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Big Shifts in Post-Covid Tuition Realization for Faith-Based Schools: A Welcome Development or a Cause for Concern?
One of the post pandemic trends I have noted during an analysis of independent school trends 2019/20-2022/23 is a decline in the ratio of Net Tuition to Gross Tuition + Fees that is particularly prevalent in several faith-based school market segments. Based on information reported to NAIS’ DASL database, the ratio of Net Tuition to Gross Tuition + Fees for all private day schools declined by about 1% over the period--from 81% to 80%. However, among Episcopalian, Jewish and Catholic day schools, the declines were 9%, 6% and 5% respectively. In contrast, the Quaker school ratio declined precipitously in 2021/22 but then recovered substantially in 2022/23 to end only 1% below its pre pandemic level. Please see Figure 1 below for details.
The Episcopalian school ratio declines were from a lofty 93% base but in contrast, the Jewish day school ratio was 71% pre Covid and sank to 65% in the post Covid environment. Granted, schools submitting data to DASL only represent a fraction of the total body of private schools– but the sample sizes are not insignificant and are diverse in terms of school enrollment and location. Please see Figure 1 below.
Figure 1: Net Tuition as a Percentage of Gross Tuition + Fees
What caused the declines?
An optimistic view of the cause of the declining ratios would be that Covid, by showcasing the greater responsiveness of private schools to family and student learning needs, motivated large numbers of public school families to shift to private education. It is possible that a significant proportion of these families had limited means and therefore required significant scholarship funds. From a sustainability standpoint, schools made the calculus that enrolling mission appropriate families was a priority and that securing some incremental tuition was better than no tuition.
This scenario fits for those private school subsegments that gained enrollment (see figure 2 below), but not as well for the Jewish day school segment where post pandemic enrollment for the roughly 100 included schools was slightly lower. Please see Figure 2 below.
Figure 2: Post Versus Pre Covid Enrollment Changes
The logic also works if the increase in enrollment came from less affluent but mission appropriate families. However, if the declining tuition realization ratios represents relatively affluent families insisting on “deals” in order to maintain their children’s enrollment once the pandemic’s impact had passed– and this is somewhat supported by the fairly sharp 2021/22 to 2022/23 ratio declines among Catholic and Jewish Day School families–then this represents a significant risk factor for school sustainability. It signals a relatively low regard by the newly enrolled families for the schools’ value for tuition as well as a risk that even veteran families who become aware that tuition is negotiable, begin to request discounts.
Two Key Implications for School Leaders
There are a number of important implications from these data for school leaders whose schools have experienced declining tuition realization ratios:
First, that it is vital that they ensure not only that their schools’ value proposition (teaching quality, curriculum quality, co-curricular program quality, and social-emotional programming in relation to tuition) is as strong as possible. Additionally, it is critically important that the schools build awareness of this value by constantly marketing the positive tangible outcomes it delivers for students that justify its tuition level. These can and should include next level preparation outcomes relevant to current students, graduating students, and post graduate students.
Second, it is vitally important that standards of eligibility for tuition discounts be clarified and strictly adhered to in every relevant marketing message and medium and in every interaction with prospective and current families. Families who are convinced that a school’s value for tuition is unimpeachably high will be less likely to take a hard line negotiating “deals,” particularly if schools are willing to say “no” when the deals are not warranted by family circumstances. In the long run, tuition discipline coupled with rigorous value proposition scrutiny and marketing will prove to be a winning strategy.
In Summary
Those schools that have experienced a post-pandemic decline in tuition realization can and should view this as an urgent wake up call to assess relative value for tuition, the effectiveness of its communication and the integrity of standards for offering tuition discounts. In this manner, problems can be turned into learning experiences that will enhance long term school vitality.
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