Mark Mitchell, Vice President of the School Information Services Team at the National Association of Independent Schools (NAIS), discussed the impact of the recession on schools and their ability to continue to provide support to families in the independent school enrollment process.

1. Financial Aid and The Recession
April 8, 2010
NPEA Conference, Baltimore
Mark J. Mitchell, Vice President
mitchell@nais.org

2. “Truth and justice make their best way in
the world when they appear in bold and
simple majesty.”
--Elizabeth Heyrick,
19th-Century English abolitionist

3. Learning from the Past?
“There is no guarantee that this
recession will be like the
last…But the past can give us a
perspective on the future…And
recessions, even long and deep
ones, do eventually end.”
--Gregory Acs, “Unemployment
and Income in A Recession,”
Urban Institute, December, 2008

4. Economic Trends and Financial Aid
22-Yr Avg Ann Chg in Aid Granted: 7.61%
91-92: Avg Aid up 13.3% 02-03: Avg Aid up 13.1%
Avg Apps up 6.5%

5. 20.00%
Increased Fin Aid
1-year change 2008-09 to 2009-10
17.44% 15.79%
15.00% 13.94%
10.00%
5.00%
0.60%
0.00%
Median One Year Median One Year Median One Year Median One Year Median One Year
Percent Change in Percent Change in Percent Change in Percent Change in Percent Change in
Enrollment Financial Aid Financial Aid Financial Aid Financial Aid
Dollars (Need- Students (Need- Dollars per Student Students as % of
-5.00% based Financial based Financial in Financial Aid Total Enrollment
-3.95%
Aid) Aid) (Need-based (Need-based
Financial Aid) Financial Aid)
-10.00%

6. What Just Happened?
 Same pattern as previous two major recessionary periods
– It’s what has helped schools weather the storm in the past
– Median fin aid budgets up 17.4%, serving 15.8% more
students
– Spent slightly more on financial aid dollars per student, but
to a wider base of families (largely returning, former full-
pays)
 It’s a natural consequence of downturn that more people will
need more help
 Questions: What does the near-future hold? What’s the impact
on high-need families? Is this “new normal?”

7. Will This Last…Three Forecasts
 Unemployment rates not expected to decrease any time
soon
– Different impact on families based on educ level
 Most major housing markets will continue to see decline
in home values
– Consumer confidence remains weak or slow to
rebound
 Mean income growth very slow, sluggish at all
levels…below inflation

8. Unemployment Rate Projection
Source: The Financial Forecast Center, www.forecasts.org

9. back
Unemployment Rates, January
by Educational Attainment
2000 2005 2010 Change Factor
(2000 to 2010)
All 4.0 5.3 9.7 2.425
LT High School 6.4 7.7 15.2 2.375
High School 3.4 4.7 10.1 2.975
Grad, No
College
Some College 2.6 4.1 8.5 3.269
College Grad 1.8 2.4 4.9 2.722
Source: Bureau of Labor Statistics, Labor Force Statistics from Current Population Survey

10. Housing Market Projections back
Pct Chg in Projected Home Values
Selected Major Markets
15
10
5
0
-5
-10
-15
Source: Housing Predictor website, www.housingpredictor.com
-20

11. Income Change
Mean Income by Quintiles, Family Households
CPI-adjusted to 2008 Dollars
2000 2005 2008
Lowest $17,657 $16,286 $15,906
(2008: $27,800 and
lower)
Second $40,371 $38,752 $38,125
($27,801 – $49,325)
Third $63,449 $62,012 $61,582
($49,326 - $75,000)
Fourth $93,511 $92,748 $92,160
($75,001 - $113,205)
Highest $196,195 $194,432 $190,400
($113,206 and higher)
Top 5 Percent $347,661 $340,393 $326,928
($200,00 and up)
Source: U.S. Census Bureau, Current Population Survey, Annual Social and Economic Supplements

12.  Families less able to Schools with recent rates of
Trends Within keep pace
tuition change
– Check local economy, demography…income change lag
inflation?
– Higher-income, current full-payers more likely to be aid-eligible
– Lower-income, more expensive students less attractive, less
affordable
 Shifting from aid for “access” to aid for “affordability”
– Increased budget but competing priorities for dollars
– Seeking to meet new, unforeseen need of higher-income
families
– Recession fall-out will exacerbate the prime “either/or” scenario:
 Fund either one $25,000 grant OR five $5,000 grants
 Mission Risk: Those who need aid most increasingly unlikely
to get it

13. Other Pressures Mounting…
 Funding for K-12 grants from agencies, other
organizations tighter or disappearing
– Federal, state support waning
– Fundraising more difficult to sustain
 Voucher programs as a funding priority being
called into question (e.g., Washington DC)

14. Financial Aid and Family Issues
 Job and Income Loss
– Work to get a projected income statement and documentation
– Use “provisional” or semester-based awards
– Follow up regularly for updated job status
 Personal debt
– View carefully case-by-case
– Allow more leeway if credit cards used to pay normal expenses due to
income loss
– Count annualized monthly payments as unusual expenses
 Decreasing Net Worth
– Remind families that the application seeks a “snapshot in time” of
current situation
– Lowered values will be considered in assessments if they complete the
application correctly

15. Effects On Financial Aid Processes
As more people continue to watch dollars, curb
spending where feasible, and seek assistance for
‘must haves’…
 Meeting deadlines, completeness of applications more
important than ever
 Funds for new students, particularly high-need
prospects, may be reallocated to a growing,
unanticipated degree
 Potentially, wiggle room for appeals and reconsideration
of school’s first award offer is tightening

17. back
Affordability Differential:
Tuition Change Rate/Income Change Rate (2000-2005)
Full-day K 3rd Grade 6th Grade 12th Grade
1st Quintile 6.96 6.87 6.87 6.26
2nd Quintile 3.61 3.56 3.56 3.24
3rd Quintile 2.94 2.91 2.91 2.65
4th Quintile 2.56 2.52 2.52 2.30
5th Quintile 2.58 2.54 2.54 2.32
Top 5 Percent 2.89 2.86 2.86 2.60

18. back
Grants awarded within each income quintile
Source: Wash DC-Area Day School, US Census Bureau
National Family Income Number of Average Grant
Range ($) Grants Awarded ($)
Quintile
Lowest 0 - 24,780 5 22,898
Second 24,781 – 43,399 5 21,125
Third 43,400 – 65,827 21 16,817
Fourth 65,828 – 99,999 31 16,829
Fifth > 100,000 41 11,899