The Economics and Psychology of Affordability

Affordability is less about policy and more about building a positive Jewish future that acknowledges the psychological and emotional impact of the deep financial sacrifices that families make to educate their children. Both schools and families succeed when those within your range of affordability feel positively about paying tuition. By engaging regularly with the data, you can gain a better understanding of your market, address the common pain points and plan more effectively for the future.

While it is true that affordability is an economic question that can be answered with quantitative data to determine if families have the financial resources to pay tuition, it is equally a psychological question that requires qualitative data to answer. Tracking the cost of living in your area, the other educational options families consider (along with the associated price tag), what your families value most, and the common “financial stories” of your families can help schools determine for whom they are affordable and develop strategies to address issues of affordability. Using the steps and guiding questions below, schools can begin to build a proactive affordability strategic plan that balances both the economic and psychological needs of families.

How do I determine if my school’s tuition is affordable for my market?

Start by determining if enough families can pay tuition for your school to be sustainable. Tools like Data and Analysis for School Leadership (DASL, and MarketView ( can help you learn more about affordability for families in your area. The National Association of Independent Schools (NAIS) asserts that to be viable, 15% of mission-appropriate families in your catchment area must be able to afford full tuition. By looking at your current financial aid applicants, you can calculate at what income and asset level a family becomes “full pay.” MarketView will allow you to see how many families live in your area and the number of children, in total and by income band, to calculate what percentage of them can pay full tuition. While the information in MarketView does not include religion, these data can give you a general sense of your school’s affordability for your market. Cross-referencing these data with census records or any Jewish population study that has been conducted in your area can add additional nuance to your understanding. 

Fit plays an important role in determining affordability. Your school might be affordable for the top 15% of earners in your area, but this does not mean that these higher-income families will choose your school. Some schools require test-entry and cultivate a culture of exclusivity, others focus on diversity, or on special-educational approaches or programs. Jewish day schools pursue excellence, but that is balanced with our missions which regularly seek to serve the largest number of mission-appropriate students possible. Families with greater resources have more choice and flexibility to find a school that is most aligned with their values. Many Jewish families who can afford tuition may not be values-aligned and therefore, not in our market (even though we may wish this weren’t the case).

Getting curious about these values and priorities is critical to understanding your market and both the economic reality and psychological perception of affordability. As the director of enrollment and tuition assistance at the Charles E. Smith Jewish Day School, I read about 375 applications for tuition assistance each year. One theme that parents communicate through this process is that tuition reifies a family’s financial, educational and religious priorities. These priorities are deeply personal and are not shared between households, or even between parents/guardians of the same child. Therefore, schools sit in the tension between a universally applied financial aid algorithm and the very real and personal financial narratives that are true (and different) for each family. For schools that seek to maximize net tuition revenue goals, addressing both personally defined affordability and collective equity are central to maintaining and building a healthy school community. 

How do values and priorities play a role in affording tuition?

When two families with similar financial profiles are asked to pay the same tuition, one may enroll and the other may say that it is unaffordable. By investigating the psychological perspective using quantitative and qualitative data from financial aid applications, you can further model affordability for your families. Analyze how families allocate their money at different income levels and how that can inform your strategy around affordability. 

  • What percentage of income are families willing to pay toward tuition at different economic strata? Families with higher salaries and assets often wish to pay a smaller portion of their income toward tuition than lower-income families due to lifestyle expectations. How can you plan for these differences in willingness to pay?
  • Have housing costs risen sharply in your area? If so, it might mean that families who have lived in the area for a while may have significantly smaller mortgage/rent costs than those who have moved in recently. How can your school tackle these different economic realities within your community?
  • What role are student loans for parents or college costs for older siblings playing in the affordability equation for families? How can your school proactively address the strain of student debt for young families who have bright professional futures?
  • How do diverse religious commitments affect a family’s perception of what is affordable? A religiously committed family and a secular family may place a different financial price tag on the religious education your school offers. How can you equitably attend to these different sets of values?

The more aligned a family is with the school’s mission, the more likely they will be to perceive the school as affordable and worth the inevitable sacrifices. Knowing this can help predict the likelihood of a family to enroll or remain in the school long term and can guide financial aid committees to use professional judgment when adjusting financial aid decisions to support enrollment goals.

How do I develop a proactive strategic plan for affordability?

Below are four categories to consider when working to build and sustain a healthy school community.

