From our trusted partner, Dewar.
With school back in session for the 2024-25 academic year, many schools will begin their financial planning for the subsequent academic year. As you begin your preliminary conversations around budgeting, here are some tips for safeguarding your budgeted tuition income.
The impact of mid-year student separations
Private schools rely on student enrollment and tuition income for ongoing expenses such as faculty and staff salaries, campus maintenance, employee benefits, and more. When a student withdraws, the school’s expenses remain unchanged, making it essential to explore solutions that secure tuition commitments and safeguard the financial health of the school.
While student withdrawal experience at your school may vary year to year, we know that no school is immune to mid-year attrition. Each school year, you may experience withdrawals due to a variety of unexpected reasons such as a family move, change in financial circumstances, medical condition(s), or a family simply deciding the school is no longer the best fit for their student.
An annual financial obligation is becoming increasingly common among faith-based schools as the cost of private education rises and the financial impact of student withdrawals is felt more than ever.
A best practice in financial security
Requiring families to commit to the full annual tuition is a best practice among private schools for establishing financial stability and mitigating risk. This policy creates a clearly defined financial commitment, ensuring that families are fully committed to the school. Schools establish a binding date in the enrollment contract (typically sometime between June 1 and July 15) by which families are responsible for the full annual tuition.
While schools may budget for potential losses from student withdrawals or rely on a waitlist to fill open seats mid-year, unforeseen circumstances can still force students to withdraw. However, there will always be unforeseen circumstances that force students to withdraw, and speculating the impact of mid-year withdrawals on tuition income or that a withdrawn student’s seat will be filled often results in significant lost tuition income.
With an annual enrollment contract, schools ensure an accurate budget with tuition income projections based on the number of signed contracts from families regardless of whether a student completes the academic year. In fact, schools without an annual obligation typically experience higher mid-year attrition rates compared to schools with an annual obligation.
A step further with tuition insurance
More than 1,000 private schools throughout North America utilize The Tuition Refund Plan to refund unused tuition and cover unpaid charges in the event of student separation. When a separation occurs, schools trust tuition insurance to assist those families who pay in installments to fulfill any unpaid balance at the time of withdrawal or dismissal. The Tuition Refund Plan provides benefits for virtually any type of withdrawal or dismissal that occurs during the academic year.
- Zero cost to the school as families pay the premium
- Claim payments made directly to the school for credit to the student’s account
- Allows school to collect tuition income that otherwise may have been lost
- Allows families the ability to withdraw without significant financial impact to themselves or the school
If you are interested in protecting your annual tuition income, experts at Dewar welcome the opportunity to assist you in implementing an annual tuition contract and supplementing it with a tuition insurance plan.
Visit FACTSmgt.com/Partners/Dewar to learn more or contact [email protected].
