The Number no one watches

Why good schools go broke, and mediocre ones survive

Gonzalo Chirinos

Contents

Introduction

1. The Enrollment Fallacy

Why more students doesn't always mean more money — and what it costs when no one does the math

2. The Price of Generosity

How to give away money without realizing it — and what to do when you finally do

3. The Cost of Goodbye

Why losing an instructor costs far more than what shows up on the payroll — and what the school schedule has to do with it

4. The Money That's Already Yours

Federal, sector-specific, and state funds for postsecondary institutions — and why nearly half never reach the institutions they're meant for

5. The Building Trap

Why buying the campus is the most expensive dream in vocational education — and when it makes sense anyway

6. Retention Is Profitability

The student already inside is the cheapest to keep — and the most expensive to lose

7. The Technology Ledger

The real ROI of LMS platforms, SIS systems, and AI tools. How to tell genuine innovation from educational marketing in disguise

8. Diversify or Die

How the same labs, the same instructors, and the same campus can generate revenue most directors never even consider

9. The Board That Doesn't Get the Numbers

How to talk about finances to people who aren't financial — and why most presentations do exactly the opposite

10. The Cost of Getting a Student

Why most institutes overspend on admissions, underperform on results, and don't know which of the two is the problem

11. The Antifragile Institution

How to build an institution that doesn't just survive the next crisis — but comes out stronger

Introduction

THE NUMBER NO ONE WATCHES

The brutal economics of running an educational institution

There was a director in Phoenix who held the highest enrollment record in her institution's history. And a $47,000 cash-flow deficit in the first quarter.

There was a director in Cincinnati whose institution had been in the family for three generations, whose graduates found jobs, and whose tuition discount rate was 31.4%. He didn't know. No one had ever calculated it.

There was a director in Nashville who lost 18% of her enrollment in one year. And who, two years later, was reporting the strongest financial performance in the institution's history. Not because enrollment had bounced back. But because she had discovered assets she had never put to work.

And there was a director in Kansas City with a $180,000 admissions budget who had never calculated what each enrolled student actually cost him. When he finally did, that number changed every decision he made about how to spend that budget.

None of these directors was bad at their job. All of them were committed, hardworking people who genuinely cared about their students and their institutions. The problem wasn't dedication. The problem was information — or more precisely, the numbers that existed but that no one was watching.

This book is about those numbers.

* * *

A Note on Where This Book Comes From

My name is Gonzalo Chirinos. I'm the founder of Accounting Care, a firm that specializes in finance for postsecondary educational institutions. For more than a decade, I've been sitting down with directors of technical institutes, vocational colleges, culinary schools, health institutes, and business programs to go through their numbers.

The conversation always starts the same way. The director shows me what they have: the reports they prepare for the board, the financial statements from the outside accountant, the spreadsheets someone on the team keeps more or less up to date. Everything looks reasonable. Then we ask the first question: how much does it actually cost you when a student leaves before finishing the program?

Silence.

Not because the answer is bad — sometimes it is, sometimes it isn't. But because no one had calculated it. The data needed to calculate it exists in the system. The number matters more than almost any other financial figure at the institution. And yet it doesn't appear in any report. It doesn't come up in any board conversation. It isn't part of any budget decision.

It was the number no one was watching.

I've spent years seeing variations of that same pattern. It isn't always attrition. Sometimes it's the real discount rate — not the published one, the actual one. Sometimes it's the cost per student acquired. Sometimes it's the amount of available federal funds that no one has applied for. Sometimes it's the disconnect between the student information system and the accounting system that makes it impossible to know which programs are profitable and which aren't.

The number changes. The pattern doesn't. There is information that exists, that matters, and that no one is watching. And when someone finally watches it, decisions change.

The institutions that survive and thrive are not the ones with the best programs. They're the ones that have built the habit of looking at the numbers no one wants to look at.

This Book Is Not for Accountants

Before you set this book down because you think you're not financial enough to read it: I'm not either, in the sense that matters. This book was not written for people with backgrounds in accounting or corporate finance. It was written for people who run educational institutions — with everything that implies at the pedagogical and administrative level — and who also have to make sure the numbers work.

In most small institutes, those two people are the same person. The director who is also the CFO. The director who also signs the checks, approves the scholarships, renegotiates the lease, and who, on at least one memorable occasion, unclogged the bathroom on the third floor.

For that person, standard finance books are nearly useless. They're written in a language that assumes a background most educational directors don't have. And education management books, when they address finance at all, tend to stay at the level of general principles that sound reasonable and don't help anyone make a specific decision next Monday.

This book tries something different. It tries to write about the finances of educational institutions the way someone would who has had those conversations hundreds of times — with real directors, at real institutions, facing real financial problems that needed concrete answers. No unnecessary jargon. No formulas that only work on paper. With data, with stories, and with the honesty to say when the smartest answer is the one that looks least like it.

That last part is what makes this book, I hope, closer to Freakonomics than to an accounting manual. Freakonomics doesn't teach economics. It uses economic thinking to illuminate things that seemed obvious and turned out to be wrong, or that seemed complicated and turned out to be simple. This book tries to do the same with the finances of postsecondary education.

High enrollment isn't always good news. Generous scholarships can sink an institution. Paying a higher salary can be the most profitable decision of the year. Buying the building can be the exact opposite of building equity. And the number that best predicts the financial health of an institution isn't the one that appears on the first line of the income statement.

Why This Book, Why Now

Small postsecondary institutions — technical, vocational, health, culinary, business, arts and trades — are going through the most demanding period in their recent history. High school graduation demographics are falling in most states. Competition, from other institutions as well as online alternatives, is more intense than ever. Operating costs keep rising. And public funding, when it exists, requires increasing regulatory compliance capacity to access.

In that context, the institutions that will survive and thrive are not necessarily those with the most innovative programs or the biggest budgets. They're the ones that make better financial decisions. The ones that know how much everything costs them, how much each program generates, when to grow and when not to, and how to build the resilience that lets them survive the next disruption — whatever form it takes.

Those decisions don't require an MBA or a twenty-person finance department. They require correct information, presented in a comprehensible way, by someone who understands the specific context of an educational institution. They require the numbers that no one was watching, but that were there the whole time.

How to Navigate This Book

The book has eleven chapters. Each one addresses a specific financial problem, starts with a real or composite story that illustrates the problem, and ends with three concrete actions you can take this week. Not next cycle. This week.

You can read it cover to cover — it's designed to work that way, with each chapter building on the previous ones. But you can also go directly to the chapter that is most urgent for your institution right now. Each one stands on its own.

If you can only read one chapter right now, read the one that makes your answer most uncomfortable when you think about your institution. Discomfort usually points to the number no one has been watching.

What This Book Won't Give You — and What It Will

This book will not turn you into an accountant. It won't give you all the answers for your specific situation, because your institution has particularities no book can anticipate. It won't replace a good financial advisor who specializes in education.

What it will do — if you read with honesty and apply even one idea per chapter — is change the quality of the questions you ask. About your costs. About your revenues. About your growth decisions. About the technology you buy and the technology you don't use. About the instructors you're going to keep and the ones you're going to lose. About the building the board wants to buy.

Better questions produce better decisions. In the context of an educational institution, those decisions are not purely financial. They're the difference between a program that keeps existing and one that doesn't. Between a family in which someone landed their first skilled job and one where that stayed pending.

That's what's at stake. Not the numbers themselves. What the numbers make possible.

Let's begin.

— Gonzalo Chirinos

Chapter 1

The Enrollment Fallacy

Why more students doesn't always mean more money — and what it costs when no one does the math

— The Story of Jennifer Walsh —

Jennifer Walsh had two jobs. The first was the one on her business card: Director of Lakeshore Technical Institute in Gary, Indiana. The second was the one that wasn't: interim CFO, regulatory compliance coordinator, and, on at least one memorable occasion, emergency plumber for the third-floor bathroom.

It was the first week of the fall semester, a Tuesday in August, when Jennifer received two emails that arrived forty minutes apart. The first came in at 7:14 a.m. from the Registrar's office. The message was brief and wonderful: Lakeshore had reached 524 enrolled students for the semester. An all-time record. After three years of declining numbers — pandemic, competition, the usual disaster — the institute had finally turned the corner.

The second email arrived at 7:53 a.m. from CFO Robert Haines. Three sentences. The first-quarter cash flow projection showed a deficit of $68,000. He wanted to meet that day. He'd already escalated to the board.

Jennifer printed both emails. She put them side by side. She stared at them in silence for a long time.

Record enrollment. Less money than the year before.

She called Robert.

"Robert, something's wrong with your numbers."

"No, Jennifer. The numbers are perfectly fine. What's wrong is the model."

That answer is, in a nutshell, the subject of this chapter. And probably of several of the financial problems your institution is dealing with right now without quite knowing why.

* * *

Before explaining what went wrong at Lakeshore, it's worth clarifying something: Jennifer Walsh is not a bad director. By any reasonable measure, she's an excellent one. Committed, hardworking, she knows her students by name. The problem wasn't her. The problem was that no one — not her, not Robert, not anyone at the institution — had asked a question that seems obvious but that almost no one asks before launching a growth campaign.

The question is this: how much does each student we add actually cost us?

Not how much they pay. How much they cost. There's an enormous difference, and understanding it is the difference between growing and growing toward a cliff.

The Most Important Idea No One Explained to You: Marginal Cost

Think about a pizza place. If the oven is already on, the dough is ready, and the cook is working, making one more pizza costs almost nothing. The cost of that additional pizza — what economists call the marginal cost — is minimal: a little cheese, a little sauce, five minutes of oven time. Everything else was already paid for.

Now imagine your pizza place is full and ten more customers walk in. To serve them, you have to open the back kitchen, call in another cook, pay overtime. Suddenly those ten extra pizzas cost a lot more than the ones before them. The marginal cost went up.

Your technical institute works exactly the same way. Except instead of pizzas, you're selling class sections. And instead of ovens, you have labs, instructors, and accreditation agreements you can't ignore.

Marginal cost is not what it costs to have a student. It's what it costs to have one more. Those sound the same. They're not.

If your institute has 468 students and one more arrives, that student probably fills an empty seat in an existing class. The instructor is already hired. The lab is already equipped. That additional student is almost pure profit. Welcome aboard.

But if your classes are already full and you add 56 new students — enough to open four new sections — the story changes completely. Now you need additional instructors. Lab equipment that wasn't in the budget. More academic advising hours. More software licenses. More everything. And suddenly each of those 56 new students isn't generating profit. They're generating a loss.

That's exactly what happened at Lakeshore.

