Tuition, Financial Aid, and the Market

1. Tuition, Financial Aid, and the Market

2. Independent schools are experimenting with new market-based and mission-based approaches to tuition and financial aid.

3. Indexed Tuition Financial Aid Financial Assistance Flexible Tuition Tuition Tier Moderated Tuition Variable Tuition Assistance Sliding Scale Graduated

4. What schools call financial aid programs School and Student Services (SSS By NAIS), 2016 State of Financial Aid Survey 12% are considering changing the term they use.

5. What is indexed tuition? A departure from the notion of offering “aid” to some families, indexed tuition is meant to offer tuition at the level each family can afford. Most schools determine tuition level by reviewing a family’s financial information, often using a third-party company to do so. Most schools treat an application for indexed tuition separate from the admission application process.

6. Just a difference in presentation? “Whether a school discounts its $30,000 tuition with $20,000 in financial aid or says a family’s indexed tuition is $10,000, the family is paying the same amount. “But that difference in presentation matters: The indexed tuition rate seems to make applying to an expensive school possible for some and accepting a discount palatable to others. It is also a great way for a school to compete with other independent schools that may have larger financial aid budgets. It is an approach smaller colleges and universities have taken for years.” Paul Sullivan, The New York Times, “At Private Schools, Another Way to Say Financial Aid”

7. With Manhattan Country School’s sliding scale tuition program, each family is an “equal participant in the cost to educate all children.” MCS was one of the first independent schools to pioneer flexible tuition (in 1970). Its model has been replicated by ~10 schools. Families pay a percentage of their income, ranging from 5% to 12%. Manhattan Country School website;Sophia Hollander, Wall Street Journal, “Manhattan Country School Gets Flak Over Growth Plan” Supporting a commitment to socioeconomic diversity Recent changes to sustain the program: MCS recently moved to a larger campus (with plans to double enrollment) in order to serve more students and be able to continue offering sliding scale tuition. “The board estimated each additional $1 of revenue per student would incur only 70 cents in new costs, allowing the school to also raise teacher salaries.”

8. Supporting a commitment to socioeconomic diversity Creating economic diversity at Lick-Wilmerding “Our goal is to create economic diversity, therefore [flexible tuition] is a program cost, not a tuition discount cost. It’s in our program budget. We believe diverse classrooms create the most powerful learning communities. By giving access to lots of different kinds of kids, we are benefiting everybody in the school.” NAIS interview with Eric Temple of Lick-Wilmerding High School (CA); Lick-Wilmerding website The importance of language to accessibility: Based on feedback from parents in 1989, the school changed the term “financial aid” to “flexible tuition.” Today, 28% of the operating budget is devoted to flexible tuition and 38% of students benefit from the program.

9. Vistamar founders sought a tuition model that reflected the school’s social justice mission. “The founders felt that the language around financial aid felt like a handout… We want all of our families to feel like homeowners, not welcome guests.” 12% of gross tuition goes to the moderated tuition program every year, as well as 5% of earnings on endowment. NAIS interview with Karen Eshoo of Vistamar School (CA) Supporting a commitment to socioeconomic diversity Sustaining the tuition model: “In the early days, founders back-stopped some of the need, but since that time, we have had to build a school that can sustain this financially. We have had to increase full-pay families…. We used to have 42-45% of families on moderated tuition, now it’s down to a more sustainable 30%.”

10. Appealing to families who otherwise may not consider independent schools At Duke School, aiming for approachability “Many families, particularly public school families, don’t know how independent schools run, so they may not be aware of the availability of financial aid. Using an indexed tuition approach makes it easy for them to understand. This approach also has made us more competitive with the lower-cost alternatives in town.” NAIS interview with Dave Michelman of Duke School (NC) Signs of success: Since implementing indexed tuition four years ago (in conjunction with a school rebrand and programmatic changes), inquiries are up 25% and enrollment went from 460 to 485.

11. Helping families overcome sticker shock At LaGrange Academy, helping prospective families see school differently “This town does not have a tradition of independent schools, so the indexed tuition approach has helped people get over sticker shock. People had the perception that the school was beyond their reach.” NAIS interview with Carl Parke of LaGrange Academy (GA) Signs of success: Although the school has not yet conducted formal market research, since implementing indexed tuition, enrollments have grown.

