How does the "new" financial aid applicant differ from years past?
Winter 2013
By
Mike Flanagan, Mark J. Mitchell
Every academic year, School and Student Services (SSS) By NAIS manages more than 150,000 applications for financial aid for more than 2,000 independent and other private schools. The data gleaned during this process offer a unique window into emerging financial aid trends.
One trend: Families who applied for financial aid in the 2012–2013 academic year have higher incomes than those who sought financial aid 10 years ago. In fact, more than a fifth (21.2 percent) of all applications for financial aid filed through SSS By NAIS were submitted by families with total household incomes (before taxes) of over $150,000. By contrast, in 2002–2003, this group of families accounted for just 6.4 percent of financial aid filers.
On the other end of the spectrum, the lowest-earning families (those reporting income at, or below, $20,000) made up 7.7 percent of financial aid applicants. Though that represents an uptick from the 2009–2010 year (which itself may reflect the lingering effects of the sluggish economy), where 6.6 percent of filers fit in this income range, it is significantly below the 10.2 percent of applicants in 2002–2003.
What are the factors driving the highest-earning families in America to comprise the largest growth of financial aid applicants? For one, this trend suggests that, for many families, the price of tuition is rising faster than their ability to keep pace without seeking financial aid. In fact, using U.S. Census Bureau data for family incomes and NAIS data for median day and boarding tuitions, it is evident that the median day tuition in 2002 represented approximately 8 percent of the average income for families in the top fifth of income earners (typically the range for a family in order to pay the median tuition). By 2010, the median day tuition was 10.9 percent of average income for the top income-earning quintile of families. For boarding tuition, the sacrifice of family income moved from 17 percent in 2002 to 21 percent in 2010.
Considering how the tuition growth has potentially impacted the decreasing representation of low-income and true middle-income families in the applicant pool, replaced by the increasing representation of upper-income families, the data paint a picture of how the face of the "typical" financial aid family is indeed changing. Not only are higher-income families seeking assistance in greater numbers, they are showing eligibility and receiving aid. As applications and aid dollars shift from the low-income to the higher-income family, the landscape now has a new backdrop against which schools must project financial aid budget needs, define financial aid investment goals, diversify financial aid funding sources, and weigh the mission-based imperative for financial aid.