What a Record Enrollment Looks Like When You Strip Away the Shine

Back to Jennifer. Her campaign had produced 56 new students above the previous year's baseline: 31 came from manufacturer partnerships, 25 were first-generation students who qualified for Pell Grants. On paper, the institute had grown 12%. Reason to celebrate.

The problem was what those 56 students required to exist inside Lakeshore. The institution was already operating at comfortable capacity. To accommodate the newcomers, four additional sections had to be opened across three different programs. And opening a section isn't free. It's a new instructor, or existing instructors on overtime. It's lab equipment. It's more load on student support services — which in many cases are contractual obligations, not optional.

That last point deserves a pause. The time of administrators is a real cost. It doesn't appear on any invoice. It has no line in the budget. But when Jennifer spent sixty hours in May and June at community events promoting the institute, those hours came from somewhere. They came from time she didn't spend on other things. That has a value. And that value should appear in the calculation of what it cost to acquire those 56 students.

When all the costs are added up — instructors, equipment, services, IT, the admissions campaign, the partnership coordination — the real cost to serve each of those 56 additional students was $4,190. The net revenue each one generated — after discounts, grants, and the negotiated rates with the manufacturers — was $3,415.

The difference is $775 per student. Multiplied by 56 students: $43,400 in annual losses, disguised as a record.

Lakeshore Technical Institute: What the Record Really Cost

Prior year enrollment 468 students

Record year enrollment 524 students (+56)

New sections opened 4 sections

Gross revenue from 56 new students + $235,000

Less: grants and discounts applied – $44,000

Net revenue from new students + $191,000

New instructors (salary + benefits) – $118,000

Unbudgeted lab equipment – $19,000

Additional student services – $24,000

Emergency IT upgrade – $12,000

Admissions campaign and events – $31,000

Manufacturer partnership coordinator – $17,000

Net result of growth – $43,400

What each new student cost $4,190

What each new student paid (net) $3,415

Loss per student above capacity threshold – $775

* Composite case with representative data from small technical institutes. Sources: NCES IPEDS 2022–2023 and ASBO International.

The $68,000 deficit in Robert's email was the first-quarter version of this problem: startup costs front-load before revenues catch up. But the annualized structural damage was $43,400. Real, repeatable, and — this is what makes it sting — completely predictable if someone had done the math before launching the campaign.

"The mistake wasn't the campaign. The mistake was not knowing what the campaign would cost if it succeeded."

Lakeshore Is Not an Isolated Case

If this were the story of a distracted director in Indiana, it would be anecdotal. But the National Center for Education Statistics reviewed data from more than 400 technical institutes with fewer than 1,000 students over six years and found something unsettling: among those that grew more than 10% in a single year, nearly 40% reported lower operating margins in that same period. They grew. And they got poorer. At the same time.

Why? Because technical institutes are not software companies. They can't simply add users without adding capacity. They have labs with physical seat limits. Instructors with specific credentials that can't be ordered on Amazon. Accreditation agreements that set minimum staffing ratios. Every additional student who crosses the capacity threshold drags costs that tuition prices don't always cover.

Virginia College: Growing to Die

Virginia College operated in multiple states, offering vocational programs in health, technology, and business. It grew aggressively during the first half of the 2010s, opening new locations and filling classrooms. Enrollment figures were impressive. What wasn't impressive was the margin. Its health programs required clinical coordination, external practicums, and instructors with specific licenses. Each new cohort required incremental investment that tuition fees didn't fully recover. Virginia College shut down in 2019. It left tens of thousands of students unable to finish their programs.

Lincoln Educational Services: The Boring Virtue of Doing the Math First

Lincoln Educational Services operates vocational colleges in the eastern and midwestern United States. What Lincoln does, consistently and documentably in its financial reports over more than a decade, is one very simple thing: before launching any new program or expanding an existing one, it calculates whether it makes financial sense. Not just the cost of the instructor. The full cost: student services, practicum coordination, marketing to fill the cohort, administrative time. If the program can't demonstrate that it reaches break-even within eighteen months, it doesn't launch. The result? Lincoln sometimes grows more slowly than its competitors. It also keeps existing when many of those competitors are gone.

Concorde Career Colleges: The Problem That Doesn't Show Up in the Budget

Concorde operates health programs — dental assisting, medical assisting, respiratory therapy — across multiple states. Their version of the marginal cost problem is particularly interesting because the resource being depleted isn't money. It's clinical placements. Health programs require students to do practicums at hospitals, clinics, and doctor's offices. Those sites have limited spots. When an institute decides to grow enrollment without first confirming there will be enough clinical sites for everyone, the problem doesn't appear in the budget until it's too late.

In health programs, the cost of the next student is sometimes not measured in dollars. It's measured in clinical placements. And when those run out, everything runs out.

Four Numbers. One Hour. No Excuses.

Calculating marginal cost doesn't require a full-time accountant or specialized software. It requires four numbers and the honesty to get them.

The first: how much does each student actually pay? Not the price you publish. What you actually collect after grants, employer discounts, and any special agreements. In most technical institutes, this number is between 12% and 22% lower than the list price.

The second: how much does it actually cost to open a new section? Not just the instructor's salary. The full salary with benefits, plus any additional credentials that program requires, plus the proportional share of academic coordination time that section will consume.

The third: what does each individual student cost in materials, software, support services, and consumables? In year one, these costs run between 25% and 40% higher than projected. Every time.

The fourth — the one no one wants to count — is the cost of acquiring those students. The marketing campaign, the events, the travel, your time and your team's time.

With these four numbers, calculating whether to open a new section takes less than an hour. If the result says you need 28 students to break even and your market historically fills those sections with 19, you have a decision to make before the semester starts. Not after.

The Result No One on the Board Wants to Hear

What the data shows goes against the instinct of any educational institution: in most small technical institutes, growing slowly produces better three-year financial results than growing fast.

A 2021 analysis by the National Student Clearinghouse Research Center examined more than 400 small technical institutes over six years. Institutions that kept their enrollment within 5% of their optimal capacity improved their operating margin at a rate 2.3 times higher than those that grew more than 12% in the same period.

The board wants to see enrollment go up. The balance sheet wants to see margin go up. They don't always go in the same direction. That's exactly your job: knowing when they diverge.

Jennifer Walsh, eighteen months after the August email, had redesigned Lakeshore's planning process. She introduced a simple rule: any program that wanted to grow more than 10% in a cycle had to present a marginal cost analysis approved by Robert. One page. Just the four numbers, filled in honestly. In fall 2023, Lakeshore enrolled 509 students. Fifteen fewer than the record. And the best operating margin of the past decade.

* * *

Closing

Jennifer Walsh didn't make a mistake of ignorance. She made the mistake of not having a question that should have existed in her process: how much will this growth cost us if it works? Not if it fails. If it works. It's one of the most common — and most expensive — blind spots in the administration of small technical institutes.

* * *

Levers You Can Pull This Week

1. Calculate what your last new section actually cost you

Add it all up: the instructor's full compensation with benefits, any credential or training required, the proportional share of administrative time that section consumed, the equipment, the materials, and the portion of the admissions campaign that attracted those students. Divide by the students in that section. Compare that number to what each one actually paid, after discounts and grants. If the cost exceeds the revenue, you have a problem that more growth will only make worse.

2. Find the threshold where your next new section stops making sense

With your CFO or whoever manages the numbers, identify the enrollment level at which you'd need to open a new section. That's your threshold. From now on, any growth plan that crosses it requires a marginal cost analysis before committing to instructors, students, or facilities. That's not bureaucracy. That's the difference between growing because it makes sense and growing because you can.

3. Find out how much your last campaign cost you per student acquired

Take your most recent recruitment campaign. Add up everything spent: marketing, events, travel, coordination time, positions created for the campaign, and an honest estimate of your time and your team's time. Divide by the new students it produced. That's your real acquisition cost. Compare it to what those students are going to generate in net revenue. If you've never done this calculation before, the result will be revealing. Possibly uncomfortable. Definitely useful.

Chapter 2

The Price of Generosity

How to give away money without realizing it — and what to do when you finally do

— The Story of David Hargrove III —

David Hargrove III was the kind of technical institute president who appears in vocational education brochures. Charismatic, committed, he knew his students by name. Hargrove Technical College in Cincinnati, Ohio, had been in the family for three generations. His grandfather founded it in 1958 to train Korean War veterans in electrical and HVAC work. His father turned it into an institute with eight programs. David kept it alive, grew it, and built it up to 610 students on a single campus with a solid reputation in the county.

He also drove it, without realizing it, to the edge of financial collapse. Not through negligence. Not through corruption. Through generosity.

* * *

The Hargrove financial aid philosophy was never written down in any manual. It lived in David's mind and in that of Karen Meltzer, his Director of Financial Aid: if a student wanted to be at Hargrove, Hargrove would find a way for them to pay. A family in financial difficulty got a discount. An employer that sent its employees got a special rate. A staff member who wanted to study paid less. And the adult child of that staff member. And the child's spouse. The policy never formally changed. It just kept growing, silently, one discount at a time, for fifteen years.

By 2019, the result of that accumulation was a number David didn't know: 31.4%. That was the tuition discount rate at Hargrove Technical College. For every dollar the institute said it charged, it was actually receiving less than sixty-nine cents.

It was a financial consultant specializing in technical education who discovered it in the spring of 2020. When he presented the findings to David and the board, the room fell silent. The institute wasn't about to close. It was eighteen months from a crisis it couldn't manage if something fundamental didn't change. The problem wasn't David's mission. It was that no one had ever added up the cost of pursuing it.

The Number Almost No One Calculates: Your Real Discount Rate

Large four-year universities obsess over their discount rate. There is an annual study published by NACUBO — the National Association of College and University Business Officers — that tracks this number across hundreds of institutions. In the world of small technical institutes, nobody talks about this. And that's exactly the problem.

The mechanics are simple. Take what you published as tuition price. Take what you actually collected on average after grants, discounts, and special arrangements. The difference, expressed as a percentage of the published price, is your discount rate. If you publish $12,000 and on average collect $9,000, your discount rate is 25%.

Every percentage point of discount that isn't generating new enrollment — that isn't attracting students who wouldn't otherwise be there — is revenue you're simply giving away. Not investing. Not recovering. Giving away.

A discount you can see and measure is a policy. A discount you can't see is a leak. Most institutions have more leaks than policies.

How much discount is too much? Analysis of small technical institute cases — including Gonzalo Chirinos's work at Accounting Care with more than forty institutions — points to a ceiling of between 15% and 20%. Above 20%, you're almost certainly giving discounts to students who would have paid full price. Above 25%, the problem is compounding: the revenue you're losing is exactly what you need to invest in the quality that would justify charging more. Hargrove was at 31.4%. And no one knew.

