How is financial aid funded?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Tuition never covers financial aid.

Let's say a school has an annual budget of $10 million. The school will have several revenue streams to get to that $10 million - tuition, summer camps, facility rentals, fundraising. Some schools may have an endowment that throws off income as well.

Tuition is the largest income stream, but it would never cover the full budget, hence the other income streams.

Most financial aid is going to be covered by fundraising and income from an endowment.

That's a really crude and simple breakdown of the overall budget picture.

- Former board member of a local independent school

What you meant was: Tuition never fully covers financial aid. Right?

So, tuition covers some of the financial aid?

PP here - if you view money as being fungible, then you could argue that some tuition covers some financial aid, but that's not generally how schools view it.

It would be the rare school where full pay families are actually covering the full cost of the education (I've been involved with multiple schools and never saw tuition covering the full cost per child). In other words, if you're paying full freight, you're not subsidizing the family paying 60% of the sticker price. Your tuition may cover 90% of the actual cost for your child. So the extra 10% for you and the extra 40% for the other family have to come from other revenue streams as I outlined above. I think there are some full pay families (and others) who think the full pay families are, from their tuition alone, helping to pay for other students. That's generally not true.

Again, this is all on a really superficial level and doesn't get into other aspects of a budget that need to be addressed by the school.

Can you really say with a straight face that the 50k that schools are charging doesn't cover the cost of that child's education? The facilities at most schools charging that much are nice, but not that nice and the classes are small, but not that small

Do you not understand how much these schools are paying for staffing, for resources and materials, for events, and all the other components that go into what is truly a luxury educational experience for children? I'm a former public school teacher and every time I am in the building at my DC's school, I find myself mentally tallying the costs of the things around me. Classrooms with an endless supply of materials, math manipulatives, special chairs and sensory items provided by the school, expensive art supplies that kids blow through when discovering, a lot of technology, the training and professional development that teachers attend, and on and on. FYI, benefits alone for a faculty member with a family could run $20k per year. On top of their salary. I know that nearly every teacher at DC's school participates in at least $3k worth of professional development annually (they get reimbursed and nearly all take advantage of it every year as they should). The $50k you pay per kid absolutely does not cover the full cost of everything in that school experience.

Schools are not making it up when they say that every single child gets some FA because the true cost of attendance is almost always greater than the tuition cost.

DCPS budget $24k per student. Even if you say staff should be 2:1 compared to DCPS (which most privates aren't), how does one get to tuition not covering but 80% of costs? I'll give you a hint, public schools don't pay $500k+ to head of schools.

No private school has employee benefits that remotely approach DCPS

[Anonymous]

It must be the way FA is distributed that causes all this misunderstanding about where it comes from.

FA is quite simply a tuition Discount of a certain percentage.

Take this hypothetical example of a school with a list price of $50,000 and an incoming class of 100 students.

What the school needs to have is enough tuition revenue to operate when combined with other revenue sources like gifts, facilities rental, some interest from the endowment, etc.

70 freshman at $50,000 = $3.5 m.
10 freshman at $37,500 (25% FA) = $.375 m.
10 freshman at $25,000 (50% FA) = $.250m
10 freshman at $12,500 (75% FA) = $.125m

Total Tuition Rev. $4,250,000
FA budget $750,000
Number of students getting FA is 30 (30%)
Average FA amount is $25,000 or 50% of tuition.

Schools are just like airlines. They want the plane to be filled even if they have to offer some people discounted fares.

[Anonymous]

At many privates, (full-pay) tuition alone does not really cover the full cost for that child. Most schools depend on donations, although a wealthy school might have some form of endowment which covers some or all of the gap.

[Anonymous]

Anonymous wrote:At many privates, (full-pay) tuition alone does not really cover the full cost for that child. Most schools depend on donations, although a wealthy school might have some form of endowment which covers some or all of the gap.

If you look at 990s the cost of the kid covers their share program expense (i.e. total expenses divided by total number of kids). Total tuition does not cover total program expenses because of the amount of discounts