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Keeping Your Doors Open: The Critical Calculation for FA Directors

June 16, 2024
Linda Haitani
Chief Innovation Officer

Once upon a time, in the picturesque town of Learnsville, there stood a charming school known as Wisdom School. For generations, Wisdom School had been the beacon of education in the community, known for its exceptional teachers, encouragement of mission and purpose, and nurturing environment. Parents were eager to enroll their children, and the school enjoyed a thriving reputation.

However, as years passed, the administration at Wisdom School began to face increasing costs. To maintain their high standards, they raised the tuition fees each year. But over time, the tuition hikes began to outpace the economic growth of the local community. In its quest for excellence, the administration didn’t notice the growing financial strain on the families of Learnsville. Many parents, once loyal school supporters, found it increasingly difficult to keep up with the rising costs. Slowly but surely, the number of applications started to decline.

Through thoughtful recalibration of its financial policies and a renewed emphasis on community engagement, Wisdom School gradually regained its footing. The school's doors remained open, but a valuable lesson was learned: understanding and aligning with the financial realities of the community is essential to ensuring the sustainability and accessibility of education.

The Critical Number You Must Know!

Using data to get strategic insights is part science and part art. The critical number Wisdom School needed to know is: How many interested families who are within driving distance of my school (the catchment area) can afford their tuition? If there aren’t enough families, a school may be at risk. While the formula needed to make this determination is straightforward, finding the data needed to do the math is the hard part. Here are some sources that can help:

What neighborhoods are within driving distance of my school?

You can use several online data sources and tools to determine which neighborhoods are within driving distance of your school during commuting times:

Google Maps: Enter your school’s address and use the "Directions" feature. Select the "Depart at" or "Arrive by" options for specific commuting times. This will show you the estimated travel time and routes based on real-time traffic data.

Walk Score: A useful easy to use and free online tool that provides a visualized commute zone map.

For more information on these tools and the value of understanding your catchment zone, visit our blog “Mapping Magic: Discover Your School's Neighborhood Reach with Free Tools”.

How many families, with students in our grades, live in these neighborhoods and what is the income average of these families?

You can find a wealth of valuable information from government census data to inform your strategies and ensure your financial aid programs meet the needs of your community. The U.S. Census Bureau provides detailed income data through the American Community Survey (ACS), including median household income and income brackets for specific geographic areas. Household size and composition data are also available from the ACS.

For more information on these and other tools, visit our blog Strategic Outreach: How Free Census Tools Can Inform School Enrollment Efforts.

How many of these families are able to afford my school?

You have done your research, collected all the data, and understand the demographic and economic profile of those families in your catchment area. Now the art of data analysis comes into play.

Start with the simple answer — remember, if you are doing any historical or trend analysis or looking at future projections, the goal is not to get the 100% correct answer. That is not possible. You are looking for the data that increases the likelihood of understanding the correct answer. 

The question we started with is, “are there enough families locally to afford your school tuition?” A common guideline is that families might allocate up to 10-15% of their income towards education expenses. Let’s say your tuition is $18,000 annually. 

A family would need an annual income of $120,000 to afford the $18,000 tuition if they can allocate up to 15% of their income towards tuition. Understanding this threshold helps in assessing the economic viability of your catchment area. If a significant portion of families in your area earn less than $120,000 annually, you may need to adjust your financial aid strategies to ensure accessibility and financial sustainability.

How Clarity’s Insights Can Help

At Clarity, we understand the critical role that financial sustainability plays in the success of your school. Our powerful financial aid platform is designed to empower you with the insights needed to ensure your school's affordability. With Clarity, financial aid directors can access robust data on applicants by income bracket, city of residence, and home zip code, providing a detailed picture of your community’s financial landscape.

One of the most powerful reporting tools in Clarity is InTuition, which provides dynamic Net Tuition Revenue (NTR) reporting. If you determine as a school that the necessary revenue per student for a current/desired enrollment number outpaces the price of tuition or realistic discounting, then you have some serious strategizing to do. You may wish to audit your NTR/discounting by grade and find that you've over-discounted lower grades, that's indicative of future struggles. NTR is an important concept for financial aid practitioners to understand. Read more about NTR here.

Furthermore, our dedicated Client Success Managers bring years of experience in financial aid and are always available to help you navigate these strategies. They provide personalized support, ensuring you maximize the benefits of our platform and develop the right financial aid policies tailored to your school's unique needs. Clarity equips you with the data and insights necessary to foster a sustainable and inclusive educational environment. Let us help you transform your financial aid process and secure the future of your school.

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