Five Ways to Give Away Money Without Realizing It

When the consultant finished assembling the Hargrove financial puzzle, what he found wasn't fraud or an accounting error. It was five distinct categories of discount, each with its own logic, each reasonable on its own, and together impossible to sustain.

The first was the most presentable: formal merit and need-based grants. Hargrove spent about $346,000 per year here — roughly 4.8% of its theoretical revenue. Reasonable. Strategic. No problem.

The second was more interesting: special rates for companies that sent employees to study. Those agreements had been signed years earlier. No one had renegotiated them. Three of the largest partners had been paying the same frozen rate for more than seven years while Hargrove had raised prices twice. Result: $468,000 per year in discounts that originally made sense and no longer did.

The third was an employee benefit that had silently multiplied. The original policy allowed full-time employees to take one work-related course per semester at a reduced price. By 2019, without anyone having changed the manual, the benefit also covered employees' spouses, their adult children, and the children's spouses. The 2019 cost: $130,000 per year — and no one had signed anything to authorize it.

The fourth category was the most revealing: administrative discretion discounts. Reductions approved directly by David, by Karen, or by program directors, for specific cases, without a formal process, without systematic records. The total: $187,000 per year.

The fifth was the only one the board decided not to touch: reduced rates for students from community and religious organizations with which Hargrove had decades of relationships. $37,000 per year. Real mission, real cost, conscious decision. That is a policy.

Hargrove Technical College:

The Five Holes

(Fiscal Year 2019)

What Hargrove should have collected

(list price × students) $7,200,000

Hole 1:

Formal merit and need-based grants

– $346,000 (4.8%)

Hole 2:

Frozen employer rates

– $468,000 (6.5%)

Hole 3:

Tuition benefits for employees and family

– $130,000 (1.8%)

Hole 4:

Administrative discretion discounts

– $187,000 (2.6%)

Hole 5:

Community pricing (conscious decision)

– $37,000 (0.5%)

Total given away in one year – $1,168,000

What Hargrove actually collected $6,032,000

Real discount rate

31.4% (sustainable target: ≤ 18%)

Money lost annually vs. healthy 18% rate – $972,000

Time remaining before reserves crisis < 22 months

* Composite case with representative data. Sources: NACUBO Tuition Discounting Study 2023 and Accounting Care case data.

The number that paralyzed the board wasn't the million dollars in discounts. It was the last line: at that rate, with operating costs rising and revenues unable to keep pace, Hargrove's reserves would disappear in less than two years. David Hargrove had spent fifteen years convinced that his generosity was the institution's most important asset. That day he discovered it was also its biggest liability.

SNHU: When the Discount Is a Decision, Not an Accumulation

Southern New Hampshire University was, in the early 2000s, a small regional university on the edge of collapse. Today it's one of the largest universities in the United States by enrollment, driven by its online programs. SNHU offers its online programs at deliberately low prices. That's a strategic discount. What it doesn't do is negotiate case by case, create special categories, or accumulate exceptions. Every student pays the same. The discount rate is a published policy, not the result of fifteen years of good intentions. The financial advantage of that approach isn't just the price. It's predictability.

Vatterott College: When the Discount Is Called a Federal Loan

Vatterott College operated vocational colleges in the Midwest: welding, HVAC, electrical, automotive. Real programs for real jobs. And it filed for bankruptcy and closed in 2018. More than 80% of its revenues came from federal aid — Pell Grants and student loans. When the Department of Education began restricting that access, Vatterott's revenues evaporated. When your students' ability to pay depends on a third party, you have an invisible discount. It works perfectly until the day that third party changes its mind.

Tulsa Welding School: The Employer Partnership That Actually Works

Tulsa Welding School trains welders, pipe fitters, and structural fabricators in Oklahoma, Florida, and Texas. At Tulsa Welding, employers who sponsor students pay from the standard rate upward — discounts are available only for documented volume commitments. The partnership is a source of income, not a reduction of income. Hargrove offered discounts to its employer partners because it believed that was the way to maintain the relationship. Tulsa Welding charged market rate because it understood that the employer needed the deal, not the other way around.

The employer that needs your graduates more than you need their students isn't asking for a discount. You're the one offering it. Those are different things.

When Giving the Discount Is the Smartest Decision You Can Make

Everything in this chapter so far might read as an argument against scholarships and discounts. It isn't. It's an argument against giving them without thinking. There is a category of discount that isn't an expense. It's an investment with a measurable return.

It's called retention aid. A concrete example: a student enrolls in Hargrove's HVAC Technician program. Net tuition: $8,400. Midway through the second semester, their employer cuts their hours. Without help, they leave. With a $2,000 emergency grant, they finish the program. Over the next five years, that decision generates approximately $22,000 in revenue: the semester recovered, an advanced certificate, and two referrals. Return on investment: eleven to one.

The question isn't whether you can afford the aid. The question is whether you can afford the cost of not giving it. Those are different questions with different answers for each specific student.

Hargrove, Two Years Later

Restructuring Hargrove's financial aid system took nearly two academic years. Four concrete changes emerged: an explicit discount rate ceiling of 18%, renegotiation of all employer agreements, a $42,000 annual Retention Fund with clear criteria, and a requirement to document the student's projected lifetime value before approving any aid above $1,500.

By fall 2022, Hargrove's discount rate had fallen from 31.4% to 19.8%. The operating margin went from negative to positive. Reserves stopped bleeding. Enrollment fell by just 4.2%. In December 2022, David Hargrove told his board: "I spent fifteen years being generous with money I didn't realize I was spending. Now we have more to give to those who truly need it than when we were saying yes to everyone."

* * *

Closing

The problem at Hargrove wasn't generosity. It was that generosity had become invisible. The lesson isn't to be stingy. It's to be deliberate. An institution that consciously chooses to give 18% of its tuition in strategic discounts is making a decision. An institution that arrives at 31% without having intended to isn't being generous. It's being disorganized.

* * *

Levers You Can Pull This Week

1. Calculate your real discount rate this week — not the one from the financial aid report

Add up everything you didn't collect: formal grants, special employer rates, staff and dependent discounts, informally approved reductions, historical prices no one has reviewed. All of it. Divide by what you should have collected if everyone had paid list price. That percentage is your real discount rate. If it exceeds 20%, you're subsidizing students who probably would have enrolled anyway.

2. Review every employer agreement that hasn't been renegotiated in more than three years

For each company with special rates, calculate what discount that rate represents against your current price — not the price at the time they signed. If your tuition has gone up since then and the rate hasn't changed, the effective discount grew without anyone deciding it. Renegotiating is easier than it looks: the employer needs access to your graduates.

3. The next time someone asks for a tuition reduction, calculate how much that student is worth first

Before saying yes or no, estimate how much revenue that student would generate if they complete the program, return for an additional certificate, and refer a coworker. Compare that number to the cost of the requested reduction. If the projected value is ten times the discount, the answer is probably yes. The point isn't to do the perfect calculation. It's to do the calculation.

Chapter 3

The Cost of Goodbye

Why losing an instructor costs far more than what shows up on the payroll — and what the school schedule has to do with it

— The Story of Tom Kowalski —

Tom Kowalski had been teaching HVAC at Midwest Technical Institute in Columbus, Ohio, for nine years. He was the kind of instructor directors dream of hiring and fear losing: certified in four specialties, with twelve years of field experience before entering the classroom, and a 94% job placement rate among his graduates.

In March 2021, Tom requested a meeting with Marcus Webb, the institute's director. He walked into the office with an envelope. Inside was a job offer from a competitor: Tri-County Technical Institute, twenty minutes up the highway. The salary offered was $57,200 per year. His current salary at Midwest was $50,000.

The difference was $7,200 a year. Six hundred dollars a month.

Marcus Webb did what many directors do in that situation: he reviewed the budget, saw no room for a raise, and told Tom he was very sorry but his hands were tied. Tom left two weeks later. They wished him luck with a farewell cake someone bought at the corner store.

Sixteen months later, Marcus had a conversation with his accountant that left him speechless. How much had it actually cost to lose Tom Kowalski?

The answer was $87,400. Not in one year. In the sixteen months since Tom had left. Marcus had refused a $7,200 raise to retain Tom. What he hadn't calculated was that letting Tom go would cost twelve times as much.

* * *

The Invisible Cost of a Goodbye

When an instructor leaves, any director's automatic thought is: I need to find someone to replace them. If the new person's salary is similar to the previous one's, the conclusion is that the cost of turnover is minimal. That conclusion is wrong.

The real cost of losing an instructor has seven components. Only one appears on the payroll. The other six live between the budget lines: lost time, revenue that doesn't get generated, quality that erodes before it shows up in reports.

The first is the uncovered period. Between the day the instructor leaves and the day the replacement starts teaching effectively, weeks pass. Sometimes months. In technical programs, finding someone with the right credentials, available, and willing to teach instead of working in industry is not quick.

The second is the cost of recruiting. If a recruiting agency is used — something common in scarce technical specialties — the cost can be 15% to 20% of the position's annual salary.

The third is the new instructor's learning curve. A new instructor doesn't arrive at full productivity on day one. In the first semester, they are noticeably less effective than the one they replaced.

The fourth is the loss of external relationships. Tom Kowalski was a living connection to the local labor market. The county companies that hired his graduates did so partly because they trusted Tom. That relational capital doesn't transfer with the position.

The fifth is the impact on colleagues. When a respected instructor leaves for better pay elsewhere, the effect on the remaining team is predictable: some start looking at what's available.

The sixth is the cost of temporary overload. While the vacancy is filled, someone has to teach the classes. Those extra sections are paid as overload, at an additional rate. Or they're not paid, which generates resentment.

The seventh — the hardest to quantify and the most real — is the damage to the program's reputation in the local market. In small communities, the departure of a well-known instructor is news.

The salary you didn't want to pay is the cheapest part of losing the instructor who left. You pay the rest anyway. Just distributed across line items no one adds up.

The Real Cost of Losing Tom Kowalski

(16 Months)

Uncovered period

11 weeks

Canceled sections:

lost tuition revenue

– $18,400

Cost of coverage instructors

(paid overload)

– $6,200

Replacement recruiting

Search agency

(18% of position's annual salary)

– $9,900

Internal administrative time

– $2,800

New instructor learning curve

Grants lost due to cohort

performance decline

– $4,100

New enrollment lost due

to program reputation drop

– $14,200

Loss of employer relationships

(conservative estimate)

– $8,700

Second turnover

(colleague left 8 months later, fraction)

– $23,100

TOTAL ESTIMATED COST OF LOSING

TOM KOWALSKI $87,400

Cost of the raise Tom requested (16 months) $9,600

Difference: cost of saying no vs. saying yes $77,800

* Composite case with representative parameters from technical institutes of 300–600 students. Recruiting costs based on SHRM Benchmarking Report 2023.

