Myths and Facts About Setting Tuition Rates
For some of us it is time for our annual discussion: "should we raise our tuition?" Actually, the discussion may look more like an argument, particularly if the discussion takes the form of: "I do not feel as if parents can afford what we are charging now." The discussion may also include "We have to keep our prices low enough so that everyone can afford a Christian education." An even more suicidal approach may be "Can we find out what the average tuition is in our community and charge a little less?"
Since 1992 Development Testing Services has been providing parent attitude surveys to Christian schools throughout the nation. During the course of these years literally tens of thousands of Christian school parents have been surveyed all across the United States. These surveys have shown that such reactive discussions completely miss the point.
In figuring out what "the point" is, let's look at what PinPointTM Parent Attitude Surveys have uncovered as Myths and Facts about setting tuition.
Myths
Myth #1. Tuition must be priced so that everyone can afford a Christian education.
If the argument is" we do not want to price Christian education out of reach of the average family," the answer is: you already have. In the average community, about ½ of the families make under $35,000, but in the typical Christian school less than 1/14 of the families fall into the same category. (Five years ago it was 25%.)
Family Incomes <$35,000 $35-50,000 $50-75,000 $75-100,000 $100,000 +
US Average 50% 20% 18% 6% 5%
Average Christian School 7% 16% 24% 22% 31%
Myth #2. Tuition is a watershed issue when it comes to choosing a Christian school.
When parents are surveyed they are asked to rate the influences that caused them to choose this particular school. Out of twelve choices, tuition came in third from the bottom. On a scale of 1-5, only 12% of the parents rated tuition at a 5 ("very influential"). 21% rated it at a 1 ("not influential"). In a majority of schools, tuition is a non-issue.
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Myth #3. Those who take a long, hard look at tuition rates have the least money.
Once a parent has decided that a Christian school is right for their child, income has little to do with where tuition falls as an influential factor in the enrollment decision. Parents who reported family incomes of under $35,000 didn't rate tuition much differently than those who reported incomes of over $75,000. The primary difference is in how influential tuition assistance is!
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Myth #4. If tuition is too low, surely we can raise it.
The issue of tuition corresponds more closely with Financial Value than with almost anything else. Financial value is a complex issue because it involves so many facets of the school's life. It is strongly recommended that the issue of what parents are willing to pay be discussed only in light of comprehensive survey results. (Seems lower tuition creates a situation of lower FV. This = difficult bcse often it takes $ to raise FV.)
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Facts
Fact #1. When tuition is a major consideration to a family, it has more to do with financial value than with family income or tuition rates.
Parents want to know that they are making a good investment in their child's life. It's almost assumed that spiritual training and good academics are present. The following are the items that PinPointTM surveys have shown to have the greatest effect on financial value. (This will also provide an agenda for improving your school's perceived value!):
- #1 Policies. Particularly financial aid, business, discipline and fund raising policies. Other policies were measured, but these topped the list.
- #2 Leadership. The leadership variables that rose to the top are: internal organization, board leadership and administrative leadership.
- Relationships. First on the list is the parent's relationship with the Administrator, followed by that with teachers and business office; and then student's relationships with each other and teachers.
- Atmosphere. A caring environment: friendliness, responsiveness, sensitivity, school spirit and student behavior are specific factors affecting atmosphere.
- Public Relations. Both the frequency of your communication with parents and the quality of what they actually receive.
- Curriculum. This includes the courses you offer, how creatively they are delivered, how well you integrate a Biblical worldview and how well you prepare children for college and work.
- Parental involvement. Increased parental involvement yields increased parent pride, a better understanding of the school's mission, and an increase in perceived financial value.
The part these factors play in determining the value of your education cannot be overemphasized. If you want to enhance your school's financial value, begin by developing specific, measurable plans to address each of these critical areas.
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Fact #2. Tuition does effect perceived financial value.
It is true that higher tuition and higher perceived value go hand-in-hand. However, you cannot always raise perceived value simply by raising tuition. The kinds of things that a school does with increased tuition are what increase perceived value - unless, of course, financial value already exceeds tuition. So every increase in tuition should be explained as enabling you to better-accomplish your mission.
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Fact #3. A good follow-up to facts 1 & 2 - Financial value is measurable, it can be changed, and it must be present to warrant a tuition increase.
Any significant increase in tuition must be in coordination with a well-orchestrated public relations strategy, and with an appropriate tuition assistance program. These are not incidental to a successful tuition increase, they are essential. Although nearly every Christian school gives out some sort of financial aid, less than 40% have a structured program. A tuition assistance program that utilizes a third-party service (such as Development Testing Service's Confidential Financial Analysis - CFA) to objectively assess family need costs almost nothing and speaks volumes about your school's professionalism.
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Fact #4. You do not have to be in a nice building and have fancy programs to generate financial value.
PinPointTM surveys have shown that buildings and fancy programs do not rise to the top as qualifiers of perceived value. They do obviously have an effect, but they are not among the top factors.
The first consideration in approaching any discussion of tuition should be: "How much does it cost to deliver our mission?" 1) Define what you are as a school - e.g., how you are distinct from other Christian schools. Do you specialize - like in vocational training, college prep, technical skills such as computers, etc. 2) Determine how much it actually costs you to deliver your mission - in the way it should be delivered. 3) Define your tuition philosophy - for example, can you charge what it actually costs, or are your forced to subsidize your programs? (If you currently subsidize your education with fund raisers that target parents, you are already charging what it costs, but in a very negative way!). 4) Determine to have your pricing guided by the principles you set, not by feelings.
The second consideration - "How much is it worth?" is driven by perceived financial value. Development Testing Services' PinPointTM survey with its customized written evaluation and its color graphs and charts will give you an accurate and objective measurement of whether perceived value is there or not.
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