Let’s Talk About Financial Aid

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#admissionchat episode 1 welcomes Kristen Carey Power, the senior director of membership and business development at the Enrollment Management Association, to talk about the common questions families have regarding the private school financial aid process. These questions include:

• How does financial aid fit into the private school application timeline?
• Does financial aid requests impact tuition decisions?
• What types of financial aid and tuition assistance are available?
• What documentation is required for financial aid applications?
• Do families have to re-apply for financial aid every year?
• How does the financial aid process work for divorced or separated parents?
• What happens if a family’s financial situation changes during the school year?
  

Get answers to these financial aid questions and more by listening to the episode above or subscribing to #admissionchat on your favorite podcast platform: Amazon Music, Apple Podcasts, Spotify, or Stitcher.

Transcript

Intro: Welcome to #admissionchat. Let's talk financial aid. 

Daren Worcester: Hello, I'm Daren Worcester, and for this discussion on affording private school education, I'm super excited to be joined by Kristen Carey Power. Kristen is the senior director of membership and business development at the Enrollment Management Association. Kristen, thanks for joining me today.

Kristen Carey Power: Thank you for having me, Daren.

Daren Worcester: Kristen, I just gave your job title for the Enrollment Management Association, but I don't think that accurately portrays your extensive experience and knowledge about the financial aid process within the private school industry. Can you give some insight for our listeners on your experience there?

Kristen Carey Power: Sure, I'd be happy to. So, I've been with the Enrollment Management Association for about two and a half years. And prior to my role here at the Enrollment Management Association, I spent almost nine years working for the National Association of Independent Schools. And I was focused on their financial aid product at the time which is called SSS or School and Student Services. And I traveled all over the country working with private independent schools regarding their financial aid programs. I presented at conferences, did several trainings, and then prior to my role at the National Association of Independent Schools, I spent eight years working for a student loan company in Boston. So I have been in the K–12 and financial aid and admissions world for the past 20 or so years.

Daren Worcester: That's amazing, so you've seen it from all different angles. As our families that are listening go to school websites, I'm using the term financial aid but they're probably gonna see tuition assistance as the buzzword on many school websites because that more fully encaptures the portfolio of options that are available to families as they figure out how they're gonna best afford private schools. What are the different types of assistance that are available?

Kristen Carey Power: You bring up a really great point, Daren, and that is the fact that tuition assistance—that title and terminology is used in a variety of different ways. So many families are familiar with the financial aid process or have received tuition assistance at the higher education level but not as much in the K–12 level. 

And so the different types of aid that are available for families at the private or independent school K–12 level are grants. So schools will have financial aid budgets and they will use those budgets and they will ask families who are current families or who are looking to enroll to complete a financial aid application. And based upon the data on that financial aid application, the school will then determine how much grant money they can afford to award a specific family.

So that is the grant perspective, there are also student loans at the K–12 level. So some schools might promote the fact that they have options to use a K–12 loan. So grants, student loans—there are also scholarships that can be used. Some schools have different scholarships that they've set up, some schools have also used merit awards as well. So again, when we're thinking about aid, we're thinking about tuition assistance that can come in a few different formats. 

So again, it's grant money which is money that is budgeted by the school, and grant money does not need to be repaid. That is money that's for those eligible families they will receive a grant from the school and that does not need to be repaid, as I stated. And then there's also, again, the scholarships and merit aid which also neither of those have to be repaid. And then again, the fourth one that I had mentioned was the student loan aspect and those obviously would need to be repaid. So those are really the four main categories regarding tuition assistance in the K—12 space.

Daren Worcester: That's great, there are a variety of options. You did a presentation recently where you also talked about 529 plans and how that's fairly new in the private school space—can you describe that a little bit?

Kristen Carey Power: Sure, a few years ago the government made a change to the way 529 college savings plans could be utilized. So prior to a few years ago, 529's were designated for families to be able to put funds away for their child's college education. What happened a few years ago was actually the government changed that criteria and changed sort of the outlook and said with whatever 529 funds you have we will allow families to use up to $10,000 a year for private or independent school tuition. 

With that change, some states also had some guidelines and it varies by state as to how those funds can be utilized and sort of what criteria families need to follow. So I would highly encourage families if you are looking to utilize 529 funds to pay for a K–12 education, to make sure that you know what your state guidelines are so that you're not eventually taxed or penalized in any way. But if you go to any sort of state website and look up anything regarding the 529 plans and what your state guidelines are you'll be able to find that information.

