The National Association of Independent Schools (NAIS) reports nearly one-quarter (24 percent) of private K-12 day school students received tuition assistance over the 2023-24 academic year. That number balloons to almost half (43 percent) of boarding school students.
For private school K-12 families, financial aid can be an additional source of help to ensure their children can attend their preferred school. Especially as private education in the popular imagination can center around perceptions of high expense and elitism, schools offering financial aid can be the difference between enrolling a family on the fence and watching them go to public of home-based schooling.
Most K-12 private schools use the Parents’ Financial Statement (PFS) to determine aid amounts. It gathers information about family size, income, and expenses to estimate how much a family can reasonably contribute to the costs of your school. The financial aid formula used in the PFS is a valuable resource for determining how much total 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.
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Table of Contents:
- What is the Financial Aid Formula in Private Schools?
- Components of a Financial Aid Formula
- How Private Schools Can Equitably Allocate Financial Aid
- Financial Aid Best Practices for Private School Administrators
- More Private School Financial Aid Facts
- Make Sense of Your Private School’s Financial Aid Process
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. At a basic level, all formulas subtract 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, such as offering unique classes and extracurriculars to meet school enrollment goals. Financial aid funding is not unlimited, so determining awards requires a careful, thoughtful, and balanced approach.
Financial aid officers will typically balance their efforts toward achieving the school’s mission and ensuring equitable distribution, while preserving cash flows. A fair, comprehensive financial aid formula analyzes these complex factors and creates an evaluation that’s easy to apply at scale while removing biases from the processes.
Components of a Financial Aid Formula
The financial aid formula has many different elements, each designed to ensure every family receives the aid amount they need. There are three main sections that combine to give balanced insight into a family’s ability to pay.
Expected Family Contribution
Expected family contribution (EFC) shows how much a family can contribute to the cost of tuition and overall attendance by creating a big-picture view of their finances. It starts by collecting and adding up the total valuation of a family’s income and assets, including:
- Wages and salaries, considering income from all contributing family members.
- Business ownership
- Interest and dividends
- Alimony and social security
- Liquid cash and savings
- Vehicles
- Primary home equity and real estate investments
- Retirement accounts and investment portfolios
- Individual stocks, bonds, and securities.
The EFC then considers reasonable expenses such as groceries, rent, and transportation. These expenses reflect prices in the school’s community and adjust for different family sizes, as a family of three students will require more assets to pay for private K-12 schooling than one of a single child.
The National Association of Independent Schools offers a few sample calculations showing how different factors impact final award amounts. For example, a family with dual-income parents and a high-asset valuation can still receive a larger award amount per student compared to a family with similar income but owning assets with a lower debt ratio and fewer children.
Additional Funds or Special Circumstances
A financial aid formula should consider any additional funds, such as independent 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 schools should build financial aid processes to review each family situation carefully and without bias in decision-making.
Cost of Attendance
The last piece of the puzzle is the total cost of attendance. This number may simply be the cost of tuition and fees but may also include expenses for dining, books, and uniforms. Boarding schools may also include housing (i.e., room and board) costs.
After subtracting the EFC and any additional funds or considerations from the cost of attendance, the remaining portion is the suggested financial aid award. For families expected to pay the entire amount, this number will equal zero.
How Private Schools Can Equitably Allocate Financial Aid
Private schools strive to find ways to help each prospective family applying for aid, however the funding they can offer is not unlimited. Equitable financial aid enables schools to support the students who need it most.
Making decisions fairly starts with establishing transparent, clear, and equitable policies, which can help schools assess needs consistently. Be transparent about how financial aid funds are allocated and the ways families can ask questions during the application process.
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 accuracy of your system’s data, ensuring a clearer understanding of available funds and more realistic calculations.
When applying for private school financial aid, families desire a fast, intuitive process. Providing an online experience with an integrated aid solution that requires no additional login and pulls a comprehensive filing history directly from the IRS not only creates an easy experience for families but gives teams insight into the data they need to make fair, informed decisions.
Using technology to streamline financial aid and improve award decisions can strengthen your school’s long-term planning.
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 helpful resources upfront. Tell your applicants what to expect, key deadlines, and how your school makes award 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. Publicize your opportunities to encourage more applications and share recipients’ stories on your website and social media to show the impact of your hard work creating inclusive education.
2. Share the Value of Inclusive Financial Aid
Make sure your administrators are 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 update processes, communicate that equitable financial aid can foster more inclusive schools to help the entire student body grow and succeed.
3. Regularly Review Financial Aid Policies
Your financial aid policy should adapt to changing economic conditions and school growth. Explore your policies periodically, and assess your school’s data to determine how well current results align with goals and what changes may be needed to reach them. Remember to communicate these changes with administrators and families to provide full transparency.
4. Improve the Application Experience
Applying for financial aid can seem daunting to families, but a simple, intuitive application helps remove some stress. Make your process simple, with an easy-to-use form, straightforward instructions, and a single login across all application steps. An improved experience also benefits admissions teams, as processes become easier to complete, team bandwidth increases, and applicant pools grow stronger.
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.
More Private School Financial Aid Facts
Let’s also go through some additional frequently asked questions regarding financial aid.
Q: Is the financial aid process the same for private elementary, middle, and high schools?
Typically, yes. Most changes will be at the school level, as they prioritize different factors and formulas when awarding aid, but there are not typically any extra steps or criteria based on grade level. For families applying to elementary schools, administrators will understand most families are going through this process for the first time and will often dedicate extra resources to guiding applicants through each step.
Q: Is financial aid a type of student loan?
In private K-12 education, schools do not offer loans to families to cover the cost of attendance. All financial aid in this context is a tuition reduction. None of these awards actually feature money changing hands, and schools do not make money off of aid, so there is no repayment burden.
However, some banks and private lenders do offer loans for this purpose, which schools may wish to help families peruse as needed.
Q: Are there income limits to private school financial aid?
Some schools do create income or asset caps for award eligibility, but many schools offer financial assistance based on merit or in light of extenuating circumstances. Every family should look into whether they’re able to apply for awards at every schools of interest.
Q: Does FAFSA cover private K-12 schools?
The U.S. government does not assist with making private K-12 education affordable. While the Free Application for Federal Student Aid (FAFSA) is available only for those attending private or public college, private K-12 financial aid applications follow a similar format, collecting wholesale information on family income, assets, and EFC to determine the cost of tuition each student is responsible for.
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 School and Student Services (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.
Learn how thousands of schools have combined Ravenna and SSS to fairly and quickly process millions of financial aid and admissions applications—at an average of five times as quickly. Schedule a demo today!
And for families interested in providing their children with private education, take advantage of the Ravenna Hub, a network of top private schools where you can easily manage school applications, complete financial aid assessments, register for events, and track your admissions progress—all in one place. Create an account now!
