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Decision-making Solutions for Ministry Professionals.

Since 1994 - assisting ministry professionals make informed decisions through surveys, tuition assistance assessment, and other evaluative instruments.  more...

Tuition Assistance – How Much is Enough?


Isn’t the answer to that question like many things in life – “Just a little more?”


When it comes time to budget for the next year’s tuition assistance, the discussion floating around the room seems to revolve around – “how much did we spend last year?”  “was there any left over?”  “wasn’t that enough?”


The result of this approach is an increasing number of wealthier families (and a decreasing number of lower-income families) enrolling at the school as the school’s tuition increases without appropriate adjustments in tuition assistance.


Schools often ask us – “well, how much should we be spending?”

What do most schools do?

Our research has shown that nearly every Christian school in the US (96%) gives out tuition assistance.  The areas of the United States in which Christian schools have the highest percentage of families on tuition assistance are: the Northeast and Rocky Mountain regions.  It is interesting, though, that these areas do not have the highest tuition rates.  The highest tuition is found in California, Florida, and the Mid-Atlantic regions.

 

ACSI’s Salary and Tuition Surveys have shown that the average school spends a little over 6% of their income on aid, spreading it to nearly 14% of their families.  Is this enough? Is this money well-spent? Are schools giving away too much?

What are some trends DTS has seen?

Increases in tuition without proportionately larger increases in tuition assistance creates scenarios like this (based upon an actual school).

Often DTS’s survey clients will re-survey their parents every 2-4 years.  What we have noticed is that as more and more schools work towards cost-based tuition, tuition is definitely increasing.  (The average increase in 2002 was about 7% - higher in smaller schools; lower in larger ones.) 

It seems that often as tuition increases, tuition assistance does not increase proportionately. As a result, fewer and fewer lower-income families are found enrolling their children in Christian schools. 

This is tragic for at least two reasons: 1) parents who have chosen to prioritize their family over career, and therefore have lower incomes, are the types of families you want enrolled in your school; and 2) lower-income families are often a Christian school’s most accessible, yet untapped, market for recruitment.


What should I do?

A budget for tuition assistance needs to be driven by two factors: the needs of current families, and the needs of prospective families. 

The needs of current families.


An often-overlooked fact is this: every time tuition is increased, there is an increase in the percentage of the school’s families that need help paying their tuition.  In other words, if you increase tuition 10% it is not enough to increase tuition assistance 10%. 

When a family asks whether or not they should complete a tuition assistance application, we generally counsel schools to tell the parents “If the tuition exceeds 10% of your net income, you may want to apply; you might qualify, you might not.”  Using this rule of thumb, if you increase your tuition from $3,000 to $3,500, then all the families that gross between about $38,000 and $45,000 per year need to be added to your list of families needing assistance.


Clearly, it is helpful to know your parent’s incomes.  DTS’s parent & employee surveys not only tell you their incomes, but compares these incomes to your community so that you know how many of your families really need help, as well as how large a pool of lower-income prospects you may have in your community.


We have found that the average family on tuition assistance needs between a third and half of their tuition paid.  This, of course, will change significantly depending upon two things: the families actual incomes, and the cost of tuition (the higher the tuition the higher this ratio will be). 

So, let’s assume that your tuition is around the average: $3,500.  And let’s say that you surveyed your parents and learned that 15% of your families make under $45,000.  Then to serve these families’ needs, you will need to budget about 1/3 to 1/2 of that percentage, or about 5-7% of your tuition, for financial aid.

The needs of prospective families

In the year 2000, 41% of the families in the US made under $35,000; 57% made under $50,000.

In Christian schools it is common to find that only 10-20% of their families make under $50,000.  The percentage of difference (between the 10% in the school and 57% in the community) should be seen as a good pool of prospects for Christian school enrollment. 

In other words – it is possible that most Christian schools could increase enrollment by a significant percentage if they would restructure their budget and recruitment efforts to attract more lower-income families with an adequate tuition assistance program.

Is this a wise use of money?  The question is easy to answer if you are like the average school, at about 80% of capacity (according to this year’s ACSI Salary and Tuition Survey).  It makes sense to fill empty seats with students who enrolled because half of their tuition is paid by tuition assistance.


On the other hand, if you are at or above capacity it would be worth the time to have your board discuss whether, as a Christian organization, you have an obligation to assist these lower-income families.  Is a quality education, taught from a Biblical World View, just for those who make over $50,000 per year? 

Maybe this coming year your tuition assistance budget should be broken into two categories: 1) monies needed to meet the needs of returning students, and 2) monies needed to increase enrollment of lower-income families. 

If you do, again the question arises: how much is enough?

Going back to the assumptions a few paragraphs above, let’s say that 15% of your families make under $45,000, but you want to double that percentage.  It may take you two or three years to accomplish this. 

You should anticipate increasing your tuition assistance budget to 10-15% of tuition income (more if your tuition is over $5,000) over the next two to three years.  So, you may find yourself increasing the tuition assistance budget by 3-5% each year.  This may sound like a lot of money to you and your board, but if your program is managed well, you will more than recover this investment though increased tuition revenues, and you may find that you are a better school for it.

Is there any help?

You may discover that this discussion raises more objections and questions than what you started with. 

You may hear:

The CFA program manual, entitled “A One-Day Tuition Assistance Program,” answers many of these questions.  In addition to this, we are always available to answer these and other tuition assistance questions that you may encounter.  Even if you’re not a client, please call.  We’d be glad to answer your questions.  You can reach DTS’s Confidential Financial Analysis toll-free at 888-726-9878, or feel free to email us!

CFA = Confidential Financial Analysis

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