This article appeared as "At What Cost?" in the Fall 2024 issue of Independent School.
In the summer of 1990, I graduated from Northwestern University and landed my first job as a peer counselor in the financial aid office there, helping students fix their day-to-day financial aid snafus. Having just graduated from the university as a financial aid recipient, I thought it would be interesting to look at my own financial aid folder. I discovered that the year I graduated, my mother earned around $25,000, a little more than what I was earning in my first job out of college. Seeing this for the first time, my mind raced: How could she manage to raise three boys as a single mother and send me to an independent school—Moorestown Friends School (NJ)—and a private university on such a very low income? When I asked her about it, she said that as a parent, you do what you need to do for your children, you go without some things, and you just figure it out. I knew I received financial aid at both those schools, but the scale of her financial need, hardship, and choices didn’t really register in a real way until that moment.
For families from the lowest end of the economic spectrum, like mine, to those at the top of it, affordability has always been a concern when considering independent school. And it’s become even more important for school leaders to consider as they seek to create sustainable enrollment, socioeconomic diversity, and a welcoming culture. Understanding how parents pay for school tuition—and how they feel about it—is critical to accomplish these objectives.
For the fourth time since 2006, NAIS recently surveyed parents who have applied for financial aid for private PK–12 schools to understand their collective experiences, emotions, and sacrifices related to the reality of paying for tuition and nontuition costs. Conducted in fall 2023, the most recent “How Parents Pay School Costs” survey reflects a random sample of parents who completed the Parents’ Financial Statement from the Community Brands’ School and Student Services (SSS) program for the 2023–2024 school year. A total of 1,961 parents completed the online survey, comparable to the 1,891 who completed the previous survey in 2018. The full report will be pubilshed in October 2024.
The Findings
What did parents tell us about themselves, their feelings, and their choices when it comes to paying tuition? Here are a few key takeaways, how they compare to previous years, and how schools can use this information.
The income and educational profile of the typical aid applicant continues to shift. The demographic profile of the survey respondents shows that the typical applicant for financial aid is far from uneducated or financially disadvantaged.
It’s a well-educated group of parents, with half of the respondents (50%) reporting that they have a master’s degree or higher, up from 47% in 2018. Just 17% had less than a bachelor’s degree. As financial aid seekers attain higher levels of education, schools will see increasing demand for candid and transparent looks into the financial aid process. Financial aid administrators will need to be more responsive and give more detail when explaining how the process works and how decisions are made.
It’s also a higher income group than in 2018, overall. The percentage of parents earning less than $75,000 decreased from 30% of the respondents to 22% by 2023. Meanwhile, the percentage of those earning $250,000 or more—the income bracket seeing the largest change in representation since 2018—doubled from 7% to 14%. As the pool of financial aid seekers gets wealthier, schools see more complexity in financial aid applications (such as more business owners with corporations and partnerships, multiple-property owners, and tax documents scores of pages deep), prompting the need for financial aid professionals to be more skilled in understanding the family’s financial snapshots and more savvy in engaging in conversations about their financial aid decisions.
With more highly educated and more affluent families in the applicant pool, the likelihood increases that families live in neighborhoods or towns that have public school options of higher quality. Perhaps more of the highly educated and high-income families are seeking financial aid not just as a reaction to tuition growth but as an effort to test the chance of bringing the price down closer to what their “good enough” alternatives cost. This puts pressure on independent schools to double down on clearly expressing and communicating their unique value to show that their price premium reflects that they’re more than just a luxury, that they solve a particular need or challenge that parents and their children are facing.
Beyond employing tactical and practical responses to the changing profile of applicants, understanding these characteristics of the applicant pool without prejudice or stereotyping can influence perceptions of who asks for and who receives financial aid, shape communication and information strategies, and align expectations for how parents will engage in (and assess) the process itself.
