I read with interest the recent commentary by Dvorah Vaynman (“The Humiliation of Applying for Yeshiva Tuition Assistance,” July 16, 2020) and letters and columns in response thereto. The authors presented different, and valuable, viewpoints about the scholarship applications that Jewish day schools use to evaluate requests for tuition assistance. I believe most members of the Jewish community who have either filled out, or at least read through, one of these applications would agree with both of the following sentiments: (1) the applications are invasive, burdensome and potentially even embarrassing (as Ms. Vaynman explained) and (2) the applications also gather information that contributes to fair allocation of scholarship funds (as several of the responses maintained). A critical question, therefore, is whether it is possible to be fair to both families and day schools without requiring families to fill out such an application. The answer is yes.
Two years ago at Westchester Day School, we pioneered a tuition-cap program based on adjusted gross income (AGI) that requires only submission of a Form 1040 to verify AGI. For any family willing and able to pay up to the percentage of AGI determined by the formula and calculator provided on the school’s web site, no scholarship application is needed. If a family’s default tuition commitment is less than the cap, the family pays in full. If a family’s default tuition commitment is greater than the cap, the family pays only the cap, no matter how much greater its default commitment is.
In the first year of the program, about 60% of all tuition assistance was handled in this manner, and this year I am told the popularity of the program is trending at least as high. Participating families receive almost immediate notification of their awards (i.e., confirming in writing what they had already learned from the online calculator) without filling out a scholarship application. And while the scholarship committee has not been put out of business completely, its workload has decreased substantially.
How did we develop the AGI cap program and how does it work? We spent almost a year researching the tuition assistance programs at virtually every Jewish day school in the United States. We also studied anonymized historical scholarship data from our own school and ultimately settled on a simple, straight-line formula for the cap—i.e., the maximum amount up to which a family is expected to pay for Jewish day school education, based on its AGI, regardless of how many children the family has in day school.
The cap increases gradually with income, from about 11% of an AGI of $100,000 to about 20% of an AGI of $400,000. Since WDS is a K-8 school, the formula also accounts for any yeshiva high school tuitions on a pro rata basis. For example, if a family’s obligation to WDS is $50,000 and its obligation to yeshiva high schools is $50,000, then half of the cap amount is due WDS and the other half is presumptively allocated to the family’s high school commitments. The straight-line formula applies regardless of income; it is possible, for example, for a family with four or more children in Jewish day school to receive assistance under the formula—again, without filling out a scholarship application—even if its AGI is in excess of $400,000.
The underlying principle is very simple: Our scholarship committee told us that if a family is prepared to pay a fair share of its income toward Jewish education, the committee has no interest in overseeing, or even knowing, how the family spends (or saves) the rest of its money. Since our formula was developed against the backdrop of anonymized historical scholarship data, we knew going into the program that the cap formula we were applying, though challenging for some families, would be fair and reasonable and attainable.
We knew from the historical data that some families would actually pay less under the AGI cap program than they had paid in the past. We also knew that the AGI cap would, for other families, represent a modest increase over their past commitments that had resulted from the traditional scholarship process. It turns out, perhaps not surprisingly, that many families were willing to pay a little bit more to avoid going through the scholarship process—presumably for all the reasons Ms. Vaynman noted.
We also understand that having the formula in place enabled the scholarship committee to more convincingly explain its expectations to some applicants for traditional scholarship (i.e., those that elected not to avail themselves of the AGI cap program). The formula established a baseline that 60% of families receiving tuition assistance agreed was reasonable, which is a powerful data point in the discussion between an applicant and a scholarship committee, absent a special circumstance such as job loss or illness. In the end, the net result of the program was that total tuition assistance remained about the same and the school was no worse off financially.
When we described our program to leaders at other Jewish day schools, some asked us why we did not include an asset test, as some schools have done when implementing similar programs. There are three primary reasons why we decided not to use an asset test. First, we learned from interviews of knowledgeable people that significant assets almost always correlate with significant income. The theoretical family that enjoys great wealth but low income is just that—theoretical. Second, it would be unfair to penalize a family that lives frugally and saves significant money by taxing that savings for tuition while another family with the same income spends it all and thereby enjoys a lower tuition bill. Again, as our scholarship committee told us, as long as a family is prepared to pay its fair share of income according to the AGI-based cap formula, what it does with the rest of its money—including saving that money—is up to the family and is not the school’s concern. Third, collecting asset information would put us right back where we started and prefer not to be: imposing an invasive and burdensome process on every family.
Some people asked whether the AGI-based cap creates opportunities for abuse. We felt it would not do so any more so than the current process (after all, scholarship committees have no practical way to definitively confirm the information provided on the application form). In any event, in the WDS system, awards under the AGI-based cap are subject to (quick) approval by the scholarship committee, so if something seems off, the committee can always ask for more information or even reject an AGI-based application and require a family to submit a detailed scholarship application. Vindicating our predictions, we understand that the committee has only felt the need to do that twice in the last two years.
Another advantage of the AGI-based tuition cap program is that it provides predictability to families. A family can use the calculator at its convenience any time to evaluate its approximate tuition obligation next year, two years from now, or at any time in the future. (As tuition gradually increases from one year to the next the numbers may change slightly, but even today one can get a pretty good sense from the online calculator for what one’s obligation will look like years from now.) If one child is graduating WDS’s 8th grade next year and the family wishes to know what it will owe WDS two years from now, it can use the online calculator to move that child from WDS to one of the yeshiva high schools in the drop-down menu, advance its other children to the appropriate grades via drop-down menus, and press “calculate” again. Similarly, if the family expects an increase or a decrease in income in a later year, it can edit its AGI number and press “calculate” again. There is no need to wait for the spring to fill out an application and receive a response from a scholarship committee. We have been told that the predictability afforded by this system is extremely valuable to families.
In summary, while I agree with the writers who defended the use of detailed scholarship applications that such applications can help ensure that tuition assistance is allocated fairly between similarly situated families, I also agree that minimizing the use of such applications is a very worthy goal for all the reasons Ms. Vaynman described. Our experience has proven that a properly implemented AGI cap program is a winning approach that (1) dramatically reduces the number of families that need to submit to that level of scrutiny, (2) provides families with greater predictability, (3) alleviates the burden on scholarship committees and (4) protects day school tuition revenue.
Michael Rader is a Westchester Day School parent, active volunteer and lay leader. He can be reached at [email protected]