Despite the unusual circumstances of the past year and a half, educational institutions must still consider the annual question of tuition rates. Unfortunately, the increase of programs and services, talent needs, digital infrastructure, and more have all increased the importance of carefully considering tuition costs.
A raise in tuition rates is never an easy conversation, especially when the perception of the economy is low to bad at best. Contrary to perception, the overall economy is strong and anticipated to grow 5.7% this year. Considering the inflation rate is the highest it's been in 30 years, the growth is a good thing.
While inflation may seem like a simple one-to-one matching argument for tuition increase, there are a few key additional areas to consider when deciding what your new tuition rates will be.
No. 1—Inflation impacts your entire structure.
Per Axios, inflation is expected to reach and continue at 5.8%+ for the foreseeable future. But inflation can be a broad stroke argument when it comes to your organization. Inflation translates roughly to the buying power of a community and how that buying power is keeping pace with the overall state of the economy.
When considering the financial position and needs of your school, be sure that your financial advisory team is carefully considering the impact of inflation on every component of your operations and on your various stakeholders. This means assessing everything from supply cost, energy expenses, program budgets, staffing needs, and more. It also means thinking holistically about your faculty and staff as well as the families who are being served in your community.
No. 2—Your tuition must sustain your staffing.
While not unique to the education field, staffing crises are sweeping through the nation. There has been a 19% decline of undergraduate education majors and an 11% decline in graduate level students. This means there are fewer teachers in the talent pipeline to fill the positions being vacated at an approximately 8% yearly rate.
Your school tuition rates must take educator and operations staff retention into account, via salary, benefits, and training. With more than 75% of employees reporting symptoms of burnout, it is more important than ever to provide the resources necessary to maintain a productive working environment.
Additionally, your staff is impacted by inflation. Just as you should consider the cost of doing business, you should consider the cost of living for your staff. Have you adjusted their pay in a way that maintains their buying power? Is staff adequately paid for extra programming that has been added in relation to time invested? Take a strong look at your pay structure and how your school is positioned to sustain staffing in the future years.
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No. 3—Account for upcoming needs.
After protecting both staffing levels and your staff’s buying power and accounting for inflation to produce a balanced budget, you should consider what your institution may have planned or may need to plan in the coming years. Whether it’s the ability to build up reserves for a potential wave of the pandemic or the need to enhance your facility or campus, it’s never a bad time to figure out how to spread that cost out.
It is recommended that steady annual tuition increases are practiced instead of skipping them for a few years, but then rolling out a substantial increase all at once. For example, your community may come to anticipate a yearly 6–7% increase, but would likely be shocked if you have not had an increase in three years and roll out a 20% increase all at once.
Tuition increases protect the operation of your school. Increased tuition helps you navigate the rising cost of goods and services and protects the student experience—while simultaneously providing the funds necessary to maintain and improve your staffing.