Parents are more likely to feel “stressed” than “satisfied” when thinking about paying tuition. For the first time since the survey began probing emotions associated with paying tuition, the most frequently chosen emotion was “stressed,” selected by 55% of respondents, up from 47% in the 2018 survey. This replaces the previous top emotion “satisfied,” which was chosen by 44% (versus 54% who stated so in 2018). Similarly, “worried” (36%, up from 34% in 2018) has replaced “thankful” (33%, down from 37% in 2018) as the third most chosen emotion.
Beyond that, the emotion seeing the largest increase in association with paying tuition is “overwhelmed,” which was selected by under a quarter of respondents in 2018 (23%) and rose to nearly a third of them (32%) in 2023. Families reporting “stressed” (surpassing “satisfied”) and “overwhelmed” as top emotions related to paying tuition are signaling to schools that the affordability pressure on many, if not most, families seeking financial aid is growing.
As stress, worry, and overwhelm grow when it comes to paying tuition, there may be a greater chance that parents might question the value of what they’re getting, asking, “Is this stress worth it?” Schools are wise to engage in frequent touchpoints with families about the distinct value proposition they provide, so that it’s clear that even if it feels increasingly painful to do so, it’s worth the stress families may feel in making the tuition work in their budgets. Schools should seek to understand these emotions and help alleviate them in intentional ways.
More parents are working longer hours, taking second jobs to make tuition work. When asked about certain changes they’ve made to pay for private school costs, the biggest change in sacrifices parents reported was related to working. Compared to the 2018 survey, more parents (33%, up from 28%) noted that they took a second job or increased their working hours. Also compared to 2018, more respondents also reported that a stay-at-home parent started working (14% versus 12%). While the choice to work aligns with the expectation that parents have the primary responsibility to pay for tuition through exhausting their own means, this growing strategy could have negative consequences. For example, the extra work responsibilities could contribute to the increasing sense of stress and overwhelm.
One reason more parents may find the need to work more is to make up for funding shortfalls that drive many schools’ aid offers. For example, 66% of parents stated that receiving financial aid to help with nontuition expenses was extremely or very important in the decision to enroll. Yet, 67% stated that the school did not provide such support. The added burden of finding resources for school costs above tuition can certainly add stress to a family’s experience. Further, the 2021 NAIS “State of Financial Aid Survey” shows that schools typically meet only an average of about 81% of a family’s demonstrated financial need, leaving the parents to find ways to fill the gap the school cannot. School policies and funding sources that help offset nontuition costs for aid recipients or more fully fund their demonstrated financial need are likely to be important ways to alleviate a family’s pressure to make up those financial gaps by working more.
Paying for tuition from cashflow is a main driver of affordability pressure, as few use borrowing or help from family members. One factor that could influence making choices like working more to pay tuition is that for most parents, using cashflow from their regular personal income is the primary way to pay tuition, with 70% reporting they do this, and fewer than half (45%) saying they leverage savings.
Just 12% (the same as in 2018) reported that they borrowed money other than a home equity loan (which only 4% reported doing, about the same as the 5% in 2018). Notably, even though only 12% say they borrow, one in five (20%) say they’ve used credit cards to pay tuition (at least in part), an increase from 13% who reported using credit cards in 2018. This suggests that some don’t consider using credit cards as borrowing and perhaps think of it more like a cash management strategy, especially if they’re interested in paying with credit cards primarily to receive reward points, for example, rather than to spread the cost.
Even the students’ grandparents are less likely to be a source of paying for tuition than in the past (12% in 2023 versus 15% in 2018), and very few parents use accounts like 529 Plans (8%) or liquidate assets like mutual funds, stocks, or bonds (7%).
When dipping into savings or investments, getting help from others, and borrowing persist as strategies of lesser resort, it stands to reason that parents facing increasing tuition costs are more likely to seek ways to increase their income sources or constrain their spending choices (e.g., saving less for retirement or college and delaying new purchases or repairs). The more it feels necessary to work more or spend less, the greater the chance of increasing stress, worry, and overwhelm and the greater the importance of receiving assistance from the school.