Price setting. While the actual amount of tuition may only rise a few hundred dollars each year, pay attention to those increases relative to income growth. Even if families love the school and are having a positive experience, tuition may feel less affordable with each passing year. When looking at historic data of income versus tuition, calculate the rate of growth rather than actual dollar increases to better understand the impact on affordability. When tuition outpaces incomes, school leaders must collaborate around how to address the increasing gap between tuition increases and what families can afford in order to be sustainable.

Place in the market. The question of affordability is highly localized. Whether or not families perceive your school as affordable is not only about the absolute cost of tuition, but where your school sits in your market. The perception of affordability is relative to the other options families would realistically consider. If the total cost of attendance is not reflecting the place you want to inhabit in the marketplace, then that is another area for the school leadership to consider. If your school is in high demand, then raising tuition is unlikely to affect enrollment, whereas if a school is declining in enrollment and net tuition revenue, then tuition increases may need to be moderate or low. NAIS defines these tuition increase options as relative to the Consumer Price Index: high (>CPI +2), moderate (<CPI +2), or low tuition (CPI or +1). This approach may lead boards to approach tuition setting by prioritizing market demand over the budgetary goals of the school, which can put a strain on sustainability and a school’s ability to pay competitive salaries and improve the program. 

Value. Collaborating among enrollment, financial aid, marketing, teachers and administrators is vital so that when you speak with a parent who is upset about affordability, it is in an ecosystem where the value of the school community is continually articulated and reinforced. Ensuring that families recognize the strength of your STEM program, have pride in the middle school basketball champions, and heard that several seniors got into top-tier universities can help diminish some of the anxiety in these conversations. Even if parents are sincerely concerned about paying tuition (which may cause them sleepless nights), oftentimes they would be even more upset if they didn’t believe that their child was in the school and learning community that is making them happy now, supporting and optimizing their development, and preparing them for a bright future. 

However, according to ISM’s article “How Private Schools Can Prove ROI to Families,” “Families love to hear how well the school is doing—but they care much more about whether their own children are thriving.” Therefore, before having financial aid conversations with families, check in with principals or teachers to learn how a child is doing in the school. If a student is struggling, then parents may not be experiencing the school as worthy of the financial sacrifice. 

Priorities. Affordability is a fluid concept. One year, a family believes your school is affordable, the next year, the school is unaffordable although their family size, income and asset levels remain constant. What changed? For some, a family member may become ill; others may be unable to keep up with home maintenance while also paying tuition. Maintaining close relationships with families can help you support and plan for these types of shifting priorities. You can use qualitative data collected through letters that families submit as part of the financial aid process, conversations with current and prospective parents, and exit interviews to help you better understand and address both value and priorities of your school community overall.

One approach is to develop personas to understand both the financial and emotional impact of tuition on different types of families. In a 2018 study, NAIS asked parents how they feel about paying tuition (note: They could check off more than one answer): 54% said they were satisfied, 47% reported feeling stressed, 37% were thankful, 34% worried, and 23% said they felt overwhelmed. It is useful to understand the profile of the satisfied and thankful family versus the one who is stressed and overwhelmed. Creating personas can help schools know who finds your school affordable (and why) so school leaders can more effectively communicate value, create impactful marketing strategies, and ultimately attract and retain more of those types of families. If very few families in your school and your larger community feel positively about their tuition dollars, then schools need to dig deeper to better meet the values and priorities of their population.

How do I make difficult financial aid decisions when my mission is to serve Jewish children?

As people who work in mission-guided organizations, we often wish that our schools could serve every admissible student, but that is not realistic for tuition-dependent schools. Leaders must acknowledge that schools often cannot meet 100% of demonstrated need for all students. This may be an absolute, i.e., there is a minimum amount of tuition required for each student, or your school may determine that the budget can support only a certain number of chesed students. 

For families who require financial support beyond the program’s defined thresholds, my school prioritizes current families who have had a financial crisis. This fits within our mission and core values to care for those within our school community and try to maintain stability for the children of parents who are often suffering from illness, job loss or some other hardship. This also means that our school is not affordable for some families applying to our school for the first time. 

While it is painful for us to turn away these mission-appropriate students, remaining disciplined and steadfast to our strategic goals—both for enrollment and net tuition revenue—is central to the whole community’s health and well-being. In advance of every tuition assistance season, schools should grapple with the question, For which families will my school not be affordable? so the tuition assistance committee is prepared to make the hard decisions and stick to them.

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HaYidion Fall 2022 Affordability
Fall 2022
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