The Real Culprit No One Mentioned at the Going-Away Party

Salary was the reason Tom gave for leaving. But it wasn't the only reason. What Tom hadn't said in that meeting with Marcus — what technical instructors rarely say directly because it sounds like a minor complaint — was that his schedule over the past year and a half had been a disaster. His classes were distributed in a way that made it nearly impossible to prepare properly, that prevented him from picking up his son from school on Tuesdays and Thursdays, and that forced him to split his attention between two labs in the same shift.

Tom was a professional. He managed it. But he managed it with growing resentment. And when the Tri-County offer came, the higher salary was the visible reason. The schedule was the real reason.

In small technical institutes, building the school schedule is frequently one of the most chaotic processes in the operation. It's done manually, in spreadsheets no one else understands, by someone who has ten other responsibilities. The result is usually a schedule that optimizes classroom utilization — and completely ignores the impact on instructors' quality of life.

And technical instructors are not interchangeable with general education teachers. A nursing instructor with an active license and five years of clinical practice is a professional who has options. Many teach because they enjoy it, not because they couldn't earn more in the industry. If the non-monetary cost of the job exceeds the value of teaching, they leave.

There's something more. A well-designed schedule isn't just a matter of convenience. It's a form of real economic compensation. Many technical instructors have — or could have — additional income from consulting work, technical service contracts, or practicing their trade on their days off. An electrician who teaches Monday through Friday from 8 to 5 has no time for any of that. An electrician with a concentrated schedule has days available to generate additional income. This completely changes the salary calculation.

The salary was the reason Tom mentioned. The schedule was the reason Tom thought about. And the free time that the schedule didn't give him was the reason neither of them knew how to put into numbers.

Tools designed specifically for scheduling educational institutions — like Timetable Ninja — do exactly that calculation: balancing space constraints, workload limits, instructor preferences, and program requirements in a process that in many institutions is still done with a spreadsheet, a marker, and a lot of aspirin. The difference in instructor retention is not trivial.

What Institutions That Have Lived It Confirm

ECPI University documented that the average cost of replacing a technical program instructor was equivalent to between 1.4 and 1.8 times the annual salary of the position. For health programs, the multiplier reached 2.1. A nursing instructor with a $55,000 salary costs between $77,000 and $115,500 to replace.

Lincoln Educational Services, before losing an instructor, calculates how much it will cost to lose them. When an instructor with more than two years of tenure shows signs of departure, the operations department produces a turnover cost analysis covering the seven components. If the cost of retaining the instructor is less than the projected cost of replacing them, action is taken. The result is a faculty turnover rate consistently between 8 and 12 percentage points lower than the sector average.

Paying a good instructor well is expensive. Replacing them is more expensive still. The difference between those two costs is exactly the room you have to make the decision.

* * *

Closing

Marcus Webb wasn't a bad director. He was a director making decisions with the information available to him. The problem was that the available information was incomplete in a very specific way: the cost of retaining an instructor appeared in the budget. The cost of losing one appeared nowhere. When both numbers are on the table at the same time, decisions change.

* * *

Levers You Can Pull This Week

1. Calculate the cost of replacing each of your key instructors — before they announce they're leaving

Choose the three instructors whose departure would cause the greatest impact. For each, estimate the seven components: uncovered period, recruiting, learning curve, loss of employer relationships, impact on colleagues, temporary overload, and reputational damage. The resulting number is your real retention budget for that person.

2. Conduct exit interviews — and ask specifically about the schedule

Every time an instructor leaves, spend thirty minutes having an honest conversation about the real reasons. Not the official reason in the resignation letter. The schedule, the workload, the weeks with uneven distribution — those are frequently the reasons that don't get mentioned. Documenting those conversations and looking for patterns is the prerequisite for knowing what to change.

3. Review how your schedule is built — and whether there is a systematic process for balancing workload and instructor needs

Ask who builds the school schedule, with what tools, and what constraints they consider. If the answer is "a spreadsheet and the experience of whoever does it," you have a process that optimizes for the person building it, not for the instructors who have to live with it. Tools designed specifically for educational scheduling, like Timetable Ninja, report measurable improvements in instructor satisfaction and reductions in turnover.

Chapter 4

The Money That's Already Yours

Federal, sector-specific, and state funds for postsecondary institutions — and why nearly half never reach the institutions they're meant for

— The Story of Patricia Nguyen —

Patricia Nguyen didn't go to the annual ACTE conference out of enthusiasm. She arrived late to the afternoon session and sat in the back row. The presenter, an administrator from a Houston institute named Derek Calloway, was talking about something called Perkins V. Patricia knew the name vaguely. She didn't know her institution qualified, how much money was involved, or how to apply for it.

What Derek was explaining was almost absurdly simple: the Carl D. Perkins Career and Technical Education Act allocates federal funds to states for distribution among eligible technical education institutions. The states have public formulas to calculate how much each institution is entitled to. The institution just has to submit a usage plan and an annual report. There's no competition. It's not a contest. If you qualify, the money is yours. You just have to ask for it.

Patricia raised her hand.

"What happens if an eligible institution has never applied for the funds?"

"The unclaimed money gets redistributed among the institutions that do claim it. Or it goes back to the state. Depends on the year."

Patricia calculated in her head. Three fiscal cycles without claiming. Around 580 students in eligible technical programs. The Texas formula was public and was on the TEA website. That night, from the hotel, she did the calculation on her phone. The result was $127,000. Not in the future. Not if she won a competitive grant. One hundred and twenty-seven thousand dollars that the Alamo Career Institute had been entitled to for three years, and that hadn't arrived because no one had asked for it.

* * *

According to data from the Office of Career, Technical, and Adult Education at the U.S. Department of Education, in fiscal year 2022 approximately 38% of Perkins V funds allocated to eligible institutions in states with high concentrations of small institutes were not fully claimed. Not because the institutions didn't qualify. Because they didn't ask.

Federal Money: Five Programs That Exist for Institutions Like Yours

The first and most direct is Perkins V. More than $1.3 billion annually. Funds go to states, which distribute them by formula. It's not competitive. The process is an annual plan and a usage report. If your institution offers vocational or technical programs — HVAC, welding, health, information technology, applied business, cosmetology — and has a minimum proportion of low-income students, it probably qualifies.

The second is Title IV funding beyond the Pell Grant. Title IV also includes the Supplemental Educational Opportunity Grant (SEOG) and Federal Work-Study (FWS). The SEOG can add up to $4,000 per student with extreme need. FWS subsidizes part-time campus jobs for students, covering up to 75% of the wage.

The third is WIOA — the Workforce Innovation and Opportunity Act. Institutions that formalize partnerships with Job Centers in their area can receive funding for eligible students' tuition — the government pays full-price tuition directly. It works for any accredited program with demonstrable job market outcomes.

The fourth is E-Rate, administered by the FCC. It subsidizes the cost of internet, telecommunications, and technology equipment. Discounts range from 20% to 90%. For an institute spending $35,000 a year on connectivity services, a 50% discount is $17,500 that stops going out of the budget.

The fifth is NSF ATE — Advanced Technological Education — from the National Science Foundation. Grants range from $75,000 for small projects to $7 million for regional centers of excellence. The application rate from small technical institutions is so low that in several recent cycles the NSF has had trouble distributing all available funds.

There are federal programs specifically designed for institutions like yours that have been going without applications for years. Not because the process is difficult. But because no one on your team knows they exist.

If Your Institute Isn't "Technical": A Funding Map by Program Type

Culinary Arts and Hospitality. The James Beard Foundation distributes more than $500,000 annually in grants for students and programs at accredited institutions. The NRAEF operates the ProStart program and offers additional funding for certified programs. The American Culinary Federation Education Foundation has annual calls for apprenticeship and certification programs. Becoming an affiliated institution positions you to access curriculum development, equipment, and faculty training grants — not just student scholarships.

Cosmetology, Esthetics, and Beauty Arts. The Beauty Changes Lives Foundation offers annual grants for both students and institutions. The Professional Beauty Association Education Foundation funds continuing education for instructors. WIOA applies strongly in this sector: cosmetology is one of the fields most frequently funded by Job Centers for women re-entering the workforce.

Health and Allied Health Programs. HRSA distributes grants specifically to expand health training capacity in underserved communities. The HPOG program was designed to fund exactly the type of short health certification programs that small technical institutes offer. Many states have additional programs subsidizing health training at accredited institutions — Texas has the Skills Development Fund, California has the Employment Training Panel, Florida has the Quick Response Training Program.

Business Administration, Accounting, and Business Programs. WIOA funds business programs oriented toward immediate employment. Programs that award industry-recognized certifications — QuickBooks Certified User, Certified Bookkeeper, certifications from the American Institute of Professional Bookkeepers — have more direct access to WIOA funding. The SNAP E&T program is especially relevant for institutes working with populations over 25.

The GI Bill: The Student Who Arrives With the Money Ready

The Post-9/11 GI Bill covers up to 100% of tuition at VA-approved institutions, plus a monthly housing allowance and a stipend for books and materials. For 2025–2026, the tuition cap for private institutions is nearly $30,000 annually. The payment goes directly from the VA to the institution. VA-approved institutions appear in the VA's GI Bill Comparison Tool — a directory that hundreds of thousands of veterans use to find eligible programs.

A veteran with the GI Bill is a student with guaranteed funding, full tuition paid directly, and zero need for institutional grants. They're looking for your program right now. Do you appear in the directory?

State Funds: More Accessible, Less Known, and Sector-Specific

Most states have at least one workforce development program designed to subsidize training in priority sectors. The mechanism is similar in all of them: a company or group of companies identifies a training need, the educational institution designs the program, the state finances total or partially the cost of instruction. Small institutes that know local employers, have relationships with chambers of commerce, and understand what skills the county economy needs have a real comparative advantage for accessing this type of funding.

The Three Real Obstacles — None of Them What You'd Expect

The first real obstacle is not knowing what exists. Patricia Nguyen didn't know she qualified for Perkins V not because the program was secret, but because no one at her institution had the explicit responsibility of staying informed about available programs.

The second obstacle is confusing complexity with volume. Submitting a Perkins V application requires reading documents, following a process, and completing forms. It's administrative work that requires time and organization, not specialized knowledge.

