trends in affordability and demand

TRENDS IN AFFORDABILITY AND DEMAND

KRISTEN C. POWERNATIONAL DIRECTOR, BUSINESS DEVELOPMENTJULY 9TH, 2015

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During this session, we will:

• Explore how we got here. What are the current trends in financial aid?

• Examine the trends impacting today’s financial aid landscape. Who is receiving financial aid?

• Discuss the affordability landscape. What does it mean to be “affordable?”

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Today’s Aid ApplicantWho’s seeking financial aid?

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PFS Filer Medians 2013-14 2014-15

Income $88,651 $92,688Net Worth $18,500 $27,475

Home Equity $5,000 $14,893Family Size 4 4

Children in TCS 2 2

Parent Contribution $8,047 $8,335

Today’s Aid ApplicantWho’s seeking financial aid?

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Quintile US Families PFS Filers, 2014-15

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 + 36.2%

Top 5% $210,000 and greater 10.5%

Dynamics of the Evolving Applicant PoolWho’s seeking financial aid?

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0-20K 20-40K 40-60K 60-80K 80-100K 100-120K 120-150K 150K+0

5

10

15

20

251

0.2

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

02-03 09-10 14-15

Range of Total Family Income

% o

f File

rs

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.

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CPI--Urban Mean Fam Inc Top 20% Fam Inc

Top 5% Fam Inc Mean Bdg Tuition Mean Day Tuition

Pace of Tuition Change

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The Affordability Landscape

Median Family Income

Median Tuition

1.16%

5.70%

Avg annual change, 1992 – 2012

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Dynamics of the Evolving Applicant Pool-Why the dramatic demand shift? Income growth fell

dramatically

Lowest Fifth

Second Fifth

Third Fifth

Fourth Fifth

Highest Fifth

Top 5 Percent

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

1960s1970s1980s1990s2000s

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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

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Dynamics of the Evolving Applicant Pool

What are these new applicants like?

Characteristics of the “New Financial Aid Family”

Higher income, higher net worthMore assertive, less of a sense of “shame”More entrepreneurial, savvy investorsAccess to better choices or alternativesMore accustomed to having influence over decisions

The Affordability Conversation

• Key Question: How does our price impact our ability to enroll the students we want?

• External shifts are promising– Income growth and school-age population projections– Next five years projected gains over past five years

• Recently, less selective among declining number of applicants, tougher to yield an accepted student?

• Slow down in financial aid investment impacting enrollment and net revenue?

• Examine relationships between these factors– Population problem, quality of pool problem, or

willingness/ability to help problem?

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The Affordability Landscape

Median Tuition(All Grades)

Full-Pay Income*

$27,500(middle school)

$171,000

$32,950(high school)

$190,000

What’s your Affordability Range?Tuition prices reflect ‘15-’16 tuition at Sample School

Assumptions: Family of four, two parents, two children, one in a tuition-charging

school, parents age 47, both work, one earns $20K, Maine residents, COLA = 1.000

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The Affordability Landscape

Median Tuition(All Grades)

Full-Pay Income*

$27,500(middle school)

$273,000

$32,950(high school)

$317,000

What’s your Affordability Range?Tuition prices reflect ‘15-’16 tuition at Sample School

Assumptions: Family of four, two parents, two children, two in a tuition-charging

school, parents age 47, both work, one earns $20K, Maine residents, COLA = 1.000

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Where Are the Full Pay Families?Current top towns (draws)

*Data from NAIS Demographic Center**Assumption: tuition increase 5% each year

TownsAverage

household income in ’14*

Projected household income

in ’19*

Projected upper school tuition in

’19**

Dover $80,511 $90,853 (12.9%) $40,050 (21.55%)

Exeter $105,976 $118,333 (11.7%) $40,050 (21.55%)

Kittery $79,947 $89,421 (11.6%) $40,050 (21.55%)

Portsmouth $92,398 $103,022 (11.5%) $40,050 (21.55%)

York $97,234 $108,205 (11.3%) $40,050 (21.55%)

The Affordability Conversation• Zero in on what it means to invest in affordability

– Aspirational: Establish or affirm the primary purpose and goals of the aid investment

– Financial: Clarify and diversify sources of financial aid funding– Professional: Ensure staff training for tactical and leadership

skills development– Societal: Articulate the community-wide benefits of the

investment; understand the impact of external trends and realities

• Set benchmarks and measure progress• Leverage the admission and financial aid voice ‘at the table’• Encourage school-wide ownership and accountability

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Questions? Reactions? Thoughts?

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Presenter Information

Kristen Power

National Director, Business Development

SSS by NAIS

power@nais.org

202-973-9759