00:00Part of this is a function of the price, the cost of tuition at these elite private schools.
00:05The average across the country is $50,000 now, and at a boarding school, it's closer to $80,000.
00:11So that's really at, you know, a college level.
00:14And for secondary elementary school age kids, that's a hefty price.
00:21And there's a lot of families that that was always unaffordable, but it's increasingly unaffordable
00:26for even families that typically would consider themselves high earners.
00:31So the fact that they're doing this, like, giveaway, financial aid or whatever,
00:36indicates to me that these schools are growing desperate for students or what?
00:43Well, so the schools we spoke to, what they tell us is that they're noticing a change in their applicant
00:49pool.
00:50So they're noticing that they're getting applicants from either the children of very wealthy people
00:54who can afford these prices, no worries, or they're getting kids from low-income backgrounds
01:01that need full tuition, full rides.
01:05And they're missing the middle.
01:07That's how schools are phrasing it.
01:10So they want to attract more families who are sort of in between.
01:14Maybe they can afford to pay something.
01:16They can't afford the full price.
01:18And in some cases, it's a talent war.
01:21And in other cases, it's a matter of boosting their enrollment.
01:25Because nationally speaking, there are fewer kids for these schools to recruit
01:30because of the drop in birth rate.
01:32There's all schools, public, private, are competing for students.
01:37So when you're charging $50,000 or $80,000 in tuition,
01:42offering a discount is a way that you can try and attract and retain some of those students
01:46who have increasing options to consider.
01:50Okay.
01:50So if you're going to make financial aid or grants available to families that are making $500,000 a year,
01:59how sustainable is this?
02:00I mean, it might work for a year or two years,
02:02but is this a solution that can last beyond a few years?
02:06Yeah, that's really the question.
02:08I mean, of course, for a lot of the schools that are offering some of the most generous offers,
02:12these are schools that have very large endowments.
02:16One of the schools we mentioned, Deerfield Academy, Massachusetts Boarding School,
02:20their endowment's over a billion dollars.
02:22So obviously, they've got the resources.
02:25But the average endowment across private schools in the U.S. is about $9 million.
02:31So it's a very different story for a lot of schools.
02:34And we did have a rare situation last year here in Manhattan,
02:38where a school, Manhattan Country School, had to close down after it was known for offering sliding scale tuition.
02:46And after losing too many full-paying families, it did ultimately have to shut down.
02:51Yeah, I got to wonder if it's just like if you're offering that,
02:54then does your elite status sort of evaporate?
02:58Good question.
02:59Yeah.
02:59I mean, these schools all feast off of their elite status.
03:01Sort of self-defeating?
03:02Yeah.
03:03I mean, for a lot of these schools, and this is what's so interesting,
03:06they are really being transparent.
03:08They're publishing this on their website, their income thresholds.
03:11And for them, they say it's about making sure that the best are coming to their schools.
03:16And this is a little bit echoing what you see at the college level.
03:20Increasingly, elite colleges are saying we have these income thresholds,
03:26where promising certain levels of tuition not going above a certain level, offering calculators,
03:34because they're basically saying, and we mentioned some families in our story who said,
03:38you know, we just, we know we can't afford it, so we're not going to even apply.
03:43Right.
03:43And these schools are trying to ensure that all families do apply, all students do apply,
03:50if they're interested, and then if they get in, they have a projection.
03:53So they can pick the best ones.
03:54Yes.
03:55Now, Scarlett mentioned, a lot of these schools do go to the muni market to issue pay, to raise money.
04:04What's the reaction in the market in terms of, you know, investor reaction when one of the schools is doing
04:14this?
04:14Yeah, it is.
04:16I mean, the discount rate of the amount of financial aid compared to full paying families
04:21or the school's operating income, these are metrics that investors watch very closely.
04:30The independent, the private schools that borrow in the muni market, these deals are very, very niche,
04:36very specialized, and so investors really do apply a lot of scrutiny to them because of that,
04:45because they are so special.
04:46So it's something that, for sure, these schools will, or these investors will watch closely,
04:54depending on how it might impact applications.
04:59You know, it's really going to matter the specific school and the enrollment and the demand for that school.
05:08I know.
05:08Every time you write about a school that's borrowing money,
05:10I notice how you include stats like the acceptance rate and the enrollment rate,
05:15because these matter to muni investors.
05:18It kind of tells the story of demand for this school and, therefore, whether it's a good credit risk, right?
05:24Totally.
05:25Yeah, yeah.
05:25And, you know, as long as students want to go to that school and families are paying to go to
05:32that school,
05:33you know, then that's a good credit in a lot of ways.
05:37And you're looking at my trust that you want to be able to acknowledge the net,
05:37walk through your Arch Completion party,
05:37have you very happy if you teach that or not?
05:37I don't think I can't wait for you,
05:37it's very much if I think you teach people out to go to that school.
05:37There's definitely the figuring out what I'm doing here and doing here,
05:37and really talking about rural areas there.
05:37Yeah, and I'm authorities are working on campus.
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