for independent schools: The sector is financially stronger than it was five years ago, but the operating model is under growing pressure.
NBOA’s Financial State of the Industry: BIIS 5-Year Trend Report 2021–2025 (note: the report is free to NBOA members and $125 for non-members) tracks 18 financial and operating indicators for 279 day schools and boarding schools that submitted financial operations data every year from 2020-21 through 2024-25.
By following the same schools over time, the report provides a useful longitudinal view of what changed during (2020-2021) and after the pandemic, rather than a one-year snapshot of different schools in each period. The pool of schools was not statistically selected but NBOA notes that the schools included are distributed geographically across the United States.
The headline is not a simple story of recovery or distress. It is both. Enrollment and demand signals are generally positive. Balance sheets have improved. Net tuition revenue has grown. Capital investment is beginning to recover. However, expenses are rising faster than tuition revenue, the per-student “gap” that must be covered by other revenue sources is widening, philanthropy is becoming more uneven, and deferred maintenance has increased. Independent schools appear to have gained financial runway, but they are also facing a sharper test of strategy amid demographic and economic shifts that are exerting pressure on their financial models.
Enrollment Patterns
Enrollment tells the first part of the story. Average enrollment among the 279 schools increased from 571 students in 2020-21 to 604 in 2024-25, a 5.7% gain. Median enrollment rose from 475 to 495 students, a 4.2% increase. Most schools grew: 76% reported higher enrollment over the four-year span, while 23% declined.
However, the pace of enrollment growth slowed materially, from a 2.8% increase early in the period to just 0.7% from 2023-24 to 2024-25. Larger schools fared better: those at the 90th percentile increased enrollment 8.1%, compared with just 1.6% growth at the 10th percentile. Regionally, the report notes that 44% of schools in New Jersey and New York and 35% in the Midwest experienced enrollment declines.
The broader demographic environment is not uniformly favorable. NCES data show private K-12 enrollment was 4.7 million in fall 2021, unchanged from fall 2019, with private schools representing 9% of combined public and private enrollment in both years. However, NCES’s broader projections for elementary and secondary enrollment expect both public and private enrollments to be lower in 2030 than in 2019, with private elementary and secondary enrollment projected to decline 12% between 2019 and 2030. The takeaway for independent schools is that demand exists, but it is likely to be more competitive, more regional, and more sensitive to value.
The second major story is balance sheet strength. Average total net assets per student increased from $86,979 to $104,630, a 20.3% gain. Median total net assets per student rose even faster, from $66,400 to $84,410, a 27.1% increase. Fully 80% of schools increased total net assets per student over the period. Expendable financial resources per student also improved, rising from $33,741 to $40,105 on average, an 18.9% increase; the median rose 26.4% from $25,302 to $31,988. However, that strength was not universal, as 37% of schools saw per-student expendable financial resources decline.
This distinction between average total net assets per student and expendable financial resources per student is important. Total net assets are a sign of long-term financial capacity, but they may be tied up in buildings, endowment restrictions, or other illiquid resources. Expendable financial resources are closer to the funds a school can use to handle shocks, seed initiatives, or manage downturns. The report suggests that many schools are better capitalized than they were in 2020-21, but not all are more flexible.
On pricing, the data are striking. Average gross tuition and fees per student increased from $31,563 to $37,517, an 18.9% gain. Median gross tuition and fees rose 18.7%. Net tuition and fees per student, after financial aid and tuition remission, rose even faster: average net tuition increased from $25,636 to $30,817, a 20.2% gain, while the median rose 20.9%. Over four years, net tuition and fees per student increased at 97% of schools.
That is a positive sign for the tuition-dependent independent school model. Schools were not simply raising sticker prices while discounting away the gains. Financial aid per student increased 14.9%, and 71% of schools increased financial aid per student, but financial aid as a percentage of gross tuition and fees declined slightly from 14.2% to 13.3%. The total discount rate, including tuition remission, also declined from 16.5% to 15.7%.
The risk is affordability. NAIS’s 2024 research on how parents pay school costs found that among parents who applied for financial aid, only 10% said they would still be very or extremely likely to send their children to private school without that support. NAIS also reported that 55% of parents felt stressed about paying for private school, up from 47% in 2018. NBOA’s findings show pricing power, but schools should not confuse pricing power with unlimited household capacity.
Expense Growth
The most important warning sign in the report is the rate of expense growth. Average total operating expenses per student increased from $30,486 to $38,798, a 27.3% increase, with an average annual increase of 6.8%. The median rose 28.6%. Nearly every school in the study (95%) saw operating expenses per student increase.
Because net tuition per student rose 20.2% while expenses rose 27.3%, the gap between what schools charge in net tuition and what they spend per student widened significantly. The average gap per student increased from $4,833 to $7,469, up $2,636, and 80% of schools saw the gap increase.
This is the core structural challenge. Tuition increases have been strong, but expense increases have outpaced those gains. One analysis that might be useful is whether or not the operating expense increases were due to overall inflation or increases in faculty and staff FTE’s. The operating margin data reinforce the point, though with an important caveat. Average operating margin declined from 8.7% in 2020-21 to 5.7% in 2024-25, while the median declined from 8.7% to 4.9%. NBOA notes that margins were unusually high in 2020-21 and 2021-22 because some schools received federal pandemic assistance, so the decline partly represents a return to normal. Still, “normal” now includes higher recurring costs.