Many parents may feel hesitant to dip into their savings or borrow for school tuition because they expect to rely on those means for their children’s college expenses. To help address that anxiety, schools could collaborate with financial planners and advisers to help educate families on ways to leverage the resources at their disposal today and still make sound financial choices for their future needs. These sessions could help more parents find the right combination of income, savings, and borrowing that makes paying tuition doable with as little stress and worry as possible. This could be particularly helpful to younger parents seeking to learn how to invest in independent school tuition while not overly compromising their future goals, such as retirement planning or saving for a home.
Enrollment choices as a reflection of a school’s value proposition show mixed signals.
About 1 in 5 parents who applied for financial aid but didn’t receive any still enrolled in a private school (19%). It’s likely that parents making this choice were of higher income, but it’s notable that for them the value proposition of the school was strong enough to make the full tuition workable without aid.
On the other hand, about the same proportion of respondents (21%) said that they didn’t enroll because the tuition was too high since the school didn’t offer any financial aid.
Among those who ended up not enrolling in a private school, about one-third (32%) noted that the school offered aid but not enough to make it work for them. Another 10% didn’t believe the school was ultimately worth what they’d have to pay. For these families, with or without aid, the value proposition of their private school choice(s) didn’t measure up to alternatives to be deemed worth the sacrifice.
These findings suggest that for every family that “bites the bullet” to enroll without any of the aid they sought, there’s one who can’t do it. And there are two or three who feel it’s not worth making that choice, even with at least some financial aid in play.
Families who enroll even without receiving any of the aid they requested can be a gold mine for understanding your value proposition. Understanding their motivations and the factors driving their decision to enroll is extremely important. Explore what drove them to that decision, and get as specific as possible. Consider how to leverage what they tell you as the most magnetic factors that may attract others who are skeptical or unclear about the outcomes they’d get for your price. Use that insight to underscore your value proposition to others who have affordability concerns, and lessen the chance they will decide that your school is not worth the commitment.
It is as important, however, to maintain close touch with families who enrolled without the aid they sought as they progress through the school to ensure that they can keep up with increases in tuition and other costs. Watch to see whether they are more likely than others to leave after a year or two of trying to make it work without aid or seek financial aid in subsequent years. The school should build the flexibility and strategies to support them if and as their financial needs change over time.
School Strategies
Fewer than a quarter (24%) of parents in the survey graduated from an independent school themselves, with only 13% having received financial aid from an independent school when they were students. For many, the likelihood of experiencing this process within independent schools is new, raising the stakes for schools to provide frequent, clear, and consistent information and education about costs and affordability realities.
Using these findings, schools can consider ways to rethink or build new processes, policies, and resources to help alleviate the stress, worry, and overwhelm that families feel as they engage in making the dollars make sense. Unpack the data with business officers, enrollment managers, and board members to explore where innovations in program, pricing, or discounting strategies can best support and clarify your value proposition among all families in your community.
The choices and sacrifices that families make to afford independent school tuition and other costs are only getting harder, and while parents like my mom will continue to do what it takes to “figure it out” and make the finances work, school leaders also must figure out how to lower the hurdles that stand in the way of improved affordability and value.
Go Deeper
NAIS’s 2024 “How Parents Pay School Costs” report provides insights into the ways independent school families pay tuition, the importance of financial aid in their enrollment decisions, and their emotional state when paying. To read highlights on parents’ perspective on affordability and find strategic questions, next steps, and shareable graphics, download the full report.
Read More
Check out some of Mark J. Mitchell’s other recent Independent School articles on tuition and financial aid:
- "The Changing Face of Financial Aid,” Winter 2024
- “Tuition: Ability to Pay vs. Willingness to Pay," Fall 2022
- “Research Insights: How Do Parents Pay Independent School Costs,” Winter 2020