Maximizing Net Tuition

Economic uncertainty is a driving factor in the decisions private K-12 institutions make. Now more than ever, schools should focus on maximizing net tuition — the amount each student pays for tuition after financial aid.

Each student will pay tuition unique to their situation, so financial aid often diminishes a school’s revenues. While providing equitable financial aid is important, schools must implement award strategies that maximize tuition revenue while educating their stakeholders about these changes to retain their alignment.

Reframe the Financial Aid Discussion

During the 2019-2020 school year, private schools saw a median tuition and fees income of $27,951 per student, while the median financial award was $4,856 resulting in a median discount rate of nearly 17%. For most schools, this discount rate has increased further in the 2020-2021 school year. To maximize net tuition revenues given these discount rates, schools should consider the following three factors:

  • Families paying 100% of gross tuition.
  • Families receiving financial aid and paying less than 100% of gross tuition.
  • Vacancies amounting to 0% of gross tuition.

Financial aid is a valuable way to attract students, but to maximize gross tuition, schools should balance students receiving aid with students paying full tuition or close to it.

Focusing Your Recruitment Strategy

Finding ways to drive revenue while still offering financial aid can be a challenging task. With careful strategies, schools can maximize net tuition while still encouraging applications from lower-income candidates. The best approach is to recontextualize your institution’s discussion of financial aid during recruitment. Schools can overcome recruitment challenges by:

  • Creating simple, straightforward messaging.
  • Focusing messaging on “tuition” rather than “aid.”
  • Emphasizing tuition amounts instead of award discounts.

By changing terminology, schools can control the conversation around financial aid awards in order to attract high-income candidates. Schools can still offer accommodations to low-income families as needed, but focusing on tuition rather than aid will result in fewer empty chairs and more students paying higher tuition.

Analyzing Data Effectively

To increase tuition revenues, schools develop strategies based on their wealth of actionable data. Some of the most effective strategies for data analysis in private K-12 schools include:

  • Comparing net tuition and gross tuition revenues across grade levels.
  • Calculating profit percentages that show how each grade level contributes to tuition revenue versus the amount coming from family contributions.
  • Creating charts and graphs that show your school’s tuition payment and financial aid discount distribution by family income.

Understanding Need-Based Aid

Most schools award financial aid to roughly 25% of their student body. It’s difficult to meet financial needs for an entire student body or to completely meet a single student’s financial needs. With need disparity in mind, schools should consider how they can create the most benefit with their financial aid.

According to NAIS, the median net tuition revenue covers about 81% of median net costs per student. To maximize revenues, schools should recognize how financial need functions in different income groups and implement strategies that maximize the value of the aid your school awards. Additionally, schools can find ways to increase funding to their financial aid programs, such as fundraising events, sponsorships and benefactor funding.

Learn More About School Management Solutions With TADS

TADS is a trusted leader in management solutions for K-12 private institutions in the United States. Our software helps schools make the most of their resources to provide students equitable access to great educational experiences. To learn more about maximizing net tuition, read our full whitepaper online or contact TADS today!

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