Daren Worcester: That's a great tip on making sure they check the state regulations and laws. Thank you. Now, I kinda jumped in really deep, really quick. Let's take a step back and talk about the overall financial aid process for getting that grant money. What's the general timeline, how does it go concurrent with the admissions application process?

Kristen Carey Power: Many families will start thinking about independent school or thinking about the admission process in the fall for the upcoming year. So let's say, for example, if I were going to send one of my daughters to an independent school, I might've started to consider the school in September of 2020 for fall enrollment of 2021. And throughout the process, as families are meeting with schools or interacting with schools they will become familiar with different deadline dates. So each school sets a deadline date for admission applications. 

They also set a deadline date for financial aid applications. What I encourage families to do is to make sure that you start the financial aid process as early as possible and be as honest as possible and make sure that you have all of the data that you need to apply to the various schools you're interested in. 

So what that means is throughout the fall, as you start to interact with schools and meet with schools, you'll be given a direction on which application for admission to complete, on what other documentation you might need to have. You'll be given guidance on which financial aid application you might need to complete and all of this will vary by school. For most families, the financial aid process will begin in the early to mid-fall, and many schools will have deadlines that begin I would say around late-fall, early December right through March into April. 

So make sure that you know those differences of deadline dates by school—because depending on where you go and depending on if you're looking at a day school or a boarding school, depending on what areas of the country you're looking at, those deadline dates can vary.

Daren Worcester: Now, they do try to have the deadlines for financial aid and enrollment applications around the same time so that families can get decisions on both back around the same time and factored into their enrollment decisions, correct?

Kristen Carey Power: Yes. So quite often schools will have similar . . . they'll try and have their financial aid deadlines in a similar timeline to admissions, but they're never—well, not normally are they the same date. So that's why I encourage families to make sure they know what those dates are because if you miss your financial aid deadline because you're waiting for your admission application to be processed you could actually miss out on dollars that you could have been awarded from the financial aid budget and you could have missed out on receiving a grant. So even though the deadlines for financial aid and admission are relatively around the same time, make sure you know exactly when those deadline dates are. And don't wait for an admission acceptance before you start applying for financial aid.

Daren Worcester: That's a great point. And I think, too, having those dates so close together might make some families nervous that perhaps their requests for financial aid might impact the admissions decision. What would you say to a family that's thinking that way?

Kristen Carey Power: And that's a question that I've heard quite a bit and most schools try and take a mindset where it's need-blind. So they are looking at the student application, they're looking at the recommendations, they're looking at all of the documentation that they've collected from the admission perspective. Grades, transcripts, and the like, and then making their decision for admission based on that application. So they really try not to heavily weigh their decision on whether or not a family needs any sort of financial aid. 

Daren Worcester: Now, I know every school setup is different in terms of who wears what hats, but it is often the same people making admissions and financial aid decisions? Are they usually separate people?

Kristen Carey Power: That is a great question. So as far as admission and financial aid decisions and who actually makes them, oftentimes financial aid decisions will be made in the admission office, perhaps the director of admission or director of enrollment management is also the person that makes the financial aid decisions. Or there also could be a situation for many schools that have their own designated director of financial aid, who will make those decisions. And then sometimes, and this is sort of the third scenario is the financial aid decisions will be made by the business office and handled that way. 

So again, the first scenario is that the admission and financial aid decisions are made in the same office. In the second scenario, the admissions decision is made obviously in the admissions office, and financial aid is made by the director of financial aid. And then in the third scenario, admissions handles that admission decision, and the financial aid decision is handled from the business office perspective.

Daren Worcester: Interesting. So, I think to summarize that would you say the takeaway is that if a family is foreseeing the need for financial aid in order to be able to make attending the school realistic for their family, that they really just shouldn't and don't need to worry about that side of it, that they should just apply for both?

Kristen Carey Power: If a family does feel as though it is a stretch for them to be able to afford tuition at a private or independent school, I would highly recommend that they do inquire about financial aid. I always tell families to be as honest as possible and be as upfront as possible. So when you are a family applying for admission, and in your admission application when the question pops up, “Are you applying for financial aid?” Be as honest as possible because what you don't wanna have happen is you go through the process and then decide after the fact, after an admission decision is made, that you then want to apply for financial aid. Because again, you might have already missed your window in receiving any sort of grant money. So I fully believe and I would encourage families to also believe in transparency and honesty with every school that you are applying to.

Daren Worcester: That's such great advice. And the thought of potentially missing the window brings me to another question. A moment ago we were talking about the deadlines and how they're similar, and I think of schools with set deadlines—usually the application deadline is somewhere in the middle of January for most schools. What about schools with rolling admission? What do families need to think about there? When should they be applying for financial aid? How does financial aid even work with schools with rolling admissions?

