Unintended Consequences of a Need-Based Aid/Cost-Based Tuition Model

While last week’s entry was aimed at Asset Management (one of the five aspects of Advancement), this one deals with Enrollment, since it is step one of the implementation of a need-based aid/cost-based tuition model of financing a school.  Personally, I had begun calling it “Growth-based tuition,” but I’ve rethought that title.  Since the natural progression of revenue generation for a school (other than tuition and fees) has been fundraising –> Development –> Advancement –> Growth –> Sustainability, Sustainability-based tuition now makes a tremendous amount of sense.

Whatever you may call it, even though it may seem pretty simple in theory to grasp, the reality is that it is very difficult to implement effectively unless the initial groundwork has been laid as a solid foundation. As we’ve seen, as enrollment declines, tuition increases. Further, as unpaid tuition increases, the enrollment decline accelerates.  The thought is to handle the tuition side first, since we want to do everything as a process.  We’re trained that way.  Unfortunately, as some schools have discovered, when they only work on one item at a time, completing step one before they go on to step two, they may not get past step one before they realize that closure is imminent.  If you must choose just one thing…guess what?  YOU CAN’T!  You must choose two: Solidify your tuition capture process, AND work on increasing enrollment.

Case in point: A Catholic school I was familiar with worked on solidifying it’s finances two years ago.  They collected 80% of the tuition funds they were supposed to collect by the end of March.  Right on track, with two more months of tuition to capture, and only $2,000 of past due funds.  But the school will closed after that.  Why?  Not enough students registered for next year.

About 8 years ago, the same thing happened to a school that called me with good news and bad news.  The good news was that after implementing the nation’s leading provider of tuition management services at their school (FACTS), the bad news was that not enough families had registered for the following.  Did they have an enrollment or admissions director?  No.  They wanted to work on one thing at a time.

As soon as you understand that you need do those two things, however, you come to the realization there are two items that need to happen even before you can take that first step: 1) the best way to build your enrollment is to keep the enrollment you already have (which is retention), and 2) in order to bring new students into your school, you have to first be able to expose your school to new audiences (which is marketing). Retention is a short-term goal, and marketing is a medium-term goal.  Therefore, you can actually take the five elements of advancement and break them into four and one, with the one being Development, since it seeks outside sources for funding.  Also unfortunately, many school leaders, if given the choice between working on a system consisting of four inextricable processes or one element of a system will choose the singular element – Development – before realizing that there are actually 9 processes at work within Development.  In order for those effort to be effective, the development director (yes, it’s a FULL-TIME job) must spend the majority of his/her time outside the school, and that Development will see significant results three to five years into the future since it’s all about relationship building, and not all about the money.

In other words, if you place the processes in a pyramid shape, Development ends up at the top…and you can’t build the top unless you have supporting structures and constructs beneath it.

After reading this, I’m hoping that, if you haven’t done so already, you’re beginning to see that all five aspects of advancement have an effect on each other. Since there are always at least three items in play at any time, the process is indeed akin to juggling. It’s the only way to keep three (or four or five) items in the air at the same time with only two hands.

As for the unintended consequences of moving to a need-based aid/cost-based tuition model, the most difficult realization to come to grips with is this: as you work to increase enrollment, you will definitely lose enrollment when you make the decision to move forward and announce a tuition that is significantly higher than what your tuition currently is.  You cannot implement a cost-based tuition strategy without forming the foundation first. In fact, it is precisely why Development is a necessary component, since there needs to be financial aid to allocate.  Further, Development is not just a new word for fundraising.  Fundraising is short-term oriented, designed to fill gaps in the operating budget. Development is much deeper than that. It’s long-term oriented, and comes from relationships that are developed with your school’s ABCDE (alumni, businesses, community members – which parents of alumni may fall into, donors, and everyone else) categories. These funds should NOT go to “operating” costs, but are used first and foremost for need-based aid, as well as endowment. Therefore, even before gathering a committee to investigate a need-based aid/cost (or, sustainability)-based tuition model, since aid comes before tuition, you must begin efforts to increase your enrollment, AND begin development efforts.  These are the two “long-term” processes, and must be begun while working on the other elements.  A school cannot work on development, THEN enrollment, THEN marketing, nor can it focus on asset management and retention and ignore development and enrollment until “they’re ready” to be addressed.

The fact of the matter is that there is no first step.  It’s all – or nothing will result.  If you’re a Texas Hold ‘Em player, it’s all in…all the time.  What’s really interesting is that’s name of a presentation made by a former Navy Seal, Brent Gleeson.  It’s pretty incredible, and was a factor in why The DREAM Framework was changed to The ARMED Framework – since you need to be ready for the challenges facing your school.

As previously stated, there are three things to keep in mind:

1) Effective enrollment management requires a system that will track inquiries to your school and continuously follow-up with them in a meaningful way, engaging parents and guardians of prospective students before they’re a part of your school community.

2) Your school must be a quality school first in order to attract new students.  Notice I did not say a “good” school, nor a “great” school.  In truth, your school needs to be an excellent school today, especially since you’re expecting parents and guardians to pay 4 or 5 figures of tuition per child.  Once prospective parents and guardians discover you, you have to provide an educational environment that appeals to them EMOTIONALLY, or they’re not going to realize the worth of your excellent educational environment.  Customers today want to be “wowed.”  Writer Sally Hogshead refers to this type of engagement as “Fascination.”

Consider the iPad.  Here’s what was said about it when it debuted in 2010:

“Consumers seem genuinely baffled by why they might need it” – BUSINESS WEEK

“Insanely great it is not” – MARKETWATCH

“My god, I am underwhelmed” – GIZMODO

And yet, fanatics continued to be fascinated by it, developers keep creating new applications for it, and schools continue to buy it as their device of choice to deliver curriculum and foster learning excitement in students.  And today, the new $299 iPad with iPencil support, has made it debut on the market!

Parents must come to the realization that your school is the environment where they WANT to enroll their child, and then deepen that emotion to the point of DESIRE by continually reaching out to parents who are not currently part of the school community to bring them back into the school – perhaps by attending a sporting event or a concert – and then do this over and over again. This might be the hardest step of enrollment, since it requires taking a good, hard look at your school, realizing the things that must be done, and then doing them. Many of these things might be easy to accomplish, but that first step of taking the time to evaluate may be the most difficult step since it requires time – which you may not have during the school year. If that’s the case, then the summer is the time to do it.  Now, before you say, “But we’re closed during the summer,” please consider –

3) Enrollment is a year-round activity. It does not start in January during Catholic Schools Week, in February during Christian Schools Month (as some Christian schools have begun to celebrate) and end when the first day of school begins. It is a 12-month, relentless search for students. So, if your school closes during the month of July to give teachers and principals a “well-deserved rest,” that could be the precursor to closing the doors for the other 11 months of the year. While you might have been able to do this in the past, the times – and parents – have changed. Don’t believe that?  Eight years ago, there was no such thing as an iPad.

Think of that word, “relentless.” God is relentless.  He never stops pursuing us.  Churches don’t close their doors during the summer because parents are on vacation. There are no businesses that close their doors over the summer and expect to continue growth when they reopen in the fall. Most business that conduct their main business during the winter (like snow removal companies) do something else in the summer (landscaping, parking lot paving) to keep their businesses top of mind.  Faith-based schools must come to the realization that they must go and do likewise.

© Michael V. Ziemski, SchoolAdvancement, 2006-2018