Admissions and Philanthropy Differ in Some Ways
Admissions and philanthropy offer mixed but useful signals. Application coverage, applications divided by new students, increased from 251% to 263% on average, and the median rose from 242% to 262%; 60% of schools improved this metric over four years, suggesting that many schools have deeper applicant pools than they did at the start of the period. At the same time, a better indicator may be calculating the applications coverage percentage for full pay students and for financial aid students. A much lower coverage ratio for full pay students could be indicative of a tighter market.
Fundraising, however, is becoming a differentiator. Average annual giving per student increased 11.2%, from $1,475 to $1,641, and the median rose 13.1%. But the bottom and top of the distribution moved in opposite directions. At the 10th percentile, annual giving per student fell from $485 to $312. At the 90th percentile, it rose 20.4%, from $4,037 to $4,862. Total contributions per student were relatively steady, peaking at $2,170 in 2021-22, while the median rose from $1,780 to $1,973.
That divergence aligns with broader philanthropy trends. Giving USA has reported declining donor retention, especially among small-dollar donors, while Blackbaud’s 2025 giving trends found that mid-level and major donors carried sector growth, with gifts of $1,000 or more increasing while sub-$1,000 giving declined. For independent schools, that means advancement capacity may increasingly determine which schools can close the operating gap without relying too heavily on tuition increases.
Costs of Operating and Maintaining Facilities
Facilities are the final piece of the post-pandemic picture. Average property, plant, and equipment, net of depreciation, rose from $42,104 to $49,556 per student, a 17.7% increase. Median PP&E per student increased 16.6%. Yet only 51% of schools increased PP&E per student, indicating uneven reinvestment.
More telling is the capital spending ratio, which compares capital expenditures with depreciation (capital expenditures divided by depreciation expense). NBOA reports an average ratio of 0.79 over five years; a ratio below 1.00 suggests facilities are being consumed faster than they are being renewed. The ratio improved from 0.52 in 2020-21 to 1.11 in 2024-25, but it was below 1.00 in four of the five years.
Debt does not appear to be the main driver of the facilities rebound. Average plant debt per student increased 7.3%, from $14,580 in 2020-21 to $15,645 in 2024-25, but only 35% of schools increased plant debt per student, while 53% decreased it. Among schools with plant debt, the ratio of PP&E to plant debt improved from 2.58 to 2.98, and 68% of those schools saw the ratio improve.
Key Takeaways from the Report
For school leaders and trustees, the report points to a clear planning agenda. First, enrollment strategy cannot be separated from tuition strategy. Second, financial aid must remain mission-centered but financially modeled over multiple years. Third, expense growth needs board-level visibility, especially compensation, benefits, program expansion, and facilities costs. Fourth, fundraising strategy must account for a donor base that may be narrowing even as dollars rise. Lastly, capital planning should move from deferred maintenance triage to disciplined reinvestment.
NBOA’s data do not suggest a sector in crisis. They suggest a sector with real strengths: resilient demand, improved balance sheets, stronger net tuition revenue, and renewed capital investment. But they also show why the next five years may be harder than the last five. The schools best positioned for the future will be those that use their improved financial position not simply to absorb higher costs, but to redesign the financial model around value, affordability, philanthropy, flexibility, and long-term stewardship.
While the report was generally favorable, I was skeptical about the section on tuition discounting and decided to dive a little deeper into the numbers disclosed in the report, as well as other reports that may provide deeper insights.
Tuition Discounting: The Aggregate Number May Hide Merit-Aid Pressure
One of the more reassuring findings in NBOA’s report is that tuition discounting appears to have moderated. Financial aid as a percentage of gross tuition and fees declined from 14.2% in 2020–21 to 13.3% in 2024–25, and the total discount rate, including tuition remission, declined from 16.5% to 15.7%. On the surface, that suggests schools have protected net tuition revenue even as affordability pressures have grown.
However, this is also one of the areas where trustees should read the report with caution. NBOA’s financial aid metric combines need-based aid and merit scholarships. It does not separately show whether schools are increasing merit awards to attract high-performing students, fill seats, improve yield, or compete with neighboring schools. That distinction matters because a school can reduce its overall discount rate while still increasing merit aid, especially if gross tuition is rising faster than aid dollars or if need-based aid is growing more slowly.
Outside sector data suggest that merit aid has been gaining ground over the longer term. NAIS reported that the average merit award increased by about 36% between 2010–11 and 2020–21, and that the number of schools offering merit aid grew by nearly 40%. The Enrollment Management Association’s (EMA) earlier NAIS/DASL-based analysis found that median merit aid grew faster than median need-based aid over a five-year period, even though merit aid remained a small share of total aid dollars.
This makes trustee anecdotes about rising merit aid credible, even if they do not directly overturn NBOA’s aggregate finding. The more precise takeaway is that discounting is becoming more strategic and more uneven. Some schools may be successfully limiting discounting as a share of revenue. Others may be using merit awards more aggressively to generate applications, increase yield, or compete in crowded markets. NBOA’s own 2024 tuition discounting research points in that direction: the overall discount rate declined, but tuition remission and merit aid played a larger role in discounting.
For boards, the practical lesson is that the single “discount rate” is too blunt. Schools should separately track need-based aid, merit aid, tuition remission, average award size, new-student versus returning-student discounts, yield by award level, retention by award level, and net tuition revenue by cohort. A stable or declining total discount rate may still mask a recruiting strategy that is becoming more expensive, more competitive, and potentially more damaging to margins.
The fastest way to get NAIS, NBOA, or EMA to collect this data is to have Heads of School, Chief Financial Officers, and Board Officers ask for it. The Department of Education has collected and published college and university data like this for years. Even though private schools do not receive federal government financial aid funds, if Trustees want to avoid the quagmire of tuition discounting in which many private colleges are trapped, they should ask for more transparency.