Kristen Carey Power: That's a great question, Daren, because, well, the schools who do have rolling admission also will sometimes have financial aid deadlines, they need to consider their financial aid budget. So if you are applying to a school with rolling admission and you do want to apply for financial aid you can ask the school and have an open conversation with the school about their financial aid timeline. You hopefully at that point, at that stage of the game they will still have financial aid dollars available.

Daren Worcester: Excellent, and I think just a point of clarification for anybody who's not aware rolling admissions simply means that instead of having a set admissions deadline that schools are accepting applications on an ongoing basis until all their seats are full in any given class.

Kristen Carey Power: Yes and we've certainly seen several schools opt for the rolling admission process this past year just given some of the changes that we saw with the pandemic. So it's certainly something that more schools adapted their process a little bit more over the course of the past year. We're a little bit more lenient with some of the deadlines because of the need to try and help as many families as possible.

Daren Worcester: That brings up another great question. What impact has the pandemic had, have you seen, on the financial aid process and maybe the amount of awards that are granted—that sort of thing?

Kristen Carey Power: Many schools in this spring were faced with families who had some major setbacks. Families who had lost their jobs, families who work in areas where their place of employment was really, really impacted such as the restaurant-hospitality industry and the like. Many schools in the spring created different funds and different ways to help impacted families be able to get through the next few months to help pay for tuition. They often called it COVID relief funds or there were donors who helped cover the costs of education for families. 

And then what happened was we also—so we had the current families who were impacted by COVID but then we also saw, because of what was going on with the pandemic, that obviously impacted the public schools and other private schools as well. But families felt, not every family, but quite a few families felt as though they wanted their child to be in-person or they wanted a hybrid model for education. They didn't necessarily want their child to be fully remote. 

And so what we saw was an influx of families in certain areas of the country applying for admission at private and independent schools, and also therefore applying for financial aid. So families who are looking at private and independent schools for the first time due to COVID. Also realizing that this isn't something they had planned for and therefore also needed to request financial aid and think about the way in which they're going to pay for tuition. 

And again, we saw this throughout the country. So what we saw was an influx of families leaving major metro areas and going to more remote areas because at that—even now families can work remotely from anywhere. And that really puts some strain on some schools in major metro areas who are losing families because they were moving to other locations. 

But at the same time, we did see applications increase in certain areas of the country because families were moving. And then therefore, as I said, they also were requiring or requesting financial aid because they hadn't planned on even considering an independent or private school. But because of the situation with the pandemic, it forced them to reevaluate their child's educational choice. 

Couple that along with the fact that let's not forget about the families who were impacted in the spring and we have these COVID relief funds that some of the schools had created, if they hadn't rebounded in their location with hospitality and business, the restaurant business still being impacted those families were asking for more financial aid again. So they were also winding up in the financial aid pool this year.

Daren Worcester: That's very insightful. Obviously these factors vary across the country in different markets and that sort of stuff. But as my takeaway as a parent—that if I'm looking to apply for financial aid, just know and understand that there may be more people applying in my market or at my school. And that the best thing I can do is make sure I get my application in and as complete and thorough as soon as I can.

Kristen Carey Power: Yes, you definitely wanna make sure that again you've planned accordingly. You know when those deadline dates are for admission and financial aid, and that you get your application in on time. I encourage families to give yourself some leeway, give yourself some time, because when you submit your application there will be documentation that will be required from each school that you're applying to. 

And you wanna make sure that you have all of those documents in alignment. You wanna make sure that once you submit your financial aid application that you're not missing something else or that you don't have access to something that the school might require. So if at all possible, if you have a certain financial aid deadline that you are adhering to give yourself about a week's time to make sure that you are completing everything and have everything in right in time for that financial aid deadline.

Daren Worcester: So that brings a great question, or leads me into my next question, which I was gonna ask you, what are some of the things, some of the paperwork, some of the things that families need to start preparing in advance and what are they going to have to submit for their financial aid application?

Kristen Carey Power: So, many schools will require documentation. And what that documentation is, is it's support of what you're putting in on your financial aid application. So the financial aid application that families complete is a form that lists a variety of different questions from income to assets to information about real estate. What schools will ask about after or in conjunction with the financial aid application are supporting documents. So that application that you're completing is only as honest as you are and then there is that supporting documentation. 

So many schools will ask for or require a copy of your W2, your 1040, they could require pay stubs. They could require documentation about a custody situation, divorce situation. And when these documents are being required most likely they're being required by several schools that you're applying to. You'll only really have to submit those one time and fortunately many of the financial aid platforms can then pass those out and send those off to the various schools that you're applying to. 