The third obstacle is indiscriminate fear of compliance. The fear of one complicated program acts as a shield for all programs, including the ones that aren't complicated. In Patricia's case, securing the $42,300 Perkins for the current cycle required approximately 35 hours of work. Thirty-five hours for $42,300 is an hourly rate of more than $1,200.

Available Funds by Institution Type

(Annual Ranges, 300–800 Students)

Federal — Universal

Perkins V

(qualified technical/vocational programs only)

$45,000 – $180,000

Title IV SEOG + Federal Work-Study

$35,000 – $145,000

WIOA — eligible student tuition

$30,000 – $150,000

GI Bill — veteran tuition

(requires VA approval)

$20,000 – $120,000

E-Rate — telecom and internet discount

$8,000 – $35,000

SNAP E&T — for certified providers

$15,000 – $80,000

Sector-Specific — Culinary and Hospitality

James Beard Foundation (affiliated programs)

$10,000 – $50,000

NRAEF / American Culinary Federation

$5,000 – $25,000

AHLEF (hotel and hospitality)

$8,000 – $30,000

Sector-Specific — Cosmetology and Beauty

Beauty Changes Lives Foundation

$5,000 – $20,000

Professional Beauty Association Education Foundation

$3,000 – $15,000

Sector-Specific — Health and Allied Health

HRSA / HPOG (health training for underserved communities)

$50,000 – $300,000

State health training programs (varies by state)

$20,000 – $150,000

State — Workforce Development

(varies by state)

Skills Dev. Fund (TX), ETP (CA), QRT (FL), TechCred (OH)

$25,000 – $200,000

NSF ATE (competitive, technical and STEM projects)

$75,000 – $500,000

* Estimated ranges based on public data from the Department of Education, NACUBO, and cases from 300–800 student institutions.

Patricia, Six Months Later

Patricia Nguyen claimed the current cycle's Perkins funds six weeks after the conference. The process took approximately 35 hours. The amount received that first cycle was $42,300. She then formalized a partnership with Workforce Solutions Alamo, which in the following cycle funded the tuition of 23 WIOA-eligible students. She applied for E-Rate for the first time and received a 47% discount on her telecommunications services — $17,400 in annual savings. At the end of the following fiscal year, the Alamo Career Institute received $94,700 in external funds and savings that didn't exist in its budget twelve months earlier. Without new debt. Without raising tuition. Without cutting staff. Just claiming what was already theirs.

* * *

Closing

The gap isn't about eligibility. It isn't about complexity. It's about information and assigned responsibility. Those are two problems that any institute — technical, culinary, health, or business — can solve without hiring additional staff, without extra budget, and without waiting for the next cycle to be better than the last.

* * *

Levers You Can Pull This Week

1. Do the funds inventory in the next 30 days

Create a single page listing everything your institution receives externally: program name, annual amount, administering agency, renewal or reporting date, and internal person responsible. If that document doesn't exist, its absence is the first problem to solve. Then compare what you have to the table in this chapter. Every row you're not using deserves a question: do we qualify?

2. Verify your eligibility today for Perkins V, E-Rate, and VA approval

Three programs with a high probability of generating immediate money without a competitive process. For Perkins, the entry point is your state's education agency. For E-Rate, the USAC portal at usac.org has an online eligibility tool. For VA, search "State Approving Agency [your state]." All three have eligibility guides a director can review in an afternoon.

3. For non-technical institutes: identify the sector organizations in your field and verify whether they have grants for affiliated institutions

Culinary: start with the James Beard Foundation and the NRAEF. Cosmetology: Beauty Changes Lives Foundation and the Professional Beauty Association. Health: HRSA and your state health agency. Business: the WIOA system and your state's workforce development programs. Affiliating as an institution positions you for grants beyond individual student scholarships.

Chapter 5

The Building Trap

Why buying the campus is the most expensive dream in vocational education — and when it makes sense anyway

— The Story of Brian Kowalczyk —

Brian Kowalczyk had been running the Milwaukee Allied Health Institute for twelve years from the same building on the south side of the city. A rented space in a converted commercial complex, with access to the neighbor's parking lot on weekends and a landlord who accepted paying for major repairs without too much argument. It wasn't glamorous. It worked.

The board of directors had been trying to convince him to buy for almost as long. The argument was always the same: "Brian, we're throwing away $11,400 a month on rent. Twelve years of rent. That's $1.6 million that could be equity."

Brian resisted for years. He said rent was predictable, that capital was better invested in medical equipment and qualified instructors, that the institute needed flexibility to grow or shrink with program demand.

In fall 2018, a building three blocks from the campus came on the market. $1.85 million. Brian gave in. The board voted unanimously. The institute took out a $1.5 million commercial loan at 20 years with a variable rate, used $350,000 of its reserves for the down payment, and became, officially, the owner of its destiny.

Eighteen months later, the interest rate had risen 190 basis points. The building's HVAC system collapsed in January. The repair was $87,000. The roof needed replacing. The parking lot had drainage problems the city demanded be resolved. And the reserves that would have covered all that were in the down payment.

In summer 2020, with the pandemic bearing down and enrollment having fallen 31%, the Milwaukee Allied Health Institute had no reserves to weather the storm. It had a building.

* * *

"We're Throwing Money Away on Rent": Why That Argument Is Incomplete

The logic is correct in its premise: paying rent doesn't build assets. At the end of twenty years of renting, the tenant has the same net worth as on day one. That's real. What the argument omits is everything that happens between day one and year twenty.

First: the down payment. The $350,000 was the cushion that would have allowed the institute to survive the pandemic. After the purchase, the cushion didn't exist. The building existed. In a crisis, you can't sell the building in January to pay February's salaries.

Second: mortgage payments are fixed. A commercial mortgage doesn't renegotiate over a phone call with the landlord.

Third: rent is not throwing money away. Rent buys flexibility, predictability, and the ability to move or downsize if the institution needs to.

Rent is not throwing money away. It's buying flexibility. And flexibility, for a small educational institution, is the most undervalued asset on the balance sheet.

The Seven Things That Don't Appear on the Mortgage

The monthly mortgage payment is the least representative number of the real cost of ownership.

The first is major maintenance. Every building has systems that eventually fail: roofs, plumbing, electrical, HVAC. The tenant doesn't pay those costs. The owner pays all of them.

The second is property taxes. In Wisconsin, commercial property taxes can represent between 2% and 3% of the assessed value annually. On a $1.85 million building, that's between $37,000 and $55,500 per year.

The third is insurance. A property owner's policy typically costs between 0.5% and 1% of the building's value annually. On $1.85 million, between $9,250 and $18,500 per year.

The fourth is space adaptation. The building the institute buys is rarely configured exactly for its needs. In a rented space, improvements are negotiated with the landlord. In an owned space, every adaptation is a capital investment.

The fifth is the opportunity cost of capital. The $350,000 stopped being available for what educational institutes really need: equipment, instructors, and emergency reserves.

The sixth is the loss of operational flexibility. An institution that rents can expand or move. An institution that owns has to live with what it bought.

The seventh is management distraction cost. Owning a building is a job. It requires managing contractor relationships, overseeing maintenance, negotiating with the city — problems that have nothing to do with educating students.

Rent vs. Buy: Milwaukee Allied Health Institute

10 Years

Scenario A: Continue Renting

Current monthly rent

$11,400

Total rent over 10 years

(3% annual increase)

$1,593,000

Investment return on

$350,000 reserves (estimated)

+ $280,000

NET REAL COST OF RENTING FOR 10 YEARS

$1,358,000

Scenario B: Purchase the Building

Mortgage payments over 10 years

(principal + interest)

$1,188,000

Property taxes over 10 years (2.4% average)

$444,000

Owner's insurance over 10 years (0.7% annually)

$129,500

Estimated major maintenance over 10 years

$210,000

Space adaptations for programs (10 years)

$160,000

Building value at year 10 (2% annual appreciation)

+ $407,000

NET REAL COST OF BUYING

$1,924,500

DIFFERENCE: buying cost more than renting over 10 years $566,500

* Calculation based on real parameters from the Milwaukee, WI commercial real estate market. BOMA benchmarks 2023. After ten years, buying the building cost more than renting. Equity doesn't pay payroll. Liquidity does.

The Flip Side: When Buying the Building Is the Right Decision

Buying the building can be the right decision. But it requires four conditions to be met. The first condition is liquidity: at least nine months of operating expenses in reserves after paying the down payment. The second is price: a building acquired below replacement cost. The third is stability: at least five consecutive years of stable enrollment with well-established programs and solid accreditation. The fourth is the rental alternative: if the local market doesn't offer leasing options that fit the institute's technical requirements.

None of those four conditions was met at the Milwaukee Allied Health Institute in 2018.

The question isn't whether to rent or buy. The question is whether the four conditions are met. If the answer is no, renting is not throwing money away. It's buying time and flexibility.

ECPI University operates twelve campuses, virtually all leased — not because it can't afford to buy, but by strategic choice. Its capital is better invested in program updates, technology equipment, and instructor retention. Milan Institute, by contrast, bought in 2011 and 2012 — at the bottom of the post-crisis market, using SBA financing that preserved operating liquidity, acquiring properties already configured for beauty and health activities. A decade later, those properties have appreciated substantially. That case confirms that the four conditions matter. When they're met, the purchase can be the right decision.

* * *

Closing

Buying the building can be the right decision. But it requires the four conditions: sufficient post-down-payment liquidity, favorable price relative to market, documented institutional stability, and inadequate rental alternatives. When those conditions aren't met, renting isn't a mistake. It's a strategy.

* * *

Levers You Can Pull This Week

1. If the board is pushing to buy, do the full calculation first — not just mortgage vs. rent

Build the ten-year table: mortgage, property taxes, insurance, estimated major maintenance, projected space adaptations, and the opportunity cost of the down payment. Compare that total to the cost of ten years of rent with a 2–3% annual increase. If the result favors the purchase, the four conditions are met, and post-down-payment reserves cover at least nine months of operating expenses, the purchase deserves serious consideration.

2. Negotiate your lease as if it's the most important decision of the year — because it probably is

Negotiate landlord-paid improvements, grace periods for adaptations, renewal options with increase caps, and reasonable exit clauses. A well-negotiated lease can be worth tens of thousands of dollars per year in avoided costs.

3. If you're going to buy, investigate SBA financing before the commercial bank

SBA 504 loans are specifically designed for small businesses — including private educational institutions — to acquire real estate: lower down payment (typically 10%), fixed long-term rates, and terms that reduce the cash flow impact. If the Milwaukee Allied Health Institute had used SBA 504 financing instead of a variable-rate commercial loan, the behavior of the debt during the period of rising rates would have been completely different.

