1. 1. THE NEW FINANCIAL AID FAMILY KRISTEN C. POWER NATIONAL DIRECTOR, BUSINESS DEVELOPMENT JULY 9TH, 2015
2. 2. During this session, we will: #BBK12UC Explore the dynamics and implications that the evolving applicant pool is bringing to school financial aid offices Discover how to reshape policies and budgets to meet what the new aid families bring to the table Examine ways to communicate and align expectations to increase timely and open participation in the process
3. 3. Dynamics of the Evolving Applicant Pool Whos seeking financial aid? #BBK12UC 10.2 18.7 20.3 17.2 12.5 8.1 6.5 6.4 6.6 12.8 14.8 14 12.4 9.9 10.7 18.8 6.4 10.9 12.6 12.4 11.8 10.1 11.8 23.9 0 5 10 15 20 25 0-20K 20-40K 40-60K 60-80K 80-100K 100-120K 120-150K 150K+ 02-03 09-10 14-15 Range of Total Family Income Source: SSS By NAIS PFS Filer Pool. Reflects total income from all sources, before taxes or allowances, as reported by families on the PFS submitted.
4. 4. Dynamics of The Evolving Applicant Pool #BBK12UC Whos seeking financial aid? Quintile US Families SSS Filers Lowest $0 - $27,794 10.1% Second $27,795 - $49,788 13.2% Third $49,789 - $76,538 17.0% Fourth $76,539 - $119,001 23.6% Highest $119,002 and greater 36.2% Top 5% $210,000 and above 10.5%
5. 5. Dynamics of the Evolving Applicant Pool -Why the dramatic demand shift? Income growth fell dramatically #BBK12UC 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% 9.00% Lowest Fifth Second Fifth Third Fifth Fourth Fifth Highest Fifth Top 5 Percent 1960s 1970s 1980s 1990s 2000s
6. 6. #BBK12UC Family Income Quintiles, 2013 (US Census Bureau) Sample Academy % of Financial Aid Applicants Sample Academy % of Financial Aid Recipients Sample Academy Avg Grant $0 - $27,794 10.6% 2.6% $26,150 $27,795 - $49788 14.3% 8.6% $23,242 $49,789 - $76,538 14.3% 12.9% $24,030 $76,539 - $119,001 14.7% 23.2% $16,794 Over $119,001 46.1% 52.9% $14,159 Dynamics of the Evolving Applicant Pool -Why the dramatic demand shift? Income growth fell dramatically
7. 7. Dynamics of The Evolving Applicant Pool What are these new applicants like? Characteristics of the New Financial Aid Family Higher income, higher net worth More assertive, less of a sense of shame More entrepreneurial, savvy investors Access to better choices or alternatives More accustomed to having influence over decisions #BBK12UC
8. 8. Dynamics of The Evolving Applicant Pool How do they feel about the aid process? #BBK12UC
9. 9. Dynamics of The Evolving Applicant Pool How do they manage to pay tuition? #BBK12UC
10. 10. Dynamics of The Evolving Applicant Pool Whats the role of borrowing? Only 13% of parents reporting borrowing from some source to help pay school costs (other than home equity loans) Of those who reported borrowing, the sources were: #BBK12UC
11. 11. Implications for The Aid Office Goals and Outcomes Is your aid investment serving who you think it should serve? Does the distribution of aid match the financial aid mission? Are the lower and true middle-income families succumbing to sticker shock to greater degrees? Is the commitment to high- or moderate-need applicants shifting to low-need applicants? Are returning students receiving more aid than anticipated or planned for? Time and Relationship Management More applications, more complexity, more follow-up Increase staff knowledge and training to utilize available tools Ability to tap into networks, experts, and others Managing pushback, appeals and negotiating #BBK12UC
12. 12. Reshaping Policies and Procedures Self-employment and net worth issues Business expenses, write-offs Depreciation treatment, negative income and cash flow Investment transactions, home and other real estate equity Debt and lifestyle issues Allowable vs nonallowable indebtedness Discretionary debt vs emergency or necessary debt Choice vs obligation Be careful of biased subjectivitystay objective #BBK12UC
13. 13. Reshaping Budgets and Resource Needs Key Challenge: MONEY Typical school meets, on average, 69% of demonstrated financial need 11% of schools reported meeting 100% of need Gapping is more easily overcome by high-income, low-need families Only 8% of reviewed applicants did not qualify for some help 86% of schools report that the #1 stressor is balancing limited dollars with expanding demand Old News a lesser strain on aid budgets as recession effects wane slowly Returning families new to aid Not typically anticipated in budget-setting Proactively account for that new need #BBK12UC
14. 14. Reshaping Budgets and Resource Needs Key Challenge: TIME Typical aid professional spends 24% of his/her time managing the aid responsibilities and tasks Only 30% feel that the amount of time they spend on making a financial aid award decision is just right 50% report that there are too few weeks allotted for managing the overall awarding process 100% of full-time aid directors reported that the time spent making individual decisions AND the timespan of the overall process were just right Tended to receive fewer financial aid applications Tended to process more applications (in numbers and percentage that needed review) Tended to get a higher yield among the financial aid applicants #BBK12UC
15. 15. Establishing and Communicating Expectations Generation X = born 1965 1981; Roughly 30 50 year olds 1. Hold the highest education level of any age group 2. Active, balanced, family-oriented, more heterogeneous, more accepting of social diversity than previous generations 3. Less likely to idolize leaders and hold casual disdain for authority; more likely to work towards systematic change through economic, media, and consumer action than direct rebellion or ouster of leaders 4. Experience several career changes due to lower sense of loyalty to institutions, and chaotic nature of the job market; work to live not live to work 5. Income growth for men has slowed; growth in family incomes driven by women entering the workforce 6. Independent, tech-savvy, resourceful, hands-on, entrepreneurial, start-up/small-business minded, willing to take risks, customer-focused #BBK12UC
16. 16. Establishing and Communicating Expectations Educate, educate, educate The more you share, the better-aligned their expectations will be Be clear about the pressures on your aid budget and the distribution of your applicant pool Help them put their own situation in a context outside of themselves (or their neighbors) Be ready to teach a family to understand all the factors driving your decision #BBK12UC
17. 17. Questions/Reactions? #BBK12UC
18. 18. Today We Covered The dynamics and implications that the evolving applicant pool is bringing to school financial aid offices Reshaping policies and budgets to meet what the new aid families bring to the table Ways to communicate and align expectations to increase timely and open participation in the process #BBK12UC
19. 19. Presenter Information Kristen Power National Director, Business Development SSS by NAIS power@nais.org Phone: 603-770-0145 #BBK12UC