Some schools also require not only current year W2's and 1040s, but also prior year W2's and 1040s. So what some schools are doing is they're actually basing the financial aid decision off of last year's tax documents, not this current year's tax documents. So in this case for 2021, schools will require the 2020 W2's and 1040s. But in some cases, schools will actually require the 2019 W2's and 1040s. 

Now, I realize that your financial picture today might not be indicative of what your financial picture looked like last year or the year prior, but that's why I would encourage families to be transparent and to have a conversation with the school. On many financial aid applications, you can add something at the end to tell your story, to tell your situation so that they are aware, the school is aware of any hardships you might be going through or you be able to share the reason why your financial situation is not indicative of what the tax documents look like.

Daren Worcester: Now that could be an uncomfortable thing for families to do, sharing their financial situations with other folks at the school, especially. What would you say to someone that's just not all that comfortable with really divulging too much, how detailed should they be with this information? What would you recommend?

Kristen Carey Power: I would recommend again that the family is as honest and upfront as possible with the school, because at the end of the day, what a family is trying to do is be transparent enough so that the school understands how to best spend their financial aid dollars and which families are the most deserving. 

So even though it is a tough conversation to have, please be reminded that these are professionals—they are not going to share your information with other faculty members or staff members. They are really trying to act on behalf of the school and have the school in the best interest because they are trying to make sure that they are spending their financial aid dollars accordingly. 

Also with tax documents W2's and 1040s, I realized that there's a lot of sensitive information on those documents. Every financial aid provider that I'm aware of takes major, major steps and has different accreditations to protect all of that data. Families can rest assured that all of their tax documents will not be shared or used throughout the school. Nobody on the faculty or staff level will have access to those tax documents.

Daren Worcester: Thank you. That's probably reassuring for some folks to hear. Let's change the style of this a little bit Kristen, let's do some role playing. I call dibs on being the parent. So I'm gonna take the role of a parent, which, I have a seventh grader right now so I'm kind of in that mode, I feel like I can get that vibe pretty quickly, and can you play the role from the school's perspective?

Kristen Carey Power: Mm-hmm.

Daren Worcester: As a parent, I'm going through the financial aid process—you just described the documentation, it's very extensive. I'm getting kinda nervous doing all this because I'm thinking about trying to make ends meet, I'm trying to save for retirement. I'm really thinking about my kid's college education and how I'm gonna help them afford that. So I'm just trying to understand how I'm budgeting for private school, where I'm trying to fit in here and does the school understand that I've got all these other things that I need to pay for? Just the process alone of filling out all that documentation makes me feel like they're gonna squeeze me and they want me to dive under my couch cushions looking for lost pennies. What is the school's real expectation for what I should fairly contribute towards my child's private school education?

Kristen Carey Power: That is a great question, Daren. And I love the way you positioned it because it's a question that comes up frequently, and this is what I always remind families of: At the end of the day, it is not the school's responsibility to subsidize anyone's lifestyle. So sending a child to a private or independent school is a choice. It's a choice that families make and certainly schools will help in any way they can from a financial aid perspective. 

But if a school sees that you are putting the maximum amount of money into your retirement each year and applying for financial aid, they might come to you and say, actually, Daren, do you think that you could spend some of the dollars that you are putting in your retirement account towards your student's education, your child's education? 

Because they don't want families to think that they can put as much money away as possible and take a family vacation to France every year and buy a brand new boat every year without having some sort of skin in the game. Again, this is a choice. This is a way for families to better their student's education. But also again, the school wants to see that the family has some skin in the game and they don't want to have to subsidize anyone's lifestyle. 

So while the school realizes that saving for retirement is important, you might need to start to make a choice as to how much can you save for retirement or college versus what you can actually contribute, and how much could you contribute to a private school education?

Daren Worcester: Okay that makes sense, I'm understanding that better. Now for my next question I just need to—in the very off chance that my spouse is ever listening to this—I need to clarify that we're role playing here in that my next question isn't wishful thinking. Because what I wanted to ask is how does the financial aid process work for divorced or separated parents?

Kristen Carey Power: Well, so in the off chance that this ever happens to you Daren, which I'm sure it will not, but for divorced or separated families, many schools will require that both parents complete the financial aid application. Now, even though both parents are completing the financial aid application, they're both submitting documentation, they don't actually see each other's data. So none of data ever crosses paths or anything like that. 

