Enrollment management is one of the key tools for managing your private school admission, enrollment policies and student population. Student enrollment typically generates more than half of the revenue in a private school and funds everything from salaries to facility maintenance. In many cases, net tuition revenue can open the door to uncovering new revenue streams for your institution.
There are several tried and true methods for successfully managing and organizing net tuition revenue as you implement this innovative enrollment strategy at your school.
What Is Private School Net Tuition Revenue?
Net tuition revenue is equal to the full tuition billed to families minus the financial aid you award to students. The net tuition revenue model focuses on a set goal for the revenue rather than drafting a traditional financial aid budget at the beginning of the recruitment season.
The benefit of this model is that once you have awarded all of your financial aid, you can fill empty seats with students who can only afford to pay a portion of their tuition. Then, you receive the advantage of increased income, and more students have an opportunity to receive an excellent education from your institution.
Another benefit of net tuition revenue is that fewer school resources go to waste. For example, a teacher receives the same salary if the class is full or has empty seats. The savings also apply to school security and insurance.
How to Manage Net Tuition Revenue for Private Schools
The majority of traditional admission offices award a target audience of students with a set financial aid budget. The transition to net tuition revenue shifts this mindset. Financial aid is no longer an expense but a tool to generate revenue. If your institution has empty spots available with a financial aid wait pool, the net tuition revenue strategy is key to your financial strategy.
As a leader, you’ll need to walk with your business office or board of trustees to help skeptics accept this significant change in financial policy. One of the key ways to approach this process is to gather data.
You should collect several data points for managing revenue and presenting to your stakeholders:
- Enrollment history: To examine trends, analyze three to five years of enrollment and revenue information.
- Fixed costs: Review how much capacity your school can support with boosting fixed costs. In other words, how many students can you truly support before you need more teachers, security and maintenance staff?
- Marginal cost: Determine an exact marginal cost for educating a single additional student at your institution. The cost of educating one student will help you determine a figure you cannot go below other than outstanding cases.
How to Organize Net Revenue for Private Schools
There are several key insights for organizing private school net tuition revenue. You can break down your student population into several categories:
- Full pay: Full pay families do not receive financial aid and pay all of their tuition personally.
- High paying: It’s also possible to further break down the full-pay tuition received. Students from high-paying families can afford 90% to 100% of the tuition out of pocket.
- Aided: Aided students pay a portion of the tuition but also receive financial aid awards.
- Tuition remission: Tuition remission enrollees receive a tuition grant as an employee discount.
Other important factors for organizing revenue include net tuition per grade and by day. You can also analyze your student population further by examining grade level by the day for boarding and international boarding students.
It’s vital to analyze these metrics every week. The monitoring process helps you track finances and ensure that one particular grade or population doesn’t receive a cluster of financial aid while others become neglected.
Manage Tuition and Billing in One Central Hub With Ravenna
Ravenna is a one-stop customer relationship management (CRM) tool designed to process tuition and billing for your private school admissions. The Ravenna TUITION payment system provides workflow automation for your Business Office staff, from invoice management to book reconciliation.
Request a demo online today to experience Ravenna first-hand and take your first step toward a more organized tuition and billing process.