Private K–12 schools are entering 2025 facing a familiar challenge: tuition revenue isn’t keeping up with rising costs. While schools may be increasing tuition year over year, net tuition—the actual amount of money collected after financial aid and discounts—often falls short of covering operating expenses. According to the National Association of Independent Schools (NAIS), the median net tuition income per student was $23,515 in the 2022–2023 school year, while the median total cost per student was $30,893. That means net tuition revenue only covered about 76% of actual expenses, leaving schools to make up the difference through fundraising, endowments, or operating cuts. (NAIS 2022–2023 Facts at a Glance)
The TADS white paper Maximizing Net Tuition Revenue provides timely insights into how schools can take a more strategic approach to financial aid and tuition discounting—one that prioritizes sustainability and equity while preserving enrollment. The paper begins by challenging the traditional obsession with the discount rate. While it’s common for school boards and finance committees to aim for a lower discount rate year over year, that number alone doesn’t offer a full picture. What truly matters is net tuition revenue and seat yield. If a school has empty seats, that revenue is zero. If a school offers aid and fills a seat with a student paying adjusted tuition, even at a reduced rate, the school is financially better off. In other words, a higher discount rate can still result in stronger revenue if it leads to fuller enrollment and broader access.
One of the biggest missed opportunities for schools lies in how they talk about financial aid. Many families choose not to apply for aid—not because they wouldn’t qualify, but because they feel stigmatized by the language schools use. Phrases like “aid,” “award,” or “scholarship” can make families feel like they’re asking for charity. By shifting the conversation to emphasize “adjusted tuition” or “variable tuition” schools can reduce that stigma and focus on what families want to know: what will I need to pay?
Additionally, schools can reframe their aid communication to highlight family contributions rather than the amount of aid given. For example, instead of saying a family received $12,000 in aid, say their tuition will be $18,000. That reframing makes families feel like paying participants rather than recipients of assistance.
Also, it’s important to use real data to guide tuition policy. Many schools have access to detailed financial, demographic, and enrollment data—but they’re not always using it to its full potential. Schools should regularly compare gross tuition revenue to net tuition revenue by grade level, track average family contributions as a percentage of income, and assess how discounting patterns vary across different income bands. With clear, data-driven insights, schools can adjust their aid formulas, set strategic enrollment targets, and anticipate where gaps might emerge in future enrollment cycles. These efforts also help boards and finance leaders make informed decisions and justify policy changes to stakeholders.
In 2025, middle-income families are emerging as a critical group in net tuition strategy. These families are often above the threshold for full financial aid, yet still stretched thin by housing, healthcare, or caregiving costs. Schools should actively encourage middle- and even higher-income families to apply for adjusted tuition, particularly in high cost-of-living regions. By taking a more holistic view of family circumstances—including medical expenses, debt, or elder care—schools can offer modest tuition adjustments that retain families who might otherwise opt out. At the same time, many schools are phasing out non-need-based discounts such as sibling or employee discounts. While well intentioned, these discounts often reduce revenue without necessarily driving enrollment growth or equity. Schools that refocus their aid strategy on demonstrated need can target their dollars more effectively.
Funding financial aid remains a major concern for most independent schools, and the white paper outlines several common approaches. The majority of schools fund aid directly through the operating budget, often allocating a set amount annually (e.g., 5% of total budget). Others supplement with fundraising, donor-restricted scholarships, or support from diocesan or association networks. In recent years, some schools have also explored “seat sale” strategies, offering modest tuition discounts to fill specific empty seats—recognizing that partial revenue is far better than none. Regardless of the funding model, schools must be transparent with their communities about how financial aid is structured and how it supports enrollment goals. Data-backed financial aid performance reports can play a key role in this transparency.
The paper also highlights the role of cost-of-living adjustments (COLA) in financial aid evaluations. Traditional aid formulas often use national or regional income benchmarks but don’t always account for local variations in expenses. Families in high-cost areas, or with significant but necessary expenses, may struggle to contribute even if their income appears “average.” Schools can build more equitable aid policies by allowing for variations in housing, medical, or dependent care costs within their formulas. Doing so helps ensure that awards reflect actual financial need, not just income level.
Lastly, stakeholder education is vital. Finance offices, enrollment teams, board members, and communications staff all need to understand how net tuition revenue strategies support the school’s mission and long-term viability. Schools should regularly present performance data, year-over-year comparisons, and breakdowns of how aid aligns with enrollment and revenue targets. These reports not only strengthen internal alignment but also help boards and leadership teams make better decisions.
As schools look ahead to the next enrollment cycle, it’s clear that tuition pricing and financial aid are no longer just finance office matters—they’re strategic levers for enrollment, equity, and sustainability. Schools that use data, adjust their messaging, and develop more nuanced aid strategies will be better positioned to serve families and meet their bottom line.
To learn more about how to implement these strategies, download the full Maximizing Net Tuition Revenue white paper or contact TADS to explore how our tuition and financial aid solutions can support your school’s goals today and in the future.