By now, you’ve certainly heard of a tuition strategy which a number of tuition-charging schools have employed throughout the country – cost-based tuition/need-based aid. It goes by a few other names, such as value-based tuition and need-based aid/cost-based tuition, among others. Frankly, it scares the heck out of most school leaders for two reasons. One of those reasons is a misinterpretation of the strategy, but the other makes the school face a harsh reality.
The misinterpretation is the thought that tuition will equal the cost of education. That’s possible, but it’s not usually true. The point is that the “announced tuition” for the school is based on the cost of education, rather than guessing how much of a tuition increase parents will be able to accept from one school year to the next, and hoping they’re right. The harsh reality is that the school will actually need to calculate the cost of education. There’s a third issue to consider, but let’s take his one step at a time.
To calculate the cost of education at your school, add up all the expenses from your school’s budget, and divide it by the number of children in your school. If your school’s expenses total $1,000,000, and your school has 200 students enrolled in it, that’s a cost of education of $5,000 per student.
And that’s enough to make most school leaders, board members and church/parish finance councils gasp, and seek elsewhere for other “silver bullet” solutions, keep following the same path they’ve been on, just hoping they can stay open for another year.
May I be so bold as to say that if you identify with the previous paragraph, you’re not offering the parents who are a part of your school community much long-term hope. (And by the way, there are no “silver bullet” solutions, so don’t waste your time looking for them.)
Let’s think positively for a moment. It’s easy to see that if you could somehow double your school’s enrollment to 400 students, the cost of education would drop to $2,500 per student. (An easy way to double your enrollment is to have each of your students bring a friend to school…but that’s another topic for another day).
Perhaps you’re counting on your sponsoring church(es)/parish(es) to “invest” in your school, perhaps to the tune of 25% to 50% of the cost of education. Let’s just say that your parish provides 25% of the $1,000,000 so that tuition can be $3,750 per student. While that’s a more “marketable” tuition figure, increasing enrollment takes on a negative inference. This point was made crystal clear to me a number of years ago when a principal exclaimed, “I have 20 more students in my school this year!” Her pastor, who was standing next to her, provides that 25% to each student, and said, “Yeah, which means I have $25,000 less to run the parish on.”
But what’s the effect on a parish? 200 students as $1250 each equals $250,000. Divided by 52 weeks, that’s just a little over $4,800 a week. In some parishes I’m familiar with, that’s a good TOTAL weekly collection. They certainly can’t (and don’t) support a Catholic school on their own.
In some smaller schools today, the church or parish still considers the amount to be a subsidy – no matter what anyone calls it. In a subsidy-based model, every student receives some type of financial assistance (from the subsidy) whether the family needs it or not. If a school charges $1995 per student, and the cost to educate each student is $5000, then the additional $3005 is coming from somewhere – usually the parish or parishes to which the school is attached. In this structure, it’s important that every student pay their tuition because each new student costs the parishes $3005 as soon as they enroll. 100 students in the school means $300,500 of parish funds goes to support the school. If that parish or Christian congregation only has $400,000 in regular offertory gifts, 75% of their regular income is going to support the school. It’s no wonder many pastors see the finances of a Catholic or Christian school burdensome!
Frankly, it’s one the elephants in the room that no one wants to talk about, and when it the topic arises, it’s emphatically denied, because to admit it would offer even less hope to families.
So let’s offer some hope!!
Let’s shift that cost-based tuition/need-based aid model to “Need-Based Aid/Growth-Based Tuition” (SM). If a school investigates a “cost-based tuition” model, the message that’s heard by parents is that tuition will be equal to the cost of tuition. As was previously mentioned, the tuition is “based” on the cost of education of the school. but (and here’s that third issue), that may mean that the “announced tuition” might be higher than the cost of education to allow for a line item of financial aid.
In this new nomenclature, putting “Need-Based Aid” first shifts the thought process to emphasize financial aid and calculating the amount of “financial need” that’s present in the school’s families as early as possible. Once that’s done, then the budget for the next school year can be built so that it is positioned for growth…and that means including a budget line for financial aid.
And that brings us to that third issue. Adding a line for financial aid might mean that the “announced tuition” might even be higher than the cost of education! However, that might be what’s necessary in order for growth to occur!
In this model, there is the opportunity for each family to pay tuition according to their means. Further, adding an extra amount to the “cost of education” encourages parents to practice stewardship, as well as allow for a smoother transition from elementary to high school. If the cost of education is $5,000, then tuition could be set at $5,500 per child, creating a $500 surplus from each student from which a pool of financial aid can be created. In a school with 300 students, that’s $150,000 in available financial aid – and no monies have yet been requested of the parish or church. In this way, those who have been financially blessed can help those who have not been so abundantly blessed, which is rooted in the second letter of St. Paul to the Corinthians. Students might also be able to receive scholarships if their family has no calculated financial need, yet they excel academically year after year.
But the tuition model is the third element of a five-pronged approach that must be instituted in every school that wants to survive. Further, calling it the third element does NOT mean that there are two other things that have to be done first. It’s that there are other elements to a system of success that must be instituted as a complete system.
Two of those elements are “Fill Every Desk” and “Seek Outside Sources for Funding.” The thought behind “Fill Every Desk” is that if an optimum number of students per classroom is determined (let’s say 20), then it costs the school nothing to add an extra student to that room. If the optimum number is 20, yet the room can hold 25 seats, any additional children can be helped via “unfunded scholarships” if they are admitted after the school year has begun.
A number of years ago, one school that embraced this approach developed a great marketing tool to help them promote the “Fill Every Desk” concept. And “empty desk” was placed in the hallway near the front door of the school with a sign on it saying, “Welcome to our new students who are filling our desks!” it’s followed by the children’s names and what grade they will be entering. It’s a great motivator for parents coming to the school, knowing that their child will be welcomed, and, as the list gets longer, they realize that they’ll have to make a decision to enroll the child sooner rather than later!
What about “Seek Outside Sources For Funds?” More about that next week…as well as those other two elements, and how all these elements fit together
© Michael V. Ziemski, SchoolAdvancement, 2007-2017 (Original Publication Date: 20070716)