Chapter 6

Retention Is Profitability

The student already inside is the cheapest to keep — and the most expensive to lose

— The Story of Carol Esteban —

Carol Esteban had 510 students, full sections every semester, and the most aggressive admissions campaign in the Phoenix market. What she didn't have was an answer to a very simple question.

A compliance audit by the Arizona State Board asked for job placement data. Four days later, they had the answer. 74% of students who completed their programs found work in the field within six months. A number Carol would have been proud of — if it had ended there.

The second part: only 61% of students who enrolled at Pinnacle finished the program. The other 39% left. Four in ten students who paid to enter didn't make it to the diploma. And no one, in any meeting, in any report, had talked about that as a financial problem.

* * *

The Leaky Bucket

Retaining a student who is already inside costs much less than getting a new one from outside. When an institute launches an admissions campaign, the cost of that process per enrolled student rarely falls below $3,000. It frequently exceeds $5,000. How much does a phone call in the second week of the semester cost, to ask a new student how things are going? How much does a $500 emergency fund cost for the student about to drop out in month eight because their car broke down? Most retention interventions cost a fraction of what it costs to acquire a new student. And yet, in the typical small institute budget, admissions has a line with real money. Retention has no line.

Most institutes spend ten times more getting new students than keeping the ones they already have. The numbers say it should be the opposite.

Mapping Attrition: Not All Goodbyes Are the Same

Short postsecondary programs have three moments where the probability of dropout is concentrated. The first is month one. A surprising percentage of dropouts happen in the first four weeks, when the student still isn't sure they made the right choice. At this moment, the most effective intervention is the lowest-tech possible: a phone call from a human being asking how things are going.

The second moment is the middle of the program. The excitement of the beginning has worn off. Things got harder. Work, family, money have started competing more visibly with study time.

The third is the final quarter. It's the most expensive because the institution has already invested in almost the entire program without seeing the return. And it's also the most unfair, because the student dropping out at that stage was very close to finishing.

What a Graduating Student Is Worth — Beyond the Diploma

A student who finishes the program, gets a job in the field, and has a good experience at the institute is not just a paid tuition. They're the beginning of something longer. That graduate has coworkers who are also looking to get certified. Their word carries more weight than any Instagram ad. They may return for additional certifications. They may become the door to a corporate training contract.

A satisfied graduate is the cheapest salesperson you have. They charge no commission. They ask for no marketing budget. They just need their experience to have been worth it.

The Real Problem: It's Not Attrition — It's That No One Was Measuring It Well

Carol's story has a second level worth exploring: the fact that it took her four days to reconstruct information that should have been available in four minutes. Graduate data lives in different places: the academic management system, a spreadsheet someone started maintaining, emails from instructors who remember who got a job where. Each piece exists. But assembling it required four days and an audit to motivate the effort.

This is where a tool like Placemat changes the picture in a concrete way. Placemat centralizes graduate records — turning the report that took Carol four days into something generated in minutes — and simultaneously serves as an active job board: employers post internships and available positions, and students in their final quarter and recent graduates see them first.

Pinnacle, Twelve Months Later

With clear data on when dropouts happened, Carol's team identified two concrete facts: the first month was where they lost the most students, and many of those who abandoned in the eighth or ninth month did so for logistical or economic reasons, not lack of interest. Two almost ridiculously simple interventions followed: a follow-up call to each new student in the first and third week of the semester, and a small emergency fund for students in the second semester facing a sudden crisis.

Carol summarizes it in a way worth repeating: "I'd been filling the bucket for years. I'd never noticed the hole."

* * *

Closing

Retention isn't an educational problem dressed up as a financial problem. It's a financial problem that for too long has been managed as if it were educational. The difference matters because it defines where money goes, who is accountable for the outcome, and how success is measured.

* * *

Levers You Can Pull This Week

1. Find out when your students leave — not just how many

Take the dropouts from the last complete cycle and classify them by moment: first month, middle of program, final quarter. If you don't have that information available in under an hour, the data infrastructure is the first problem to solve. You can't intervene at the right moment if you don't know when the right moment is.

2. Implement first-month contact — the highest-return intervention per dollar spent

A phone call or direct message to each new student in the first and third week of the program, from a staff member, detects problems before they become dropout decisions. This isn't technology. It's not a complex system. It's attention. And it costs a fraction of what it costs to recruit the student who would replace the one who leaves.

3. Centralize your graduate data and put it to work

The job placement report that state agencies require shouldn't be reconstructed manually every time an audit arrives. And that same data should actively connect employers with students in their final quarter and recent graduates looking for jobs or internships. Tools like Placemat do exactly that: fulfill the regulatory requirement and activate the graduate network as a real job board.

Chapter 7

The Technology Ledger

The real ROI of LMS platforms, SIS systems, and AI tools. How to tell genuine innovation from educational marketing in disguise

— The Story of Daniel Reeves —

Daniel Reeves was the kind of director who read the emails from educational technology vendors. By 2021, the Crestwood Career Institute in Louisville, Kentucky, had eight active educational software contracts: an LMS, a CRM for admissions, a learning analytics tool, a clinical practicum management system, a video conferencing platform, a student communication system, an online assessment tool, and curriculum planning software someone had bought two years earlier that no one used — but whose license kept renewing automatically because no one had canceled the card.

Total spending on educational software: $127,400 annually. What Daniel didn't know was how much of that spending was producing any measurable result.

The answer arrived through Patricia Haines, his most senior academic coordinator, who walked into his office with a printed page. The page listed all the active software systems. Next to each one, Patricia had written how many instructors actually used it, how frequently, and for what. Of the eight systems, two were used consistently by more than 70% of the staff. Three were used occasionally. Two were actively avoided because they were difficult to use. And one — the curriculum planning software — no one remembered ever having used.

"Daniel, we're paying $127,000 a year for eight tools. We use two."

* * *

Why the EdTech Market Is Especially Hard to Navigate

Buying educational software is structurally different from buying any other institutional tool. With educational software, the impact of an LMS on student learning can take semesters to manifest — if it manifests at all. The improvement attributable to an analytics tool may be indistinguishable from other variables that changed at the same time. EdTech vendors know this. And they've built a sales pitch that exploits exactly that opacity.

The right question before buying any educational technology is not whether the tool is good. It's whether the problem it solves is the problem you have. Those are different questions with frequently different answers.

Not All EdTech Is the Same: Three Types

Type 1: Infrastructure — what you can't avoid. Every postsecondary institute needs an LMS to structure and distribute course content, a Student Information System (SIS) to record enrollments, grades, and attendance, basic student communication tools, and reliable internet. This category doesn't require elaborate ROI analysis. What it requires is discipline: choose one solution per category, implement it well, and resist the temptation to replace it every time a newer option appears.

The SIS is the financial and academic heart of the institute. And it's also the tool most frequently implemented poorly. The phrase developers repeat — garbage in, garbage out — is true. Students registered in incorrect programs. Payments applied to the wrong account. Duplicate records. Accounts receivable that don't reflect grants already approved. A poorly implemented SIS produces incorrect decisions based on reports that no one questioned because they came from an official system.

Type 2: Multipliers — those that amplify what already works. A student analytics platform that makes visible what instructors already detect informally about dropout risk. A scheduling system that optimizes a process already done but consuming disproportionate time. These do require ROI analysis: how much does the current process cost? By what proportion will it realistically improve? If the process the tool is going to improve doesn't currently work well, the tool isn't going to create it from scratch.

Type 3: Educational marketing — what sounds better than it works. Warning signs: pitch based on transformation rather than specific function; absence of documented use cases at similar institutions; long-commitment contracts without a trial period.

The Problem No One Sees Until the Auditor Points It Out: The SIS Disconnected from Accounting

The SIS controls the academic and financial side of students. The accounting system — QuickBooks, Xero, NetSuite — controls bank reconciliations, payroll, vendor accounts, and the institution's overall financial state. In most small institutes, these two systems are connected in the most rudimentary way possible: someone exports a number from one and types it into the other.

The result has three consequences. First, poor granularity: when SIS revenues transfer to the accounting system as a single global entry, all information about which program generated them is lost. The accounting system records the money. It doesn't record exactly where it came from. That makes it impossible to answer the most important question: which of my programs is profitable and which isn't?

Second, distortion of accounts receivable: the SIS says students owe $340,000; the accounting system says $280,000. The $60,000 difference exists somewhere — in records the SIS hasn't updated, in payments that arrived but weren't correctly applied. The finance team manages cash flow based on an estimate someone makes mentally combining both.

Third, the inability to make decisions based on program profitability. The director knows whether the institute as a whole is profitable or not. They don't know if the Medical Assistant program is paying the bills while the Radiologic Technology program operates in the red.

The SIS says what students owe. Accounting says what the bank received. The difference between those two numbers is a financial hole most directors don't know they have.

Accounting Care regularly works with postsecondary institutes on this specific diagnostic: auditing the state of the SIS, identifying incorrect or incomplete records distorting reports, and establishing the correct bridge between the student information system and the accounting system so revenues by program are visible, accounts receivable are accurate, and financial decisions are made with real data rather than estimates.

The Pivot: AI in Education — Real Opportunity or Moment's Hype

There are three AI applications with demonstrable ROI for institutes of the size we're describing. The first is early dropout risk detection — systems that analyze student behavior patterns and generate alerts when those patterns suggest dropout risk. These tools work when there's an established intervention process. Without that process, the AI just generates notifications no one reads.

The second is personalization of communication with prospects and graduates — systems that generate personalized content at scale for admissions communications and prospect follow-up. The personalized acceptance letter has a documented impact on admissions conversion.

The third is automation of regulatory compliance reports — one of the most invisible consumers of administrative time at postsecondary institutes.

The most useful AI in technical education is not the one that replaces the instructor. It's the one that gives them back time to do what only they can do.

The Three-Question Process Before Signing Any EdTech Contract

Question one: What specific problem does this solve, and how do we currently measure that problem? If there's no precisely identified problem, the conversation ends there.

Question two: Who at the institution is going to use this, how often, and in which part of their daily workflow? This isn't answered with the vendor's pitch. It's answered with the person who is supposedly going to use the tool. If that person can't clearly describe how they'll integrate it into their typical week, adoption isn't going to happen.

Question three: Can we measure the impact in six months? Tools with hard-to-measure ROI are the ones that end up in the 74% of the technology budget that no one reviews.

