Parents Views on Tuition and Charitable Gifts in a Turbulent Economy

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Parents Views on Tuition and Charitable Gifts in
a Turbulent Economy

• Heather Rogers presentation to the Bay Area
  Admission Directors
• May 12, 2009

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Agenda

• The Big Picture
• The Educational Consultant View
• Whats on the Minds of Prospective Families
• Views from a Sampling of Current Families
• Tools you Can Use
• Actions You can Take

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The Big Picture The Economy

• Forecasters say
• This downturn is most like recession of 1973-75.
• The recession will last through the year job
  losses and rising unemployment will carry over
  into next year.
• The impact from the stimulus package will not
  affect the economy until late this year and early
  next year.
• The current recession marks the end of the era of
  abundant and cheap credit.

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The Big Picture The Economy

• Tighter credit conditions mean that anything that
  is dependent upon credit for growth will continue
  to struggle.
• Spending will also likely remain constrained for
  goods and services, particularly discretionary
  purchases such as leisure and travel, and
  big-ticket items, like household furniture and
  home electronics.
• From Wachovia Economic Group

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The Big Picture The Economys Impact on Schools

• The institutions most likely to be affected by
  the economy are schools that
• Are rural
• Have a high discount rate (unclear value)
• Have small endowment (less than three times the
  annual budget)
• Have chronic debt
• Have little liquidity or ability to invest in a
  new initiative
• Lack differentiation from competitors
• Are profoundly tuition-driven
• Have students that are disproportionately on
  loan-based aid
• Have academic programs that are too similar to
  those of major competitors and have a price point
  that is higher than major competitors
• Excerpted from Wise Moves in Tough Times, Dr.
  Robert Sevier, Stamats

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The Big Picture The Education Landscape

• More competition
• Families finding choice within the public school
  system magnet schools and charter schools
• The rise in interest in home schooling
• The emergence of online schools, such as
  Stanfords online high school for gifted children

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The View from Education Consultants

• The Canaries in the Coal Mine

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The Ed Consultant View Are Parents Still
interested in Independent Education?

• Yessurvey respondents report that 93 of the
  clients they see are interested in independent
  education.
• Butsome say that the economy has impacted this
• 43 said they have seen a noticeable decrease in
  interest in the past six months.

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The Ed Consultant View What Drives Families to
Independent Education?

• Small classes
• Dedicated faculty
• Quality of education
• Schools reputation
• Desire for more individualized attention
• Dissatisfaction with local public schools

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The Ed Consultant View Why They Dont Choose a
Particular Independent School

• Location
• Cost
• Elitist environment
• Child being excluded by wealthy classmates
• Worry about drugs and alcohol

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The Ed Consultant View Emerging Trends

• 83 say Families are feeling greater concern
  about their ability to finance a private school
  education.
• 80 say Families are considering more
  educational options, e.g., home schooling, public
  magnet schools, charter schools, etc.
• 63 say There is an increase in the number of
  families who are seeking private school education
  for their children with learning disabilities.
• 57 say Grandparents are financing or helping to
  finance a private school education for their
  grandchildren.
• 53 say Families are considering private school
  only for high school.

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The Ed Consultant View Trends in the Last Six
Months

• 50 are seeing Families considering private
  K-12 education have changed their minds about
  pursuing this option.
• 50 are seeing Higher income families, who in
  the past would not be pursuing financial aid, are
  now doing so.
• 46 are seeing Families using cost as a major
  driver in choosing a school.
• 32 are seeing Families shopping around for
  merit scholarships.
• 32 are seeing Families coming to them for
  advice about charter schools and/or public magnet
  schools.
• 25 are seeing Families coming to them for
  advice about home schooling.

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The Ed Consultant View In Their Opinion

• Schools today should
• Make tuition understandable.
• Keep price increases down.
• Offer more family discounts.
• Help parents see that independent schools are
  less about privilege and more about quality and
  character.
• Tighten up on control of drugs and alcohol.
• Be sure to provide the individual attention and
  support that you advertise.

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Whats on the Minds of Prospective Families

• The Turbulent Years Ahead

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Are You Considering An IS Education For Any Of
Your Children?
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Is the Economy Affecting Your Choices?
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Ranking Of Educational Choices
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Why Parents Are NOT Considering IS?

• Past experience with private schools BAD
• I do not like the elitist perspective with which
  children are imbued in private schools
• They went to private from K-8th, time for the
  real world
• Need for ethnic diversity in their environment
• Believe in a public school education
• FISD public schools are the best in the country
• No private schools within our area
• Services required not offered by independent
  schools
• saving money for college versus private school
  education
• haven't found a school to suit our daughter's
  special needs.
• not desired

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Of those answering YES to IS
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People Whose Children "Very Likely" or "Somewhat
Likely Will Apply to an IS Next Year
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How Long Will Parents Send Their Children to IS?
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How Long Will Parents Send Their Children to
IS?(Contd)
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How Are You Planning to Finance Your Childrens
Education?
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Views From a Sampling of Current Families

• Reading the Tea Leaves

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NAIS Survey on Parent Enrollment and Giving Plans

• Purpose
• To take a snapshot of parents plans and
  attitudes at this particular time.
• To provide schools with individualized reports
  for their own school planning. Economic impact
  is school specific.
• 30 NAIS member schools participated
• Survey conducted January 27 through February 15,
  2009
• Over 8,500 independent school parents surveyed
• Schools represented different geographic regions,
  school types, and sizes

