Tuition Increase Strategies—Financial Aid

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Here is a summary of my queries relating to a major tuition increase and parallel use of financial aid.

All at Once or Spread Out? The responses from colleagues around the world were evenly split on this issue. Some said that spreading out the increase over, say, three years, was more predictable and palatable to parents, giving them time to plan. This approach should be taken, one said, unless there is an emergency requiring the big one-time increase. Another comment in support of this approach was that a very high one-year increase would focus unhealthy attention on the school's operations (i.e., "why is this needed now?"). About the same number of respondents favored taking the step in one year. Their reasoning included the idea that it was wisest to get the pain over with in one year, rather than listening to three years of complaints. Others said that spreading out the increase tied the hands of future boards. Indeed, some had grave doubts that the future boards would be able to maintain the nerve to continue the three-year plan.

Any Parallel Experience? Many schools, of course, had increases of tuition over the years in various ranges. But I did come across a few schools that had taken the one-off plunge recently. Quito was raising their tuition by 16-18%, to deal with currency devaluation and operating deficits. Atlanta International School had increased tuition by 20%, to allow programs to be maintained and teacher salaries to be more competitive. And the International School of Stavanger increased tuition 32%, to be able to maintain quality when enrollment dropped. All said that they had no regrets and that the actions had put the schools on much sounder financial footing.

Selling It: Most of you queried whether my life insurance was paid up, contract was solid, etc. Apart from those humorous (?) remarks, there were some bits of wisdom:

· Give parents as much advance notice as possible

· Reduce the reasons for the increase to a few, simple statements and repeat them over and over

· This must be seen as the board's (not just the director's) recommendation, if parents are to get behind it

· Hold public forums to explain the need for the increase

· Identify the most likely sources of resistance and focus on educating and convincing these groups

· Get the backing of embassies and businesses, so that they have sufficient time to build the increase into their budgets

· The best time to go for such an increase is when student enrollment is strong; be sure to check the competition's capacity and space as well

Financial Aid: No one had any foolproof means of assessing need and administering financial assistance. Still, there were some suggestions worthy of consideration:

· Most would say that the assistance should be need-based only (not academic scholarships).

· The exception would be a special full scholarship for one or two talented local students as public relations and integration with the host country; but some would recommend that this scholarship be funded by a donation or endowment, not out of operations, unless we wanted to make a moral commitment to assist the endowment for one such scholarship.

· Before restricting aid by nationality or employer, a school should be careful that this is not in conflict with the school's ethos. In other words, the financial aid program ought to flow from the school's mission statement.

· One major decision to make is whether the financial aid is meant to be short-term or long-term. That is, is the aid to help students who would attend the school all of their lives, or is it meant to help students with unforeseen or sudden financial emergencies. One corollary of this was the policy of some schools not to grant aid in the first year of enrollment. Or, some schools gave no more than a maximum of 50% reduction to foreign students, regardless of employment.

· Another philosophical question is whether the aid program is designed to increase diversity of socio-economic status or nationality or ethnicity.

· Several colleagues recommended that the aid be very generous in the first year of the big tuition increase, as good public relations. However, most suggested that the level of aid might then be reduced over the subsequent years, as new families would be expected to know the cost upon entering and thus not "qualify." I am inclined to believe in this particular approach. There will be questions to determine about whether any such "grandfathering" is one-time or permanent and whether it applies to future children, etc.

· In line with this was the idea of simply granting a one-time reduction of 10-15%, during the year of the tuition increase

· One school has a maximum of 60% reduction for host country students. Others had similar maximums for different groups.

· The range seemed to be something like 15-50% reductions for those who got financial aid, with the underlying assumption being that less than 15% need might indicate that real need wasn't present, while more than 50% probably meant too few students would get the assistance. Of course there could be exceptional circumstances.

· Some schools had taken to contracting out the need evaluation process, using local agencies or individuals who conducted home visits, photographed houses and automobiles, etc. to help corroborate the financial aid forms.

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