Crestwood, Six Months Later

Daniel Reeves canceled four software contracts: the curriculum planning, learning analytics, educational video conferencing, and online assessment software. Annual savings: $66,900. He invested part of those savings in a serious implementation of the LMS they already had — structured training for all instructors, a usage manual adapted to the institute's specific programs. The LMS that had previously been used variably began being used consistently and deeply. The software didn't change. The adoption process did. He also allocated part of the savings to upgrade the clinical lab equipment that had been on the pending list for two years.

* * *

Closing

Educational technology is neither good nor bad. It's expensive or cheap based on what it produces, and it produces based on how it's implemented. A well-implemented LMS at $18,000 per year can be more valuable than four sophisticated tools poorly adopted at $94,000. The difference isn't in the software. It's in whether there's a process, a responsible person, and a way to measure the result.

* * *

Levers You Can Pull This Week

1. Do your technology stack inventory this week — with Patricia's eyes

List all active educational software contracts: tool name, annual cost, and — this is what no one does — how many people at the institution actually use it and how often. Not what the contract says. What happens in practice. For each tool with less than 50% real adoption among its target audience, ask: if we canceled this tomorrow, would anyone notice?

2. Before the next EdTech proposal, apply the three questions

What specific problem does this solve, and how do we currently measure it? Who exactly is going to use it, how often, and in which part of their week? Can we measure the impact in six months? If the answer to any of the three is vague, incomplete, or speculative, ask for time to answer them before signing.

3. Invest the savings from canceled technology in what students actually notice

The lab equipment that's been on the pending list for two years. The support instructor who would make a difference in the program with the highest dropout rate. The renovation of the practicum space that employers visit before signing partnerships. Students don't know what software the institute has. They do know if the simulation equipment is current and if the space where they learn feels like a professional environment.

Chapter 8

Diversify or Die

How the same labs, the same instructors, and the same campus can generate revenue most directors never even consider

— The Story of Angela Morrison —

In January 2023, Angela Morrison sat down with December's numbers and knew something had changed. The Nashville Culinary Institute had been growing for eight years on the same logic: more students, more sections, more instructors. It was a simple model. It had worked. In 2022, it stopped working.

Enrollment had fallen 18%. Not because of a quality problem — the institute's reputation in Nashville was solid, graduates found work, instructors were good. It had fallen because the market changed: fewer high school graduates looking for short programs, more online competition, YouTube convincing some prospects they could learn to cook for free. Things Angela couldn't control.

It was Dana Whitfield, her pastry instructor, who said what no one else had: "Angela, we have an industrial kitchen sitting empty six days a week. We have instructors who teach four hours a day. We have a recognized brand in this city. Why do we wait for students to come to us to generate money?"

Angela looked around her institute with different eyes. She didn't see an institution with declining enrollment. She saw a 280-square-meter industrial kitchen idle six days a week. Four certified instructors with free time in their schedules. A list of 847 graduates connected to Nashville's food industry. And eight years of reputation that no online competitor could easily replicate.

Eighteen months later, the Nashville Culinary Institute had four revenue streams where before it had had one.

* * *

The One-Legged Chair

The model educational institutes use is so built around enrollment that everything else seems secondary. Tuition isn't just the primary revenue source. It's the language of the entire institution. And that language makes everything else that could generate money invisible.

An institute with a single revenue stream is a chair with one leg. It works perfectly until something shakes it.

Six Ways to Make What You Already Have Work Harder

One: Workshops for the General Public. Angela's first answer was right in the city — people who want to learn to cook better without enrolling in a twelve-month program. In six months, she had a catalog of sixteen one-day or weekend workshops. Her own instructors ran them, in time slots that didn't interfere with regular classes. The space was already paid for. The equipment was already paid for. The only thing that changed was who it was for. This model works in almost any type of institute: a cosmetology school can offer makeup workshops; an HVAC institute can teach basic maintenance to building managers.

Two: Facility Rental. Small artisanal food producers who need a certified kitchen to comply with public health regulations. Caterers who need preparation space for large events. Independent chefs developing new menus. The rate was hourly. The space already existed. The cost of having it rented rather than empty was almost zero. The income was real. The same applies to computer labs at technology institutes rented to companies for specific training, or simulation clinical labs rented to hospitals that need to train their own staff.

Three: Corporate Training. Companies in the sectors where institutes train professionals have continuous training needs for their staff. Angela made three calls. Two resulted in contracts: monthly training for kitchen staff at a hotel, and a quarterly program for cooks at a restaurant chain. Two contracts, and suddenly there was monthly income that didn't depend on any new prospect enrolling in the regular program.

Four: Short Online Programs. The most accessible entry point isn't replicating the full program online. It's identifying which parts of the program work well in digital format and offering them as standalone courses for professionals who need updates.

Five: The Podcast. The instructors at the institute already know what they're talking about. A podcast doesn't replace the program. It's a free sample of what the program offers. And free samples, when they're genuinely good, generate demand for the full version. A podcast has no geographic limit. The cost of launching one is ridiculously low: a decent microphone, a free recording app, and a distribution platform that costs between $12 and $25 monthly. A weekly episode of twenty to thirty minutes, recorded by an instructor who's already on campus, converts time that was already paid for into content that works for the institution twenty-four hours a day.

Dana Whitfield launched Nashville Kitchen Confidential — recorded in the institute's kitchen, with twenty-minute episodes about techniques, ingredients, and Nashville's food industry. Six months later it had 3,200 monthly subscribers. When prospects arrived at the campus, several mentioned having listened to Dana before visiting. The admissions conversation was completely different.

The best salespeople for the institute are already in the classroom. All you have to do is turn on the microphone.

Six: Engagement That Converts. The communication that keeps the relationship alive between the institution and the people who might study there, who have already studied there, or who hire its graduates. Institutes with the highest prospect-to-enrollment conversion rates maintain more consistent and more personal communication during the period between first contact and the enrollment decision. A letter addressed to a specific prospect, mentioning the program they were interested in, including a testimonial from a graduate in that field — that's completely different from the generic email they receive from five institutions at the same time. Physical letters, personalized with specific information, produce response rates that email cannot match. PenWorks by Zunzun.ai does exactly this: personalized handwritten letters at scale, combining artificial intelligence for content personalization with robotic handwriting technology, so each letter a prospect receives is physically distinct from a mass communication.

Six Ways to Make What You Have Work Harder

(Institute 300–600 Students)

Workshops and short courses for the general public

$45,000 – $180,000 / year

Facility rental (labs, kitchens, specialized rooms)

$15,000 – $65,000 / year

Corporate training and company certification programs

$60,000 – $280,000 / year

Online and hybrid programs (extension modules)

$20,000 – $120,000 / year

Contracts with employers for graduate continuing training

$30,000 – $90,000 / year

Accelerated summer programs

$25,000 – $80,000 / year

Combining 2–3 well-executed channels

$100,000 – $500,000 / year

Typical % of non-tuition revenue at diversified institutes

20% – 40%

* Ranges based on IPEDS, NACS, ACF, and documented case data from 300–600 student institutions.

The Warning: Diversifying Isn't Doing Everything — It's Doing One Thing Well

When a director hears they can generate income with workshops, facility rental, corporate contracts, online programs, and personalized letters, the instinct is to try all five at once. Angela started with workshops — the lowest initial investment with clear demand. When that worked and she had a clear process, she opened kitchen rental. When that worked, she talked to the restaurants.

The right question isn't: how many channels can I add? It's: which of these channels aligns best with what we already have, requires the least investment to test, and has the highest probability of working in the next six months?

It's not about doing more things. It's about doing one more thing and doing it well. After that, the next one.

Nashville Culinary Institute, Eighteen Months Later

In July 2024, the Nashville Culinary Institute had 472 students in regular programs — fewer than the 2021 peak. And the strongest financial year in its history. 31% of revenues came from sources that hadn't existed two years earlier. When enrollment had fallen 18%, the impact on total revenues was about 12%. Manageable.

The conclusion Angela shares when talking with other directors: "I thought my problem was enrollment. My real problem was that I depended too much on one thing. Solving the enrollment problem would have been more of the same. What I changed was the question."

* * *

Closing

Diversification isn't built in a crisis. It's built when things are going well, when there's room to test, make mistakes, and adjust without the institution's survival depending on the outcome. The institutions that diversify during good times arrive at adversity in a completely different position.

* * *

Levers You Can Pull This Week

1. Do the underutilized assets inventory this week — with Angela's eyes

Walk through your institution and ask: what exists here that only generates value when classes are in session? Labs, kitchens, specialized rooms, instructors with available time in their schedules. For each thing you identify: who else, outside of my regular students, would pay to access this?

2. Choose one of the six channels and launch it in the next 90 days — without waiting for everything to be perfect

The channel with the lowest entry cost for most institutes is the one-day workshop in the institution's specialty area. Define the topic, set the date, establish the price, communicate it to your graduate network and local community. If it fills up, you have evidence of demand. If it doesn't, you have information on what to adjust.

3. Review how your institution communicates with prospects during the months between first contact and enrollment

If the answer is email and phone calls, you're competing with the most saturated tools in the market. A physical letter, personalized, that demonstrates the institution knows who they are and what they're interested in, is a completely different intervention. PenWorks generates personalized handwritten letters at scale — the kind of communication that converts prospects who are already considering your institution but haven't decided yet.

Chapter 9

The Board That Doesn't Get the Numbers

How to talk about finances to people who aren't financial — and why most presentations do exactly the opposite

— The Story of Richard Okafor —

Richard Okafor had a problem he didn't dare name out loud because it sounded like a complaint about the people who were supposed to help him: his board of directors didn't understand the financial reports he presented every quarter.

The seven members of the Charlotte Career and Technology Institute's board were respectable people: a lawyer, a CPA, the owner of a restaurant chain, a former public school principal, a retired engineer, a pastor with three churches, and a real estate developer. Smart people. People who looked at the 47 pages of the quarterly financial report with the expression of someone who had just discovered the menu was in a language they didn't recognize.

No one read it before the meeting. Richard knew because the questions at the meeting never referenced specific content from the report. They were general questions: "How are we doing overall?" "Is there anything we should know?" "Are we okay?"

Things changed at an October meeting. Richard was explaining the cash flow projection for the next quarter when Marcus Webb, the restaurant chain owner, interrupted him.

"Richard, can you tell me one thing? Are we going to be able to make payroll for the next three months?"

Richard looked at page 31. The answer was there. Surrounded by sixteen other metrics.

"Yes."

"Good."

Marcus leaned back in his chair with the expression of someone who had just received exactly the information they needed. And Richard was left staring at his 47 pages with a question he hadn't asked himself before: who was he writing this for?

