Strategic Tuition Setting! Comparing Catholic and Jewish Day School Practices

By Dr. Harry Bloom, President and Founder, Benchmarking for Good

Private school tuition is a mainstay topic at the dinner tables of private school families and a cause of great angst among school leaders and Board members. Why? It is very simple. There are two potentially conflicting needs that have to be satisfied. The first: being perceived as affordable to lots of families. The second: maximizing tuition income in order to fund an exceptional program.

Striking this balance is hard. And, It turns out, that Catholic and Jewish day schools go about it differently.

One might make the case that the Catholic model is stronger because it offers greater transparency: Tuition actually paid is closer to the official tuition rate. In contrast, as can be seen below, the difference between the Jewish day school’s “list price” for tuition and tuition actually paid is significantly broader. Thus, the advertised tuition is arguably higher than it needs to be, potentially dissuading some families from applying and making it harder to convey strong value relative to tuition. The counter argument is that the Jewish day school model of displaying a higher list price relative to anticipated tuition enables it to capture more tuition dollars from those more affluent families who are committed to enrolling even at a relatively high price.

On balance, the argument appears more compelling for the "Catholic model" (which is also practiced by a significant minority of Jewish day schools) for more closely aligning “gross tuition” and “net tuition” and thereby (1)attracting more potential prospective families and (2)reducing the risk that prospective families learn that significant tuition "deals" are available and become more inclined to negotiate their own deal.

Examining the Data:

Catholic and Jewish Day School Tuition-Related Metrics Compared

Our sample is drawn from approximately 100 (each) Jewish day schools and Catholic day schools reporting data in NAIS’ DASL database.

1. 2022/23 Ratio of Gross Tuition + Fees Dollars Charged Relative to Operating Expenses. On this Metric Catholic and Jewish Day Schools are aligned!

First, we assessed how 2022/23 gross tuition and fees dollars compared to total school operating expenses. As can be seen below, there is relative parity between Catholic and Jewish day schools on this metric, with both school segments setting gross tuition and fees levels at 95-97% of operating expenses. Thus, assuming every student paid the list price for tuition and fees, the schools would have collected virtually enough money from tuition and fees to fund their operating expenses with little need for other sources of income.

2. 2022/23 Ratio of Net Tuition Compared to Gross Tuition. In contrast, when we analyzed the ratio of actual net tuition and fees dollars generated versus gross tuition and fees we see a 9% difference between the results for Catholic and Jewish day schools.

For the median Jewish day school in the sample, the 9% difference relative to the Catholic school rate amounts to over $700k in 2022/23.

What might account for this difference?

● One possibility is that the Jewish day schools are serving a population with less discretionary income than the Catholic schools. Our demographic analysis of a significant number of school populations does not tend to support this hypothesis. We find that both Catholic and Jewish day schools tend to be mission driven to be demographically inclusive and have a mix of large and small families.

● Another possibility might be that parents considering Jewish day schools are considering a wider array of alternative school types than Catholic families, including independent schools, charter and public schools, and therefore may be more inclined to require discounts from "list price" tuition levels. This is more likely to be true of non-Orthodox Jewish and non Orthodox families represent a very significant percentage of the NAIS DASL school sample. But the reality is that in our experience a relatively high percentage of families enrolled in Catholic schools are not affiliated with the Catholic faith--and thus they too are likely presented with a fair number of school choice options.

Net, there is a not a simple answer that explains the causes of this factual phenomenon, but it is real. Moreover, the gap between Gross and Net Tuition appeared to increase in 2022/23 relative to the previous several years. The good news: whatever the cause of the phenomenon, there is a logical and attainable solution to at least partially and meaningfully address the problem of low tuition realization.

Key Concept: To increase their School's Tuition Realization, School Leaders Need to Document and Communicate the Valuable Outcomes their School Offers that More than Justify its Tuition!

This is a basic, commonsense three step process.

1. First, school leaders need to conduct research to identify those critical outcomes that current and prospective families desire from their child's school.

2. Second, they need to take the trouble to document their own school's relevant outcomes on those vital factors.

3. Third, they need to actively communicate those outcomes in every school communication medium, in creative and compelling ways, year round.

In our experience, schools that take this disciplined approach can predictably both grow enrollment and also increase tuition realization.

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