Means-Testing Private School
Posted on August 24th, 2012 in Uncategorized | 3 Comments »
R. Scott Asen, a graduate of Groton, my high school alma mater, proposes that private school parents be means-tested to make up the difference between what tuition pays for and money that comes from the endowment and donations.
From the Times Op-Ed page:
For 10 years, I headed the development committee of the board of trustees at Groton School, a secondary boarding school in Massachusetts, and ran two major capital campaigns there. I can attest that expenses have so far outstripped revenues that no amount of cost-cutting at such schools, healthy as that may be, can come close to solving the problem. …
To the extent that any family with the wherewithal is paying less than the full cost of the product it is buying through combined tuition payments and donations, that family is effectively being subsidized by other current and past donors. Not only is this ethically unsupportable, but ultimately, it is also financially unworkable.
My proposal: Supplement the traditional development model with a new pricing model. During the admissions process, along with quoting the stated tuition, the school should inform all families of the real costs of operation on a per-student basis and, further, tell them that they will be expected to fill as much of the gap between tuition and cost as they are able with a donation. To determine this number, the same level of financial disclosure currently asked of financial-aid applicants will be asked of them, and a means-testing exercise will be used to determine capability.
I’m not sure why you wouldn’t just raise tuition to the level required to fund the school…
...for a small school like Groton (where tuition last year was $49,810), the impact of the change I am recommending could be a net annual revenue gain of $2 million.….
I’m really just staggered by the fact that it costs $50, 000 to send a child to Groton, an amount that will surely be considerably higher by the time my son is high-school age….
3 Responses
8/24/2012 8:44 am
The op-ed suggests that these schools have a huge international pool to draw on for applicants and could thus sustain such a radical shift in tuition pricing. My experience with a similar New England boarding secondary school suggests that while the applicant pool has become internationalized, predominantly due to an increase in Asian applications, applicants have continued to come largely from within a 250 mile radius of the school. Schools are finding it difficult to increase that geographical limitation. The one exception is California (the increase in Californian students has even led schools to consider lengthening Thanksgiving holidays, for example). It is true that the areas around these schools are increasing in affluence; so one notable change is the rise in day-student (non-boarding) applications. At some schools, it’s harder to be accepted as a day student than as a boarder, leading schools to reconsider the basic ratio of day-student to boarder and thus the nature of the school.
My question is how the situation described in this piece is any different from colleges with small endowments. Surely, they also function largely through current and past donors. I don’t know whether this is financially unworkable. But I don’t see how it is ethically unsupportable.
8/24/2012 12:42 pm
My understanding is that this is the norm at a few of the top British public schools. Some of those who can afford to pay more than the posted price, do so.
Actually, in a way that is not as explicit, a number of the top U.S. colleges do the same thing. I’ve seen at my alma mater the designation of PAR (standing for parent and with the number of the year in which their child graduates, after it) used in the annual giving book sent out by the university. It’s interesting to see for instance Mr. and Mrs. X PAR’14 and a gift in the category of > 250,000. The kid was just a first year and the parents have already given >250,000. What is going on here? Could it be that there was some subtle understanding involved when the acceptance was made?
8/24/2012 1:09 pm
This gets debated in independent school boards all the time. But the economically rational calculus may not be so rational when you take human behavior into account. Just two quick points. First is signaling: What your sticker price or pricing structure says about what kind of institution you are affects who will apply to it and, on the margin, what choices the accepted students may make. And second is what it does to the sense of moral obligation when people are simply charged more money. In his recent book, Michael Sandel reports what happened when a day care center changed its policy about late pick-ups. It had simply stated that parents should pick up their kids on time out of fairness to the staff and the other parents, etc. Then they decided to impose a fine to put some teeth into their policy. Lateness increased, because what had been a moral obligation had been turned into a cash transaction.