The high-level view on personal finance in our country is bleak. Economists at the Fed’s district office in St. Louis predicted that the U.S. unemployment rate could spike as high as 32.1% as early as this coming June, or even progressively through the summer. For comparison, the Great Depression peak was a staggering 24.9%. This isn’t breaking news, as the research emerged almost a month ago, and many have been talking about it for weeks.
This isn’t a doom-and-gloom piece, however. I promise! The light at the end of the tunnel is coming. For starters, this data says two things to me:
- We should anticipate melt to be at its highest during summer 2020.
- We need a mechanism to predict melt and capture students where they want to be.
Melt, from an enrollment management perspective, is the number of students, sometimes 5–10% of your newly enrolled, who pay a deposit in the spring, but exit the process and don’t end up coming to campus in the fall. Add into that your current students who leave your school at the same time. These are the movers and the shakers. Sometimes, these students leave your program because of family changes, moves, etc., and sometimes they are accepted from the waitlist of another school. There is a great deal of time between the deposit payment date and students showing up for the first day of school. In that time, anything can happen.
Schools often build budgets around summer melt, expecting a certain percentage of their enrolled students to drop out. In higher ed, this happens at a higher rate, but in K–12, schools should still build out a safety net for students leaving after paying their deposits. This could include setting revised expectations for melt, putting aside funds for COVID-19 financial aid, etc.
On the flip side, melt can help a school. Let’s zoom in on independent schools. Many students decide that their current situation isn’t working out for them at the end of a school year. Amidst COVID-19, many families are growing frustrated with their current school’s virtual learning program, and the impact they would feel if they were to start the 2020–2021 school year in a virtual classroom. Therefore, it’s not inconceivable that a higher number of students will be seeking a new school this summer, with a more robust virtual learning program. We’re hearing anecdotes suggesting that this is happening across the membership.
Those of us who have spun up great virtual learning models, and are doing visioning work to model our schools of the future, will have an opportunity to see this happen this summer.
That said, remember one thing. We can’t charge full tuition for zoom classes. We just can’t. We must be open to new tuition models, and see them as major, long-term growth opportunities for our schools (Tom Sheppard helps us with this on The Enrollment Spectrum Podcast).
So, how can we predict the shifts that will occur over the summer? At an institution level, you should be monitoring these key market factors:
- Local public schools’ virtual learning — Perform a competitive analysis of your local public district’s virtual learning programs. What has emerged in the media? How would you rank these virtual programs on a scale of 1–10.
- Peer schools’ virtual learning — Your peer schools have also been creating virtual learning platforms. How would you position their success and strength from 1–10? Also, how good of a job have they done on marketing this success to the public?
- Regional unemployment data — Is there a rate for your county? City? Town? Financial aid requests from current families — How many members of your community have asked for financial aid reconsideration due to job loss, furlough, etc.?
- Financial aid requests from prospective families— How many members of your prospective pool have asked for financial aid, or financial aid reconsideration, due to the same factors noted above?
- Your own school’s virtual learning — The most important question you can ask is: how would you rate your own virtual learning program? Have you completed a check-in community survey? How happy are your families? Pressure test your solution for now and for the long-term.
Your school should analyze each data point weekly. Better yet, you should name a member of your faculty as the point person to track this data and create projections for summer melt (note: if you haven’t established a cross-functional retention committee, then make one a priority — it’s a team effort to manage melt and to ensure a healthy enrollment).
How many of your current families will leave due to changes? Can you capitalize as an institution with the strongest virtual learning platform in your market?
Melt works in two ways: it can be a major advantage to schools seeking to capitalize on a fluid independent school market, but can also be a major loss if a school’s value does not match its price tag. With a strategic and innovative mindset, schools can ensure that they are on the positive side of what will be tumultuous spring and summer.
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