12. Appealing to the middle class Reaching back out to the families in the middle “‘We were taking money from high-income families and giving it to low-income families and feeling really good about that,’ said Jeff Escabar, head of Marin Preparatory School and the former director of admissions at Marin Country Day School…. ‘Then we realized we were losing the families in the middle.’” Paul Sullivan, The New York Times, “At Private Schools, Another Way to Say Financial Aid” A door opener “‘It’s a door opener for middle-income families,” [said Bathea James, head of Tehiyah Day School]. ‘They say if it’s based on what I can afford, let’s at least have a look at it.’” Julie Wiener, Washington Jewish Week, “Day Schools Trying to Put a New Face on Financial Aid”

13. Appealing to the middle class Countering the barbell curve at Marin Country Day School “Under the [indexed tuition] model, MCDS has been able to extend allocation to families with mid-level effective income without disadvantage to the lower ranges.” Mayer Riff and Ann Borden of Marin Country Day School, “Indexed Tuition and Financial Aid” (Presentation at CAIS Trustee/ School Head Conference, Jan. 2012)

14. Supporting mission / religious aims Removing boundaries to a Catholic education Father Brian P. O’Toole of the newly formed Holy Family Academy, which is offering sliding scale tuition, “believes a Catholic education should be available to all who want it… ‘No person should not send their children to a Catholic school because they cannot afford it.’”Patricia O’Connell, TheCatholic Free Press, “New Gardner academy offers sliding-scale tuition” Promoting accessibility of a Jewish education “The Solomon Schechter School of Greater Boston launched its iCap program in the 2012-13 term that guarantees a family will never be required to spend more than 15 percent of its household income on tuition…. iCap [helps] with sticker shock, particularly for families who … are far from poor but still struggle to cover the cost of a Jewish day school education.” Julie Wiener, Washington Jewish Week, “Day Schools Trying to Put a New Face on Financial Aid”

15. Contending with market realities Reversing a trend of declining enrollment “Variable Tuition didn’t look that different than what we were already doing [at Fredericksburg Christian Schools (VA)] …The biggest difference to us was that we gave our financial aid a much larger budget. And the reason we felt that we could increase that budget is because we would be filling empty seats; thereby helping to cover the expenses of each classroom…by adding tuition dollars.” Rick Newberry, Enrollment Catalyst, “Variable Tuition Leads to 10% Growth at Fredericksburg Christian” Standing apart from the competition Indian Rocks Christian School (FL) began to use indexed tuition “when it needed to increase its enrollment. ‘It was an innovative approach to market accessibility and a way to stand apart from the competition…’” Paul Sullivan, The New York Times, “At Private Schools, Another Way to Say Financial Aid”

16. Efforts to reduce attrition Tuition subvention at Hillel Day School and Milwaukee Day School “Hillel Day School in suburban Detroit is launching a ‘tuition subvention’ program in 2014-15 that provides a tuition credit to each student that increases by $1,000 each year they stay in the school, regardless of family income. “Milwaukee Day School tried a similar approach, offering tuition discounts that continue each year a student remains in the school. The strategy resulted in … one of the largest increases ever seen by the school…. But the incentive, which was a one-time offer available only to students enrolled at the school during the 2012-13 academic year, failed to arrest the school’s long-term decline in enrollment.”  Julie Wiener, Forward.com, “Jewish Day Schools Roll Out Indexed Tuition Plans for Financial Aid”

17. Advice for schools considering exploring new tuition and financial aid models

18. Advice from schools Be clear on your goals. “Be clear about why you are doing this. For some it is a core value, while for others it is a marketing device.” - Molly Huffman, Children’s Day School (CA) “A school needs to be very clear about why it would [offer flexible tuition]. If it’s doing it as an enrollment management tool… that’s how you would shape your messaging, differently than if you were doing it from a program perspective, where you want to have a diverse program. Context is really important.”- Eric Temple, Lick-Wilmerding High School (CA) NAIS interviews

19. Advice from schools NAIS interviews • Prepare and seek input. “Talk to as many schools as you can find who are already doing this to understand how best to structure and launch. Sell it to your board; I went to the Finance Committee first. When designing the program, approach it like a consumer. Consider launching a pilot first. Convene a focus group of current parents to see how they will view it.” • - Carl Parke, LaGrange Academy (GA) • At Providence Country Day, in order to deal with enrollment struggles, Vince Watchorn brought in Eric Temple from Lick-Wilmerding High School to conduct a hands-on workshop with his board about indexed tuition. - Vince Watchorn, Providence Country Day (RI)

20. Advice from schools Think long-term. “You need to think about approaching moderated tuition as a five-year plan so that you can get to where you want to be.” - Karen Eshoo, Vistamar School (CA) “The trick is to project it out over a 10-year model to understand what you are committing to; it’s difficult to walk a number back once you have committed to it.” - Molly Huffman, Children’s Day School NAIS interviews

