The good news is that median enrollment is up nationally.
The challenging news is that school administrators and boards must address myriad internal and external pressures to maintain enrollment stability and financial health.
The following is adapted from the Financial Sustainability Forecast in the 2024-2025 NAIS Trendbook, available now in the NAIS Bookstore.
By Mark J. Mitchell
NAIS Vice President of Access and Affordability
For the typical independent school, the financial stability of its business model is driven by enrollment (the largest revenue generator) and staffing (the largest expense generator). Many other aspects of the financial model also come into play, such as charitable giving, endowment, program, and physical plant. But the forecast for long-term financial stability boils down to this: Schools must be able to sustain or grow enrollment; charge a tuition price that families will accept and that can support a high-value program distinct from other schools; and staff the program to deliver high-quality experiences in the most cost-effective ways. To be sustainable in the years ahead, schools will find it increasingly important to consider the external and internal forces that impact their enrollment, pricing, and staffing.
A major external force affecting enrollment demand is competition—and not just from other independent schools. Several factors shape the competitive challenges independent schools are facing on many fronts.
Price and quality. As tuitions have risen, so too have the wealth profiles that families need to be able to comfortably afford one or two independent school tuitions. But in many markets, independent schools’ primary competitors are, increasingly, public or charter schools, which charge no tuition. To heighten the challenge, as families who can pay independent school tuitions get wealthier, the likelihood grows that they live in neighborhoods where the public school options appear to be of comparable or even better quality than independent schools.
Unless independent schools have a clear and intentional strategy for creating and communicating their unique value, parent demand may wane in some markets, particularly those where the perceived outcomes for the price push families to look for less expensive options they believe are at least “good enough.” Proving that the price is worth the cost for full-tuition-paying families will be key to generating tuition revenue that bolsters the school’s financial foundation.
Flexibility and personalization. The United States is experiencing notable and continued growth in educational alternatives such as microschools and homeschooling. Among these schools’ attractive features are flexibility, accommodation to unique needs, and hyper-attention to each child—all at a fraction of the price of an independent school.
As the proliferation of (and confidence in) these educational alternatives grows, maintaining enrollment—and the financial sustainability—of the independent school option will require more intentional work to show value and differentiation, as well as the ability to adapt in mission-aligned ways to the new demands of the market.
Alignment with families’ values. NAIS research about why parents choose independent schools indicates that a top motive is the desire to nurture children’s potential in a values-aligned community. The values parents seek vary from family to family, but political, religious, and social values certainly are top of mind for many.
In the contentious presidential election year of 2024, political and social polarization may manifest itself in choices parents make about where to educate their children. For instance, some may consider which are the “liberal” or “conservative” schools in their markets and reorient their choices about where to educate their children accordingly.
All these sources of competition point to the need for schools to be intentional about creating and communicating the unique value they offer for the price they are asking. For schools that consider themselves to be the “best-kept secret in town,” it will be critical to take strategic and concerted action to be known for higher quality, values-driven, and higher touch experiences compared to the alternatives.
The Trendbook, NAIS’s annual guide to issues affecting independent schools, includes research, data, questions to ask, steps to take, and resources to explore. Read about additional trends in the independent school workforce, legislation and legal issues, equity and justice, higher education, and more in the 2024-2025 Trendbook, available now in the NAIS Bookstore.