Doing the Student Retention Math

(Originally published in February 2015)

I spoke earlier this week with a head of school who has spent many hours in the past month meeting one on one with the parents of middle schoolers who are making noise about transferring to other schools-mostly public schools. “I started out with a list of 34 kids,” he told me, “and we have worked the list down to about 15 who still might leave.”

That’s undeniably an impressive turnaround percentage, but it has also required an enormous outlay of time and energy. The personal expenditure, however, is much, much less than the school might have lost or spent if those students were not persuaded to re-enroll.

At the Tarrant Independent Schools Consortium in the Dallas/Fort Worth area, I laid out this simple math (emphasis on simple!), illustrating the tenuous enrollment position of many private schools.

If a school of 416 students (32 per grade, K-12) experiences 10% attrition, not counting 32 graduates, the number of enrolled students prior to any new admissions is 346. At an average tuition of $10,000 per student, 10% attrition represents $380,000 in lost revenue (9% of the budget). Add in the uncertainty of Kindergarten enrollment, and the total starting revenue deficit is $700,000.

How do we get that $700,000 back? Admissions!

Many schools assume the automatic existence of the annual loss in revenue (in our experience many heads and boards are actually content with 10% attrition, though wishing it were lower). It becomes the admission office’s primary function to restore what had been an existing revenue stream with new business.

And how does the admission office do it? Let’s assume that the enrollment target for our sample school is 2% growth, or just 8 more students.

  • Including Kindergarten, the admission office must admit and enroll 78 new students (a 19% net turnover-1 out of five students!).
  • To get to 78, assuming an 80% admit to enroll ratio, 98 students must be admitted.
  • Assuming an 80% admission rate, 123 students (30% of the previous year’s total enrollment of 416) must complete applications.

This is where it starts to get scary.

  • Assuming that only 50% of families with whom admission officers interact will either start an application or seriously consider applying, the admission staff (all 1.5 of them!) must be inmeaningful conversation with the families of 246 students (59% of the previous year’s enrollment).

In a school with a budget of $4.16m, a typical admission office has no more than two full-time staff, and many will have lighter staffing still. Assuming a total outlay between staff costs (1.5 FTE in the admission office and, say, .25 FTE from marketing/communications) of $125k and $25k for marketing initiatives (direct mail, magazine ads, blimps, coffee mugs, etc.), each new enrollee costs $1,923 or 19% of their first year’s tuition.

Of course, every year our sample school has to find and enroll 32 Kindergartners. Not much we can do about that, even though Kindergarten families are more likely to come looking for us than the parents of third or eighth graders. But the other 38 students–the kids we already had–well, there is more that we can do about that.
In the case of the above mentioned head of school, his heroics over the past month saved his school the value of each retained student’s tuition. But more than that, he potentially saved the school an additional $2,000 (or more) per student, because those seats will not be filled with new recruits.
Still, this is not the optimal way to retain students. So what do we need to know about why families leave that will help us to retain more students without the theatrics of narrowly averted re-enrollment disasters?
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2 thoughts on “Doing the Student Retention Math

  1. […] In a previous post on attrition, we modeled out its troubling cost. Given that household incomes and affordability are ubiquitous concerns, attrition of only 10% can suck away more than 10% of each new student’s tuition, driving up the cost to operate, and the price, for everyone. Even modest attrition creates a vicious cycle that converts admissions activity from revenue enhancement to revenue replacement. And you face the additional penalty that a good chunk of revenue from new students never makes it into the classroom to support faculty and programs. […]

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  2. […] In a previous post on attrition, we modeled out its troubling cost. Given that household incomes and affordability are ubiquitous concerns, attrition of only 10% can suck away more than 10% of each new student’s tuition, driving up the cost to operate, and the price, for everyone. Even modest attrition creates a vicious cycle that converts admissions activity from revenue enhancement to revenue replacement. And you face the additional penalty that a good chunk of revenue from new students never makes it into the classroom to support faculty and programs. […]

    Like

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