Frequently Asked Financial Q&A in the time of COVID-19
Immediate Concerns Around Enrollment and Affordability
Tuition: Many legal experts believe that parents are obligated to continue making tuition payments for the remainder of the school year in cases where the family still owes tuition for the current year and their school has moved to a virtual platform and has continued to educate their child. However, whenever possible, schools should consider whether they can be flexible with these payments, as parents may be experiencing adverse financial effects of the pandemic at the moment.
Cost reductions, staff reductions, and new staffing models: Assuming there may be a reduction in revenue, it is prudent for schools to consider a 5%-10% reduction in their 2020-2021 school budgets from previously budgeted levels. Schools may need to consider reducing some staff immediately and explore new staffing models and blended learning models for the next school year and beyond.
Pro-rata refunds on extra fees, defaults on remaining tuition: An area for consideration is whether to prorate non-tuition fees such as busing, lunch, after-school activities, trip fees, etc., with some portion returned to parents as a refund or tuition credit. Schools should ask their legal counsel about providing a tax receipt to parents willing to forego this refund or credit.
Future and Long-Term Financial Challenges Facing the Field
Increased scholarship needs: Overall scholarship needs will likely increase, and we are estimating that this increase could be approximately 40%--from an estimate of $600 million in the current year to an estimated $800+ million next year.
Enrollment decline: The overall estimate is a 5% decline, however, some schools could experience a much more significant decline, potentially 10-20%.
Sources of Funding
For parents: Hebrew or Jewish Free Loan Programs offer interest free, short term loans (typically $2,000-$10,000) that may be available to lower and middle income families in major cities throughout the U.S. and Canada. New York, Los Angeles, Chicago, and Toronto are among the leading free loan providers in North America.
For schools: JFNA is part of a non-profit advocacy group that has lobbied for $60 billion in loans for non-profits throughout the US. We are cautiously optimistic that new legislation will extend small business loans to nonprofits, and are closely monitoring efforts in Canada to provide relief to support at schools.