What it does is both parents submit their application, they submit their data, it ties into their child's record. And then based on we're looking at both households, the system will then calculate what the families can afford to pay for a student's education. So again, with the divorce or separated scenario most schools will require that each parent submits an application because they're really trying to get an understanding of what the overall household income is. And since there are two households in a divorced or separated situation, they are going to need two financial aid applications.

Daren Worcester: Thank you, that is theoretically good to know. Continuing on that line of we're just role-playing here, let's say one of the parents is no longer in the picture, what happens then?

Kristen Carey Power: Sure, so if a school has required that both parents either be on the financial aid application or submit separate financial aid applications, but if one parent is no longer in the picture, what can happen is some schools might require a letter from either a pastor or priest or rabbi or someone who knows the family well to help explain why that parent is no longer in the picture. 

It could be that a parent left five years ago and has no interaction with that child or the parent doesn't know where that second parent is any longer. But the school might ask for proof or documentation again, from someone who knows the family, who can help explain the situation. Because what you don't wanna do is give financial aid and base their financial aid decision on the fact that there's only one parent, when all of a sudden the second parent is showing up at soccer games and is showing up everyday to pick a student up. 

So again, with the situation with a divorce or separated family, again those are two different applications. But if there is the situation where a parent is no longer in the picture a school might require a letter from a family friend or someone who knows the family well to help explain that situation.

Daren Worcester: Okay, good to know, thank you. So if we apply for financial aid and we get a package that works for our family and we enroll in the school, can we count on getting that package again the following year and each subsequent year? Or do we have to reapply? How does that work?

Kristen Carey Power: Another great question, Daren. So most schools, I say 95% of them will require that a family apply for financial aid each year. And that's really because the family's financial picture changes each year. And so they wanna capture the most accurate and up-to-date financial picture. 

Now, as far as your question around whether or not you can guarantee that you'll receive the same grant every year, that can vary. So some schools will increase their financial aid grant at the same rate in which they're increasing tuition so that you are always paying around the same amount of money each year. Some schools do that a little bit differently even though they're increasing tuition, your financial aid grant might not increase as much. 

So it really does depend on the school, but again for any family on financial aid, schools are really trying to help the family in any way that they possibly can. So they will make sure that they have your family's best interest in mind and that their decisions will help your family because they don't want to bring your family in at one point and then five years later, all of a sudden, decide that they're going to not allow you to have any sort of financial aid. 

And that's also really important to keep in mind too when we're thinking about the reason why schools ask a family to apply for financial aid each year. Again, it's not only to see what the current family's financial picture is, but depending on whether or not your salary and wages have drastically increased or decreased that also could impact and could have a real significance on what your financial aid grant is in one way or another.

Daren Worcester: That's good to know, thank you. I mean, I was gonna ask you what happens if my family's financial information changes, that sort of thing, but you really covered that in applying every year you're kind of resetting and letting the school know where you're at in those terms, would you say that's accurate?

Kristen Carey Power: Yes, exactly. And I always like to joke that, Daren, if you were to win the lottery, it's not gonna be the financial aid office that will be coming after you for any sort of increased tuition. It'll actually probably be the development office going to want you to contribute to the annual fund.

Daren Worcester: That's a good point. How do I hide from them?

Kristen Carey Power: Well, I don't know, that's gonna be tough, just stay off the TV cameras.

Daren Worcester: Good tip, good tip. There's some extra tips we didn't know we were going to be given out here. So I think we're winding it down. You've done a wonderful job of answering my questions. Is there anything from my parent perspective that I'm perhaps not thinking about that you would want to tip me off on?

Kristen Carey Power: I would encourage you as a parent applying to independent private school—again, start early, know your deadlines, be open, be honest, be transparent, do not shop around in the spring for different financial aid offers and grants. 

What some families will do is they will receive grants from schools, and those grants could be different, they could be different grants, they could be different awards. And then sometimes what families will do is then shop those around to the different schools they've applied to. I would highly encourage you not to do that because schools are working with the budget they have. So please make sure that whatever grant you have, you keep that private with your own family, don't also talk about it on the soccer field or anything like that either, this is all private information. 

And the last thing I would encourage families to do is to get the taxes done early. This is not the year to file for an extension. If you have to file for an extension, then let the schools know that you've had to file for an extension but get your taxes done early because you will need to send them your tax documents in order to be considered for financial aid.

Daren Worcester: Thank you very much Kristen, that is all excellent advice. So thanks again for joining me for this conversation.

Kristen Carey Power: Thank you, Daren I appreciate it.

Daren Worcester: And for everyone listening, thank you for joining this #admissionchat. Please look for another episode soon and for more insight into the private school application process visit Admission.org and check out our Admission Academy live webinars series. Thank you, take care, everyone.