by Dan Perla

Here’s a fact many day school parents may find surprising. If you’re paying full tuition at a typical day school in the US, you’re still receiving a scholarship. According to data compiled by YU’s Institute for University-School Partnership, it appears that a majority of day schools in five major U.S. communities charge less in gross tuition than it actually costs them to educate a child. This amounts to a scholarship, or subsidy, for the roughly 50% of the families in this sample who are listed as “full paying” families.

YU’s data is based on extensive financial information collected from nearly 40 schools in 5 communities across the US as part of an AVI CHAI-funded financial benchmarking program. The benchmarking program indicates that the average full paying student is, in fact, receiving a $500 subsidy. In two of the cities, the subsidy is in the $1500-$2000 range. In a third city, it is a whopping $4,000. While they were not formally part of benchmarking program, day schools in the Metrowest, New Jersey region and Boca Raton, Florida report that they too set gross tuition below the actual cost to educate. While some schools do, in fact, charge more than the true cost to educate, even higher priced schools in affluent communities like Bergen County, N.J. typically charge a gross tuition that is within 10% of the actual cost to educate (the modest excess over actual cost typically goes to fund scholarships).

In reality, this subsidy phenomenon should surprise no one. Even the most elite (and expensive) private schools on both coasts typically charge a tuition that is thousands less than their actual costs per child. Many of these elite schools rely on annual campaigns and significant endowments to make up the difference. Most of the day schools in the U.S. don’t have significant endowments. Instead, they depend on annual Federation allocations (where they still exist) and a myriad of fundraising events – annual dinners, auctions and SCRIPS programs. In general, these efforts provide the typical day school with 20%-25% of their total budget (based again on YU’s data from 5 major communities). Such funds are used primarily for scholarships to the truly needy but, to a lesser degree, to subsidize the actual cost of education for EVERY child.

So the next time you’re sitting around the Shabbat table listening to a friend assert that the reason that his tuition costs are so high is that he’s subsidizing someone else’s child, it might pay to pull out a copy of Hemingway’s masterpiece and respond with the following paraphrase: Ask not for whom the scholarship bell tolls, it tolls for thee!

Dan Perla is Program Officer of Day School Finance at The AVI CHAI Foundation.
cross-posted to The Avi Chai Foundation Blog.