1. Demystifying “The Barbell Effect”: Financial Aid and the Middle Class Mark J. Mitchell, VP School Information Services April 7, 2006 NYSAIS Diversity Conference Lycee Francais de New York

2. Copyright National Association of Independent Schools 2006 Guess When?? “… (the headmaster) longed for the day when his school might appear in the newspapers ‘without that abominable adjective ‘exclusive’ prefixed to it.’ It was as if schools such as his were regarded as a ‘curious survival from an aristocratic day, a kind of private preserve of the sons of the rich bound gradually to disappear along with the rich.’” --Arthur Powell, Lessons from Privilege: The American Prep School Tradition

3. Copyright National Association of Independent Schools 2006 The Barbell Effect Defined…

4. Copyright National Association of Independent Schools 2006 Demystifying the Barbell Step 1: Defining Middle Class  “What is the income of the ‘middle class’?” –The Census Bureau does not have an official definition of "middle class." We do, however, derive several measures related to the distribution of income and income inequality.” –Census Bureau website, Frequently Asked Questions on Income  EVERYBODY—except the rich and the poor. –Question: why do affluent people think they’re not affluent? –American phenomenon: “Looking Up”  The Independent School Middle Class? –Varies by school profile and locale –Starts as low as at $65,000 and goes as high as $200,000 –Is this really “the middle”?

5. Copyright National Association of Independent Schools 2006 Can the Middle Class Get Aid? Assumptions: using SSS 2005-06 methodology Family of four, two parents, two children, parents age 45, both work, no assets - parent or student, NY state/other taxes, Tuition + -- Day Schools Full Aid Eligible* No Aid Eligibility** No COLA COLA (NYC) $19,931 $133,620$309,140 $21,050$ 0 - $52,785$137,620$319,560 $21,625 $139,675$324,910 + NYSAIS members, 2005-06 medians *Families below this income qualify for FULL financial aid **Families above this income qualify for NO financial aid

6. Copyright National Association of Independent Schools 2006 Can the Middle Class Get Aid? Assumptions: using SSS 2005-06 methodology Family of four, two parents, two children, parents age 45, both work, no assets - parent or student, NY state/other taxes, Tuition + -- Bdg Schools Full Aid Eligible* No Aid Eligibility** No COLA COLA (NYC) $29,949 $165,115$387,460 $31,908$172,480$405,260 + NYSAIS members, 2005-06 medians *Families below this income qualify for FULL financial aid **Families above this income qualify for NO financial aid $ 0 - $42,015

7. Copyright National Association of Independent Schools 2006 How Many Families Make That Much? “No Need” PC at $21,625 tuition = $140,000 USANew York City Metro Westchester County New York State $0 - $50K46.248.827.844.0 $50 - $75K21.316.915.219.4 $75 - $100K13.511.614.913.5 $100 - $150K12.012.417.313.6 $150K+7.210.224.89.4 Median Income$53,692$51,150$89,249$56,556 Source: 2004 American Community Survey, www.census.gov % distribution by income range, selected locales

8. Copyright National Association of Independent Schools 2006 Who Applies for Financial Aid? USASSS Filers $0 - $50K46.236.9 $50 - $75K21.321.9 $75 - $100K13.516.7 $100 - $150K12.016.4 $150K+7.28.0 Median Income $53,692~ $57,500 Sources: 2004 American Community Survey, www.census.gov, SSS applicant data, 2004-05 processing year, NAIS % distribution by income range, SSS filers 2004-05

9. Copyright National Association of Independent Schools 2006 So, What is Middle Income?  SSS “First dollar income” at $53K in day schools—THIS IS the middle income family; and they can benefit well with fin aid  Top 5% of family income begins around $173K –Many of these would qualify for aid at high-cost schools with more than one child enrolled, especially if COLA factors are used  Should a need-based aid program do more? Should it consider “relative” poorness? Source: US Census Bureau, 2005 Current Population Survey, http://pubdb3.census.gov/macro/032005/faminc/new06_000.htm

10. Copyright National Association of Independent Schools 2006  At NY state independent schools, families stop qualifying for financial aid once income reaches around $140K-$170K  Middle income squeeze implicated ($95K-$180K) and many are led to believe that these people aren’t enrolling –Do you know for sure that this is “middle class”? –Do you know for sure that they aren’t enrolling?  Families in the true middle-income band ($43K-$65K) are served well through need-based financial aid guidelines –But they represent a declining proportion of aid applicants –This is NOT the middle-income group that schools are expressing concern about Demystifying the Barbell Step 2: Reality Check

11. Copyright National Association of Independent Schools 2006  Income and need-based aid realities –In NY state, about 91% of families earn less than $150K and would qualify for some financial aid at a $25K school –NYSAIS schools provide financial aid to 18.4% of enrolled students  What proportion of the 81.6% full-pay families at the school fits the “middle income” range that you think is squeezed out?  Do you need to extend more aid for greater economic diversity? To which families? –Shift concern to serving the “real” middle class for truer socioeconomic diversity –Or is serving the ‘emotional’ middle class a budget-building agenda matter? Other motivation? Reality Check (cont’d)

12. Copyright National Association of Independent Schools 2006 Demystifying the Barbell Step 3: Contextualize the Conversation Explore the psychology of socioeconomics in the school and its impact on experience and learning  Challenge the perceptions –“The only people who can easily pay tuition are those with high financial aid or high income.” –“No one in the middle is enrolling.” –“The middle class can’t afford our school.”  Put data in context: Typical NYSAIS school has 82% full-pay students –Too many full-pays to presume equal weights on both ends of the bar –Not all full-paying students are millionaires –Not all aid recipients have high need/low income –Disabuse the notion that high-need families are doing it easily  Study and define the problem very specifically…not a ‘one size fits all’ solution for schools –Do you really have a middle-income problem? Is it statistical or emotional? –If so, find solutions that do not siphon limited resources from those who show greatest need?

13. Copyright National Association of Independent Schools 2006 Have We Gone Full Circle??  “Initially diversity meant economic and social-class diversity. Economic diversity did not threaten the homogeneity the schools wished to preserve, since a large middle-class population shared the schools’ values and would attend if they could afford to.” -- A. Powell, Lessons from Privilege: The American Prep School Tradition

14. Copyright National Association of Independent Schools 2006 The Real Challenges Facing Schools  Converting perception into reality…get real data behind the perceived “middle income” problem –Define the range, survey the entire school population, examine patterns of aid recipients by income level –Compare against external income distribution realities…are you talking about the wrong “middle class” to help? –How to get the affluent to recognize their privileged position? Talk about the psychology of socioeconomics in the school  Finding a need-based solution to giving high-income families more help –ONLY if this is the problem to solve –Apply local cost-of-living factors, assess a percentage of the SSS PC for families in the target range  Using funding sources that don’t detract from the ability to meet the needs of more needy families –Work with board, development to cultivate donors or allocate more to financial aid budget