned that they were actually being courted, literally recruited, by certain private K-8s, and they also said that some schools made some strong suggestions (I don't think promises) that they would receive generous aid if they picked that particular school.

    I do like the idea of diversifying the schools along all lines, including race and sexual orientation (and otherwise), and I wonder if some of the financial aid money is used to diversify.

    Again, I have no judgments attached, just pure curiosity.

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  15. "What I interpret your comment to mean is that a private school will offer financial aid (money) to, for example, a well-off black family (a hot commodity) as an added incentive to get them to choose the school, even though they don't need the money. Do you truly think it works this way?"

    Yes, I think it works that way -- well, to the extent that a truly wealthy black family might not be offered financial aid, but a middle-income applicant whom the private school wanted would be offered the aid, while a less-value-adding applicant with the same income would not. That's not my imagination; it's based on what my friends who are in private schools or are otherwise familiar with the process tell me.

    Private schools have no reason to have a consistent policy that applies to every applicant -- meet these criteria and you get financial aid. My point is that they're not offering financial aid to applicants they don't want -- or don't avidly want.

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  16. This is exactly the kind of situation I mean:

    " I do wonder if they apply the policies consistently, or if they factor in diversity characteristics. I know a couple gay families who mentioned that they were actually being courted, literally recruited, by certain private K-8s, and they also said that some schools made some strong suggestions (I don't think promises) that they would receive generous aid if they picked that particular school. "

    You see this more with high schools, I think. By 8th grade, it's evident which students are appealing to private schools, so I've watched Lick-Wilmerding and the like aggressively recruit my kids' high-achieving AA and L classmates. Ditto lesbian friends' kids. And they definitely do it by offering scholarships. Actually I saw that happening with a family with kids in both my kids' in K-5 school too (middle-class AA, beautiful GATE daughters, involved parents). It sounded to me like they made definite scholarship offers -- promises.

    It's not that I think this is nefarious or anything. It's just that it sounded like some posters were assuming there were clear-cut, consistent criteria for who gets financial aid, and that's definitely not what I hear.

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  17. My point is that they're not offering financial aid to applicants they don't want -- or don't avidly want.

    They are not offering a SEAT to applicants they don't want, let alone financial aid. Is it wrong for a school to prefer to add a black family rather than a white family to their lineup?

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  18. No, it's not wrong, and it's their prerogative. I'm just pointing out the situation, correcting the mistaken idea that there are consistent criteria for aid/scholarships.

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  19. It's just that it sounded like some posters were assuming there were clear-cut, consistent criteria for who gets financial aid

    A family that receives financial aid must meet all these criteria: 1) Has been accepted by the school 2) Has enrolled at the school 3) Has applied for financial aid. They don't slip money under the table. They don't make different offers to different families who qualify equally for financial aid. They head off that necessity with criterion 1.

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  20. A couple of comments from a private school parent:

    1) Private k-8 schools don't have the resources to have need-blind admissions policies. There is only so much you can do when your school has 400 or so families, and these schools can't have the same kinds of need-blind financial aid that universities offer. So it's unrealistic to assume that financial aid can be awarded to all who need it, and makes sense that schools choose to offer aid to those families that they especially want at the school, for whatever reason.

    2) As for the bells and whistles, just as anywhere else, private schools' biggest cost is teacher salaries. So it's really not so easy to make tuition more affordable by cutting out "bells and whistles", as one poster suggested, unless you change the student/faculty ratio - which would in turn have a big effect on the school's curriculum.

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  21. Anonymous says: "[Private schools] don't make different offers to different families who qualify equally for financial aid."

    ...That's not what friends who have experience with private schools tell me. But of course different private schools may have different policies.

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  22. One problem with trying to have this discussion is that most of us are guessing in the dark. I know some of my friends receive financial aid from their schools, some generous packages, and some just a little boost, but I have never seen their tax returns. I don't really know their true financial picture. You have to assume though that the majority of private schools expect the majority of their families to pay the majority of their tuition. It's tough to offer generous financial assistance to a lot of families without significantly raising tuition for the remainder.

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  23. I've also heard that some private schools trying to woo middle- and upper-middle class families will offer a financial aid package which is generous the first year and then decreases significantly each year (after the child/family is presubably already committed to the school).

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  24. Brandeis Hillel Day School has the best FAQ on the subject that I, at least, have seen so far:

    http://www.bhds.org/admissions/admissions_tuition-faq.asp

    or

    http://tinyurl.com/33cv93

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  25. I know a couple gay families who mentioned that they were actually being courted, literally recruited, by certain private K-8s

    LOL... I hope they have something way more than being gay parents in SF going for them. Otherwise they're in for a rude awakening when the letters go out...

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  26. Lesbian friends of mine did get a very generous scholarship for their son at a sought-after private high school, and generous offers from other private high schools. I hear the same from and about other GLBT parents.

    A straight family who are also good friends of theirs and mine, applying to some of the same schools with a talented, high-achieving daughter, didn't have nearly the same positive response. Since the families are close, it was a little touchy. Of course every applicant is different, but it seemed fairly apparent that the two-mom family gave the applicant a significant edge.

    I'm not disparaging that, just pointing out the situation.

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  27. Hmm. Is diversity important or not? You can make the case that SFUSD does something similar with the lottery as private schools giving out financial aid. Not necessarily bad, but a real world issue that needs to be resolved in as fair a way as possible.

    BTW, I always take whatever Caroline says with a grain of salt after she informed us all that SF is 32% white. There is usually an interesting point in there somewhere, if I don't let her facts get in the way.

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  28. I don't remember what I said, but I think it was that SOTA (or were we discussing another school?) fairly closely reflected San Francisco's overall population. Obviously, I was quoting something and hadn't checked for myself, and I should have.

    But that's a pretty bizarre thing to dredge up. I would imagine that everyone has made a mistake at one time or another.

    I'm one of a number of posters on this topic who say that based on our and our friends' experiences, it seems apparent that private schools award financial aid as they see fit, including more to families they want in their schools. Private schools are perfectly free to do that -- there's nothing wrong with it. It seems pointless and weird to flatly insist that's not the case, and drag up irrelevancies to try to discredit one of the voices making that point. What's the point?

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  29. I have to say that from what I've gleaned about private schools' financial aid policies by talking with friends whose kids attend private schools in SF and the East Bay, Caroline's interpretation seems right on the money (so to speak). Progressive privates definitely seem to use financial aid to recruit students who appear superficially "diverse" (i.e. child with one white and one AA parent whose well-off parents live in the Oakland hills, white child of two white lesbians, child with two affluent Spanish parents, etc). Of course, private schools have the right to pick and choose the kids they want. Those that they really want are sometimes offered more generous financial aid packages than more needy but less-desired students who also apply. Less progressive schools that cannot fill all their slots with wealthy students who can pay the full cost of tuition may recruit middle-class students who can at least pay a large portion of the tuition cost. None of this is necessarily wrong, it's just the way things are, and IMO it's naive to dismiss the reality of the situation.

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  30. I have heard that San Francisco Day School has more scholarship money than they know what to do with and that the might be changing their financial aid criteria so more families would be eligible.

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  31. We know an admission director to a private elementary school in Manhattan. I brought up the travails of applying to private school. He asked us one question: We were planning to apply for aid? We said no, and he said "You'll be fine."

    That said, sometimes schools do have more FA than applicants. Hamlin's own materials indicate that a few years ago one of their stated goals was to give away more money.

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