For private school K-12 families, financial aid can be an additional source of help to ensure their children can attend private school. Most K-12 private schools use the Parents’ Financial Statement (PFS) to determine aid. It gathers information about family size, income, and expenses and estimates how much a family can contribute to the costs of your school. The financial aid formula used in PFS can be a valuable resource for determining how much financial aid you can offer families.
To help your team develop transparent financial aid processes and build successful programs, we’ve broken down the components of financial aid and compiled a list of best practices.
What Is the Financial Aid Formula in Private Schools?
The financial aid formula refers to how private schools calculate the funding they will provide to students who need financial support to attend. The basic formula subtracts the amount the family can pay, along with extra funds like scholarships, from the cost of tuition.
While this formula may sound simple, deciding who to help and how much to give are significant choices.
Private schools strive to give more families access to an academically rigorous education. This includes working to expand their diversity initiatives to meet their overall educational mission goals for the school. However, funding is limited, so determining awards requires a careful, thoughtful, and balanced approach.
Teams typically attempt to balance their efforts toward achieving the school’s mission while preserving the bottom line and ensuring equitable distribution. A financial aid formula boils down these complex factors into an evaluation that’s easy to apply at scale and helps remove biases from the processes.
Components of Financial Aid Formula
The financial aid formula has many different elements. We can break them down into three main sections that help create a balanced view of a family’s ability to pay.
Expected Family Contribution
Expected family contribution (EFC) shows how much a family can contribute to the cost of attendance by creating a big-picture view of their finances. It starts by adding up elements of a family’s income and assets, including:
- Wages and salaries
- Interest and dividends
- Alimony and social security
- Assets such as cash and savings
- Vehicles
- Home equity and other real estate investments
- Retirement accounts
- Stocks, bonds and securities
The EFC then considers reasonable expenses such as groceries, rent, and transportation. These expenses should reflect prices in the school’s community and adjust for different family sizes. The National Association of Independent Schools offers a few sample calculations showing different situations.
Additional Funds or Special Circumstances
A financial aid formula should consider any additional funds, such as scholarships, grants, or gifts from relatives. You might also review special circumstances, like divorce, death in the family, illness, or unemployment. These situations require nuance and sensitivity, so the financial aid department should review them carefully and actively avoid bias in decision-making.
While many schools assess aid through merit, remember that students from different backgrounds might not have had the same resources as other students. Consider merit in the context of the larger application and include non-academic achievements like leadership or community involvement.
Cost of Attendance
The last piece of the puzzle is the cost of attendance. This number may simply be the cost of tuition and fees, but you can also include expenses for dining, books, and uniforms. Boarding schools may also include housing costs.
After subtracting the cost of attendance from the EFC and any additional funds or considerations, you have a suggested financial aid award.
How Private Schools Can Equitably Allocate Financial Aid
While you may want to help every student who applies, funding is limited. Equitable financial aid allows you to support the students who need it most. But how do you make these decisions fairly?
The process starts with establishing transparent, clear, and equitable policies, which can help you assess needs consistently. Tell families how you allocate financial aid and ensure they know they can ask questions during the process. Separate admission decisions from financial aid decisions and emphasize inclusive processes.
Technology plays a significant role in fair financial aid for private schools. It removes many manual processes that can introduce bias or cause applications to get lost in the shuffle. It also improves the visibility and accuracy of your system’s data, ensuring a clearer understanding of available funds and accurate calculations.
Consider how technology can impact your financial aid process and facilitate clearer, more effective award decisions.
Financial Aid Best Practices for Private School Administrators
As you develop your financial aid formula and program, keep these best practices in mind:
1. Establish Strong Communication with Families
A transparent financial aid process depends on good communication, so offer resources upfront. Tell your applicants what to expect and how you make decisions.
Also, think about how you communicate your financial aid program to prospective families. Many don’t apply to private schools because they assume they can’t afford it. Make your opportunities known to encourage more applications and share all your hard work toward creating inclusive education.
2. Share the Value of Inclusive Financial Aid
Make sure your administrators are on board and motivated to make financial aid as inclusive as possible. Talk about the value of inclusive funding practices and the exceptional learning experiences of a diverse school. Diverse schools can help facilitate a more inclusive society by connecting students of all backgrounds.
As you make changes, remind everyone that equitable financial aid can foster more inclusive schools and help the entire student body grow and succeed.
3. Regularly Review Your Financial Aid Policies
Your financial aid policy should adapt to changing economic conditions and your school’s growth. Explore your policies periodically, and assess your school’s data to determine what changes you may need. Remember to communicate these changes with administrators and families.
4. Improve the Application Experience
Applying for financial aid can seem daunting to families, but a simple, intuitive application helps remove stress. Make your process simple, with an easy-to-use form, straightforward instructions, and reminders to complete forms. Better applications also help improve equality by removing barriers such as computer skills.
5. Simplify Financial Aid Management
You can also improve your financial aid program at the back end to help your team work efficiently and accurately, giving them more time to focus on nuanced decisions. Integrate your financial aid management system with other solutions, such as tuition, admissions, and billing. You can even link financial aid data to a student’s admission profile to view the entire picture.
Make Sense of Your Private School’s Financial Aid Process
Schools offering financial aid programs to achieve more equitable awards and create a more inclusive student body are going to attract more families. Ravenna and the SSS platform help K-12 private schools develop efficient, fair, and transparent financial aid processes. Track every step of financial aid, provide intuitive family-facing tools, collaborate on application reviews, and access real-time data to develop the most effective program possible.
Request a demo today to learn more about how we can help your school build a streamlined and transparent financial aid process.