21. Advice from schools Have the resources and don’t overpromise. “If you are marketing your school with this program... you have to have enough resources to live it. You can’t offer a flexible tuition program for one percent of your student body… You are setting up the expectation that the school is ready to really apply this in a broad way.” - Eric Temple, Lick-Wilmerding High School (CA) NAIS interviews

22. Advice from schools Communicate, communicate, communicate. “The most essential element, in my opinion, is how you communicate with your current parents. If I was launching the program today, I would try to over-communicate with current parents.” - Carl Parke, LaGrange Academy (GA) “Be clear on how you communicate the problem; we found that with many Spanish-speaking families, the intent got lost in the translation.” - Karen Eshoo, Vistamar School (CA) “Get some parents who are on board to help promote the program as it is unrolled.” - Vince Watchorn, Providence Country Day School (RI) NAIS interviews

23. Advice from schools NAIS interviews Offer a calculator on your site. “That has been the piece that has made it the most real for families and the piece that has taken down the sticker shock barrier the most effectively.” - Vince Watchorn, Providence Country Day School (RI) Providence Country Day online calculator St. Elizabeth’s School (CO) Family Commitment Plan online calculator

24. Advice from schools Key questions to ask when considering implementing indexed tuition: What do your demographics look like? Does your budget match your mission? How do you communicate about it? What are you trying to accomplish? How do you know if you are accomplishing it? How does it fit with your school’s mission and culture? What is your school’s real philosophy? Mayer Riff and Ann Borden of Marin Country Day School, “Indexed Tuition and Financial Aid” (Presentation at CAIS Trustee/School Head Conference, Jan. 2012)

25. Advice from schools Language is key. “Students [at Marin Country Day] are not ‘on’ Indexed Tuition… Families pay tuition below the top of the index. Families pay tuition that is affordable for their economic profile. Indexed tuition makes an MCDS education accessible to families from a wide range of economic circumstances. Indexed tuition supports the school’s commitment to economic diversity.” Mayer Riff and Ann Borden of Marin Country Day School, “Indexed Tuition and Financial Aid” (Presentation at CAIS Trustee/School Head Conference, Jan. 2012)

26. Advice Three ingredients that must be present to consider variable tuition “Current use of financial aid: Since variable tuition is a marketing messaging change, it is critical that you already have a financial aid program in place.… “Emphasis on revenue rather than financial aid as an expense: It is more important to consider the revenue that is brought into the school rather than the ‘expense’ of the discount…. “Empty seats that can be filled without increasing expenses: This use of leveraging tuition discounts to fill empty seats helps to build enrollment momentum while at the same time maximizing revenue.” Rick Newberry, Enrollment Catalyst, “Is Variable Tuition Right for Your School?”

27. Advice from schools Broadening Access Through Flexible Tuition

28. Resources • Paul Sullivan, The New York Times, “At Private Schools, Another Way to Say Financial Aid,” (2/21/14) • School and Student Services (SSS By NAIS), 2016 State of Financial Aid Survey • Manhattan Country School (NY) website • Sophia Hollander, Wall Street Journal, “Manhattan Country School Gets Flak Over Growth Plan,” (9/25/14) • NAIS interviews with Dave Michelman of Duke School (NC), Eric Temple of Lick-Wilmerding High School (CA), Vince Watchorn of Providence Country Day School (RI), Karen Eshoo of Vistamar School (CA), Molly Huffman of Children’s Day School (CA), Carl Parke of LaGrange Academy (GA), and Brad Weaver of Sonoma Country Day School (CA) • Mayer Riff and Ann Borden of Marin Country Day School, “Indexed Tuition and Financial Aid,” (Presentation at CAIS Trustee/ School Head Conference, Jan. 2012) • Julie Wiener, Washington Jewish Week, “Day Schools Trying to Put a New Face on Financial Aid,” (1/22/14) • Patricia O’Connell, The Catholic Free Press, “New Gardner academy offers sliding-scale tuition,” (5/29/14) • Rick Newberry, Enrollment Catalyst, “Variable Tuition Leads to 10% Growth at Fredericksburg Christian,” (3/30/15) • Julie Wiener, Forward.com, “Jewish Day Schools Roll Out Indexed Tuition Plans for Financial Aid,” (1/6/14) • Rick Newberry, Enrollment Catalyst, “Is Variable Tuition Right for Your School?” (2/11/16)