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NAIS Survey on Parent Enrollment and Giving Plans

• Parents Enrollment Plans
• 80 plan to continue sending their children to
  the same independent school next year. (with
  conditions)
• 4 will switch to another private school
• 3 will move out of private independent schools
• 6 are unsure
• Drivers for leaving Cost, competitive cheaper
  private schools or free public schools,
  diversity, desire for real-world experiences

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We will hold on for as long as we can

• For many families, continued enrollment over the
  long-term is conditional and somewhat uncertain
  due to economic factors
• Overall loss of wealth/savings
• Rising cost of tuition greatly outpaces yearly
  salary increases
• Job loss and/or new job at a much lower income
• Retired or near retirement
• Business owner and business is very slow
• College costs are a major concernespecially for
  families with more than one child
• Total tuition costs if more than one child in
  independent school

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How Parents Finance Tuition
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Job Security

• 50 of parents are not concerned about job
  security
• 28 are somewhat concerned about job security
• 8 are very concerned about job security

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Parents Attitudes About Independent Education
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Financial Aid

• 22 of respondents currently receive financial
  aid
• 11 who do not currently receive financial aid
  plan to apply for financial aid during the
  current or next school year
• Some who need aid will not apply

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We will do anything

• Parents are considering deferring or sacrificing
  elements of their lifestyle to keep their
  children in independent schools
• Vacations (73)
• Eating out (59)
• Buying new clothes or personal items (54)
• Putting money into savings/retirement plans (50)
• Home renovations (49)
• Purchasing an automobile (41)

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Giving Plans

• More than 80 of parents made a charitable
  contribution to their childrens school in the
  past and plan on making contributions to these
  schools in the future
• 49 will give at the same level as before
• 7 will give at a higher level than before
• 18 will give at a lower level than before
• 50 gave under 1,000 21 gave between 1,000
  and 2,499
• 24 of parents reporting incomes greater than
  300,000 plan to give at a lower level

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Reading the Tea Leaves 2010-2011

• If present economic conditions persist, including
  rising tuitions, some schools may see significant
  increases in need for financial aid and/or
  attrition
• Do you have a school team in place to analyze and
  manage your schools situation?
• Will you be able to help families so they can
  stay?
• If families leave, what will your school
  community lose?
• Do you have an aggressive, targeted fund-raising
  and marketing plan?
• Are you prepared?

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Recession trends
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Recession trends cont.
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Recession trends cont.
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Some things to think about

• SSAT Test Volume as of 1/15/09 October test up
  8 November test up 1.5 December test up
  2.9 January test down 13.5
• SSS Apps Up 6.6 compared to last year.
• Giving Overall in the US, giving goes up every
  year, even during recessions. During recessions
  it goes up in three out of four sectors Church,
  Social Services, Arts, Colleges.

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Tools You can Use

• The NAIS Demographic Center
• NAIS SurveyBuilder

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DEMOGRAPHIC CENTERBasic Reports

• They include variables such as school population,
  families with children by income, race/ethnicity,
  and educational attainment
• Types of reports
• Summary Reports
• Detailed Reports
• Multiple Area Reports

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DEMOGRAPHIC CENTERAdditional Reports for
Advanced Use

• They include variables such as population,
  households, families, housing, income,
  employment, education, sales, cost of living,
  and/or consumer expenditures.
• Five types of reports
• Quick Reports
• Ring Studies
• Quick Maps
• Rank Analysis
• Profile Analysis

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Actions You Can Take

• Tip the Trends in Your Favor

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Near Term Steps in an Economic Downturn

• Identify the key metrics that really reveal how
  you are performing in key areas.
• Reprioritize initiatives. Focus on those
  initiatives that will have the most immediate
  impact on recruiting and fundraising.
• Budget for a smaller class. It is much better to
  budget for a smaller class now than to cut
  budgets later.
• If you need to cut or trim a budget, dont be
  fairbe strategic. Use the recouped dollars to
  invest in other programs with greater market
  interest.
• Work hard to address families concerns and
  issues. Position yourself as a resource and a
  partner.
• Make sure your campus visit program shines.
  Students seldom attend a school that they dont
  visit or where they had a poor visit experience.
• Excerpted from Wise Moves in Tough Times, Dr.
  Robert Sevier, Stamats

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Near Term Steps in an Economic Downturn (cont.)

• Conduct a tuition pricing elasticity study. These
  studies can pinpoint how planned increases in
  tuition will impact market share.
• Focus on recruiting and marketing activities that
  you know work. Do not invest in new initiatives
  that will drag resources away from proven
  strategies.
• Hire and deeply train the best recruiting,
  marketing, and fundraising staff you can. There
  is nothing more helpful than talent.
• Identify your top four or five competitors and
  gather competitive intelligence.
• Excerpted from Wise Moves in Tough Times, Dr.
  Robert Sevier, Stamats

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NAIS Regional Director for the West Pacific
Northwest
Heather RogersNAIS Regional Director, West(202)
973-9758 rogers_at_nais.org
States represented HI, AK, CA, OR, WA, ID, UT,
NV, MT,WY
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And.. A few parting words

• Excellence can be attained if you care more than
  others think is wise,Risk more than others think
  is safe,Dream more than others think is
  practical, andExpect more than others think is
  possible.