A Closer Look: The Implications of Declining Birth Rates on Independent Schools

by Peter Baron

The past months have been fascinating talking with heads of school about the business model and emerging challenges.

While much of my focus here has been on talking about how hiring and staff retention signals a stressed business model, other challenges exist:

  • A new generation of parents with different expectations of school
  • Tightening credit markets (restructuring debt is becoming increasingly complex)
  • Increasing reliance on tuition discounting

But today, let’s talk about the declining birth rate.

According to data from the CDC, the national birth rate experienced a notable decrease from 2007 to 2022, plummeting from 14.3 to 11.1 births per 1,000 people, a decline of almost 23%.

The reasons for the decline in the U.S. birth rate, as cited in this Axios article, include economic factors and changing societal norms.

These shifts in birth rate are deeply intertwined with how individuals and families make decisions about having children. 

It boils down to the economics and societal changes:

  • The rising costs of raising kids and the financial security needed before even thinking about starting a family.
  • People’s views are changing; they’re weighing their career goals, rethinking when to get married, and when or if to have kids. 

So, what does this mean for independent schools? Well, it’s complicated.

If you’re in a part of the country benefiting from lots of people moving in (the Southeast has seen healthy population growth), this may not top your list of concerns, although it’s important to note that birth rates have declined in every state.

But if you’re in other regions, like parts of the West or Northeast, the migration of people from your area to new regions coupled with a decrease in birthrates likely means you’re either experiencing or will experience downward enrollment pressure.

So, what can you do to counter the trend? Start by raising this issue with your leadership team.

Here are a few suggestions to help you get started:

  1. Be in tune with the data: We must be acutely aware of the shifting demographics. With the national birth rate dropping by nearly 23% in just 15 years, it’s clear that the pool of potential students is shrinking in the most affected regions. We must rethink our enrollment strategies and projections to align with this new reality. You can start by being in tune with your local demographic trends.
  2. Strategic Planning: Adapting to these demographic shifts calls for rethinking long-term strategies. This includes continuing our essential work to recruit diverse student bases, discovering alternative funding sources, and identifying ways to optimize revenue potential on campus.
  3. Marketing: Our marketing approach must be more strategic and targeted than ever. We can’t rely on traditional methods alone. Embrace digital marketing and message personalization, and break free of just marketing your school’s features and benefits. Lean into sharing stories to help millennial parents discover if their values align with yours.
  4. Business Model Innovation: Fewer children born may impact tuition revenue— the math’s not in our favor. But this is our chance to innovate new financial strategies, including fundraising initiatives, expense control, revenue generation opportunities, and revised tuition models.

Remember, there’s no one-size-fits-all approach here.

Each school will chart its course, but together, we can turn these challenges into opportunities for growth.

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