Private and independent school tuition can bring along some pretty serious sticker shock, but when it comes to the price of admission, there's often more than meets the eye.

Affordability and retention are more important than ever before, and it's essential for schools to look at different ways to communicate tuition to their communities.

How you align the needs of your marketing, business, and enrollment offices while communicating the tuition process and affordability can be the difference between meeting your school’s enrollment goals and struggling to fill seats.

Reframing how your school thinks about tuition

Private schools need to reframe how they think about a family’s ability to pay. The head of school, the board of trustees, faculty, staff, and academic directors typically ask:

• How many students do we have?
• How many applications are in? 
• How much room do we have left in the classes? 

Those are important questions, but these are the wrong questions because they aren’t connected to the long-term sustainability of the school, and that’s when the net tuition revenue model comes into play.

Simply put, net tuition is how much a student pays for tuition after financial aid and scholarships are applied. Rather than setting a traditional financial aid budget at the start of each enrollment season, the model focuses on a goal for the school's revenue, essentially creating a unique tuition for each student based on family circumstances and your school's financial aid policies.

Keep Reading: 5 Benefits of Adopting a Net Tuition Revenue Model

Reaching more families through net tuition revenue

With net tuition revenue (NTR), you don't stop enrolling when you've awarded all of your financial aid; you stop when you've filled all your seats. Yes — some families are going to pay more, and some families are going to pay less, but most families need some financial assistance, and this is where net tuition revenue thrives.

NTR is a great opportunity to create a sustainable balance: Offer financial and merit aid, promote equitability diversity, and welcome a wider audience while still receiving sufficient tuition funds to maintain financial stability at your school.

Featured in the New York Times for its financial aid and tuition strategy, Duke School in Durham, North Carolina, charges a range of tuition based on need. They don’t shy away from acknowledging that higher-income families are going to pay more while some families are going to pay less. The school does a great job at outlining how to apply and what that process looks like, and makes it easy for families to learn more. Transparency is key when communicating your school's affordability.

Financial aid as revenue

Financial aid should not be viewed as an expense, but rather, it should be viewed as a revenue source, and for that to happen, tuition assistance should increase enrollment.

Smart schools look to fill spaces that would otherwise go empty with students who can pay only a part of their tuition. It's extending the discount rate given to students beyond the traditional financial aid budget.

For example, if your school's tuition is $10,000 and you're collecting $7,500 or maybe $5,000, schools can reframe financial aid as a revenue source in order to fill those seats rather than receiving no revenue at all and having empty seats.

Making sense of the numbers

Schools should start thinking about tuition from a grade-level perspective rather than a whole-school perspective. 

Are you retaining that family for a fixed number of years or thinking about it from a long-term perspective? Getting those distribution figures mapped out and having a school enrollment and billing software can outline many details needed to get those mission-appropriate families to your school.

As you start optimizing your net tuition revenue model, it’s critical you analyze what it costs to enroll a new student in the first year, your cost per inquiry, your cost per application, and your cost per enrollment. Ask yourself:

• How much financial aid do you have to carry students throughout their time at your school, or how are we pointing toward those grade levels? 
• How are we doing on those additional awards for each individual grade, and are we meeting our targets? If not, where do we need to make those improvements? 
• What’s your institutional capacity without increasing any fixed costs?
• What is the lifetime value of that student?
• What is your cost to educate? Divide your total operating budget by how many students you have. Now you can figure out your net tuition and how much you have to charge to keep your sustainability.

One of the most important decisions that schools have to make is setting and raising tuition. It drives how much your school delivers on its brand promise and its mission. Schools recognizing a family's ability and willingness to pay tuition will be able to make better strategic decisions, and communicating tuition, revenue, and affordability to families is critical.

The Hotchkiss School in Connecticut has placed a financial aid calculator right on its page so families can gain a better sense of affordability.

That number may fall well below what was expected and encourage families to continue exploring options while considering the school. Hotchkiss also offers more details on payment and loan plans, scholarships, and other resources to support a family’s research.

What message are you sending to today's parents?

Typically today's parents are Millennial or Gen X families. They crave authenticity; they want diversity, reviews, and trusted sources. Families want to make sure that your school is one they trust, and so they're asking, “What's really in it for me?”

Millennials have seen financial hurdles with student loans and the mortgage crisis in 2008, and now many are struggling to afford homes. It's important for them to see that affordability message on your school website.

When schools talk about tuition, they need to translate that message of net tuition, revenue, and affordability in a way that resonates with this population and takes the sting out of receiving financial assistance — reaffirm your financial aid program to emphasize tuition and payments.

The Gordon School in Rhode Island is “reimagining tuition at a school that values equity” with its Family Individualized Tuition or FIT approach. Families can learn THEIR tuition price within ten days of interviewing and submitting an application.

“With FIT, every single family at Gordon is investing to the best of their ability, in their children, in their education, and in their community. Only when every voice and experience is represented in the classroom can our children enjoy the full benefit of living and learning in a diverse community,” says its head of school, Noni Thomas López.

When it comes to supporting diversity and collecting an appropriate revenue, the school’s approach avoids a “one or the other” situation — those two ideas can work in concert with one another by rebuilding the financial relationship between a school and its families, and making the process of paying tuition simpler and more predictable. When you're letting people know what their costs are before they continue with the process, it saves both families and the admissions office a lot of time.

Alex Winnicker, director of admissions and financial aid at the Colorado Springs School, is an advocate of the net tuition revenue model and has helped the independent school become even more sustainable, generate revenue, and support important equity initiatives. By focusing on tuition and aid, the school increased the number of students by 16 percent, lowered the acceptance rate, and recruited the largest cohort in its history while bringing in over a hundred students.

“We are very honest and transparent with our families about how we do financial aid,” Winnicker said. ”We look at everybody's financial aid every single year, and we will adjust it every single year. Generally speaking, if your situation doesn't change, we're not going to change it too much. We're going to meet the family where they are but also do what's best for the school in the long run. We tell people from the beginning and are very upfront and very honest about everything we do.”

Key takeaway

There's a Warren Buffet quote about how you can determine the strength of an organization by the agony they go through on raising prices. As we come into this year's financial aid season, affordability is going to be top of mind. By supporting diversity and transparency, creating revenue, and enabling your admissions office to reach its enrollment goals, there's no time like the present to start planning for a net tuition revenue model. 

ABOUT THE AUTHOR

Connor has spent the last decade within the field of marketing and communications, working with independent schools and colleges throughout New England. As Finalsite’s Senior Content Marketing Manager, Connor plans and executes marketing strategies and digital content across the web. A former photojournalist, he has a passion for digital media, storytelling, coffee, and creating content that connects.