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, so I’ll be referring to it as that.

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 come to the realization you must choose two: Solidify your tuition capture process, AND work on increasing enrollment.

Choosing one thing, however, is indeed important, so if you want to choose just one thing, start with WHO – as in, who do you want to serve?

Those families who can pay tuition, or
Those families who cannot afford to pay tuition.

If you choose the former, focus on enrollment; if you choose the latter, focus on development.

If, however, you’re like many of the school leaders I know, they say, “Oh – we want to serve BOTH!” Got it. If you want to serve BOTH, then you must focus on BOTH.

As for steps, the first step in growing enrollment is keeping the enrollment your school already has.

While your staff may be provide online learning experiences for your students, hybrid educational models that mix online and onsite, or onsite learning with the capability to pivot to online based on circumstances, retaining those students for next year is the new “Job One” over the next few months.

You may have had students come to your school if your school was offering onsite instruction while the public school district was all online or changing from one day to the next because of an outbreak or exposure. This year, you may be struggling to keep those parents as part of your school community, especially if children have made new friends and don’t necessarily want to go back to where they were before. While kids are indeed resilient, year after year changes are grueling, as we’ve all discovered constant changes regarding mandates, restrictions and requirements. As with any “mandate,” people today don’t like being told what to do – even thought they agree to terms and conditions offered to them. If you don’t believe this, please let me know you’ve read and understood the 45 pages of text the next time your phone’s operating system updates.

Case in point: A Catholic school I was familiar with worked on solidifying its finances seven 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 in April, the school announced it would be closing at the end of the current school year.

Why? Not enough students registered for next year.

Over the past years, even with some faith-based schools showing unprecedented growth, the good revenue/bad enrollment situation has happened to more schools than I can count.

And that’s not a new phenomenon. A little over a decade 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 school had collected all its tuition they were supposed to collect for the first time in its history!! The bad news? Not enough families had registered for the following school year. Did they have an enrollment or admissions director? No. They were hoping to work on one thing at a time.

And as we all know, “hope” is not a strategy.

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) As was already mentioned, 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 simultaneous processes at work within Development (and, as I told one school leader a long time ago, “It’s not just another name for fundraising.”).

In order for those efforts to be effective, the development director (and 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 only three to five years into the future since it’s all about relationship building, and not all about the money.

And since principals are trained to supervise people that work inside the building, they may become flustered when the Advancement Director is “never at the school!” while the board says, “We hired a Development Director! Why don’t we have $100,000 of new revenue?” six months into the school year.

Looking at it another way, if you place the processes in a triangular shape, Development is the capstone at the top…and you can’t build the roof unless you have the foundation and the walls first.

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/sustainability-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 sustainability-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.

And as was just mentioned, 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 and special projects.

Therefore, even before gathering a committee to investigate a need-based aid/sustainability-based tuition model, and financial 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 short-term and medium-term 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 one of the several factors in the decision to change 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. Four years ago – right before the pandemic hit, the new $299 iPad with iPencil support, made its debut on the market. Talk about timing!

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 or in February during Christian Schools Month (as some Christian schools celebrate with re-enrollment events) 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. If you don’t believe things have changed, then you’ve probably been asleeep for the past couple of years!

Further, that iPad debuted 13 years ago. Those students that entered Kindergarten that year are 12th graders this year. Every student in the K-12 system knows what an iPad is, and, even more likely, will wonder why they’re not learning on one if schools don’t embrace the reality of change.

In a school, change is constant. Embrace that, and “that’s the way we’ve always done it” goes out the window. And today, it’s no longer a valid retort, excuse or reason.

To sum things up, think of that word, “relentless,” especially during this last week of Lent.

God is relentless. He never stops pursuing us.

Churches don’t close their doors during the summer because parents are on vacation and there may be no air conditioning. 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.

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