* * *

Why Standard Financial Reports Don't Work for Non-Financial Boards

Standard financial reports — income statements, balance sheets, cash flows, variance analysis — were designed by accountants for accountants. An accountant looks at an income statement and sees a story. The same page that is a complete financial narrative for them is, for the pastor on the board, a chart with numbers that don't connect to any prior experience that would allow them to interpret it.

The result is predictable. The board can't participate meaningfully in financial conversations. And when it can't participate, it has two options: nod without understanding — which is what most do — or ask questions so basic that the director interprets them as interference, not governance. Neither option produces good institutional decisions.

Boards don't make bad decisions because they're bad boards. They make bad decisions because no one explained things to them well. And no one explained things well because the person explaining doesn't know how either.

The Three Mistakes Almost Everyone Makes

Mistake 1: Confusing Exhaustiveness with Communication. Richard's 47-page report wasn't a bad report. It was exhaustive, accurate, well organized, and completely useless for its purpose. The instinct to include everything is understandable — the director wants to demonstrate transparency. But a shorter, clearer report communicates more. Not because it has more information, but because the information it has reaches its destination.

Mistake 2: Presenting Numbers Without Narrative. Numbers are answers. Answers only make sense when you know the question. Presenting the income statement without saying what it means, what changed from the previous quarter and why, what would be cause for concern, is like handing someone the results of a medical test without the doctor.

Mistake 3: Treating All Board Meetings the Same. There is one type of information the board needs at every meeting: are we okay? Is there anything requiring a decision from us? There is another type needed occasionally: trend analysis, comparisons with the sector. And there is information the board never needs in meeting format: the operational details the director manages well and that don't require any governance decision.

The Rule of Three Numbers

Marcus Webb explained how he communicated his restaurant finances to his location managers: "Three numbers. Every week, three numbers. Sales versus target. Food cost versus goal. Cash on hand. If all three are fine, we keep going. If one is off, that's what we talk about. Nothing else."

The same logic applies to an educational institute board. Three questions, with clear answers, presented at the start of each meeting.

The first: are we generating the revenues we expected? One figure, a simple comparison, and a sentence explaining the difference if there is one.

The second: are we spending within what we planned? If there are significant variances outside the budget, which ones and why.

The third: do we have enough cash for the next ninety days? A board that knows the answer to this question at every meeting will never arrive at a crisis without having seen it coming.

The board doesn't need to understand everything. It needs to understand enough to make good decisions. That amount is much less than most reports assume.

How to Translate Any Financial Number Into Something a Board Understands

The technique the best financial communicators use consistently is called translation to concrete consequence. Any financial number, however abstract, can be translated into a consequence any person can understand without accounting training.

"The institutional discount rate rose from 18% to 24% over the last twelve months." Translation: "We're collecting less per student than we were a year ago. The difference equals the salary of two instructors."

"The current liquidity ratio fell from 1.8 to 1.2." Translation: "If our revenues stopped today, we could pay our obligations for approximately six weeks. A year ago we could have done it for three months."

"The personnel expense variance was $47,000 over budget." Translation: "We spent $47,000 more on staff than planned. This was because we covered the health program vacancy with paid overtime while looking for the right replacement. The process is underway."

The formula is always the same: number plus cause plus consequence plus action.

How Institutions That Do It Well Do It

The best board communicators in the sector have two things in common. First, they separate the "what happened" from the "what should we do about it." They don't mix reporting and decision-making in the same breath. Reporting comes first, clearly and briefly. Then the decision, isolated, with the options and the director's recommendation.

Second, they use the same three or four indicators every meeting — without rotating them, without adding new ones, without replacing the ones that gave bad news last quarter with new ones that look better. Consistency in the indicators is what allows the board to build intuition. The board member who has seen the same three numbers for two years starts to develop instinct about what's normal. That instinct is one of the most valuable things a board can contribute.

Charlotte Career and Technology Institute, One Quarter Later

Richard Okafor reduced his quarterly report from 47 pages to a two-part document. Part one: three pages with key indicators in visual format, a narrative of what happened and why, and a list of the decisions the board needs to make at that meeting. Part two: the full report, available for whoever wants to review it, but not actively presented at the meeting.

Board meetings went from two hours and fifteen minutes to ninety minutes with conversations Richard describes as "the most useful in three years of leading the institution." Marcus Webb was elected chair of the board's finance committee. His main contribution: replacing the quarterly report with a monthly three-indicator dashboard — revenue versus target, expense versus budget, ninety-day liquidity — sent by email one week before each meeting.

The board's lawyer summarized it at the year-end meeting: "For the first time since I joined this board, I feel like I know what's happening with the institution. Before I was receiving a report and filing it. Now I receive an email and I read it."

* * *

Closing

A well-informed board is one of the most valuable assets of a small institute. Not as governance decoration, but as a real safety net. That board isn't built by choosing better people. It's built by communicating better. And communicating better doesn't require simplifying — it requires translating.

* * *

Levers You Can Pull This Week

1. Reduce your next board report to three questions — and answer them in the first three pages

Are we generating the revenues we expected? Are we spending within what we planned? Do we have enough cash for the next ninety days? Each with a one-sentence answer and a contextual phrase if something is outside the normal range. The full report can exist as backup. But the meeting starts with those three answers.

2. Translate your next three important financial numbers into concrete consequences

Take any figure from your current report — expense variance, discount rate, liquidity ratio — and write a single sentence explaining what it means in terms someone without accounting training can imagine. Not what the number says, but what it implies for the institution. That exercise, applied to the five or six most important numbers from any period, turns a technical report into a narrative any board member can follow.

3. Ask each board member what information they would need to feel truly informed

Not what you're presenting. What they would need to feel comfortable making decisions about the institution. The answers will vary. The lawyer will want something different from the entrepreneur. Those answers are the roadmap for designing a reporting format that actually works for your specific board.

Chapter 10

The Cost of Getting a Student

Why most institutes overspend on admissions, underperform on results, and don't know which of the two is the problem

— The Story of Kevin Larson —

Kevin Larson had run admissions at the Westfield Allied Health Institute in Kansas City for four years. He was good at his job. The admissions budget was $180,000 annually. Every year they enrolled between 270 and 300 new students.

At a National Association of Student Financial Aid Administrators conference, Kevin had a conversation with the admissions director of a health institute in Des Moines, Iowa, named Sandra Park. Her institute was smaller. Her admissions budget was $94,000. And she enrolled 241 new students per year.

Kevin did the math in his head. Sandra spent almost half as much. She got 84% of what he got. Her numbers were better.

"We measure everything. We know exactly what each enrolled student costs us and where in the process we're losing people. And at the part where we were losing the most, we tried something different."

Kevin arrived back in Kansas City with a question he had never asked himself: how much did it cost the Westfield Allied Health Institute to get one new student? It took two weeks to reconstruct the data. The number he found was $627 per enrolled student. It seemed reasonable until he saw Sandra's number: $390.

* * *

The Number That Explains Everything: Cost Per Student Acquired

The cost per student acquired is the sum of everything the institution spends to get one new enrolled student — divided by the number of students who actually enroll. Everything means everything: digital marketing, fairs and events, printed materials, admissions staff salaries proportional to time spent, travel, CRM tools, campus visits. For most small institutes, this number is between $400 and $900 per student. The ones in the low end of the range aren't necessarily spending less — they're spending better.

The Funnel No One Draws

The admissions process goes through four stages: leads, qualified prospects, applicants, and enrolled students. At each stage, some people leave. What varies dramatically between institutions is at which stage the most people are lost and why.

The most frequent finding when this funnel is analyzed at small institutes is always the same: the greatest loss doesn't happen between lead and prospect, or between prospect and applicant. It happens between the applicant and the enrolled student — the stage where the prospect has already shown real interest, already talked with the institution, already thought it looked good, and then chose another institution or simply didn't complete the process.

Most institutes spend 80% of their admissions budget getting prospects. And the remaining 20% converting prospects into students. It's exactly the reverse of where the effort should be.

The Pivot: In the Most Digital World in History, the Most Effective Thing Is the Most Analog

The moment a prospect receives their acceptance letter is, in most admissions processes, the most underutilized moment in the entire funnel. It's the instant of the prospect's greatest emotional openness — they just received good news, they're excited, they're actively considering whether this is the right place for them. And most institutes waste it by sending an automatic email with a PDF attachment.

Sandra Park discovered this after directly asking a group of newly enrolled students why they had chosen her institute over the others they had considered. Several students mentioned having received a handwritten acceptance letter. Not an email. Not a PDF. A letter with their name, specific details about the program they had chosen, a personal phrase about why the team was excited to have them. Written by hand, on real paper, in an envelope, sent by mail.

"Nobody does that anymore. When I opened it, I knew it was different."

In a world where every institution sends the same acceptance email, the handwritten letter isn't a kind gesture. It's a competitive advantage.

Why the Physical Letter Works — and It's Not Nostalgia

Scarcity creates value. Emails are abundant — the average working adult receives more than a hundred per day. Physical letters are scarce. An envelope in the mailbox in 2025 is an anomaly that activates curiosity before the recipient knows what it's about.

Once opened, the physical letter can't be ignored in a full inbox. It doesn't compete with other messages from the same sender. It can be held, reread, shown to someone else. Direct marketing consistently documents that physical mail has opening rates five to twenty times higher than email.

The problem is scale. Writing personalized handwritten letters for every accepted prospect is, for a three-person admissions team managing hundreds of applicants per cycle, a logistical impossibility. PenWorks (openworks.zunzun.ai) by Zunzun.ai solves exactly that problem: it combines artificial intelligence to personalize the content of each letter — the prospect's name, their chosen program, details from their conversation with the admissions team — with robotic handwriting technology that produces physically handwritten letters on real paper with a real pen. The result is a letter a recipient cannot distinguish from one written by a human. Because in every way that matters — the personalization of content, the warmth of tone, the physical presentation — it is.

Kevin and Sandra, One Year Later

Kevin Larson implemented several changes in the Westfield Allied Health Institute's admissions process. He mapped the full funnel, identified that his greatest loss was exactly where Sandra had told him — between acceptance and enrollment — and designed a specific response for that moment.

When an application was approved, instead of the usual automatic email, the system generated a personalized letter for that specific prospect: their name, the program to which they had been accepted, a reference to some detail from their conversation with the admissions team, and a phrase signed by the director of the program they would enter. The letter arrived by mail within two business days.

The impact was visible in the next cycle. The applicant-to-enrolled conversion rate went from 52% to 64%. Twelve points in one year. Without increasing the admissions budget. Without hiring additional staff. Without changing any other element of the process.

"The letter doesn't convince someone who didn't want to study here," said Sandra. "What it does is tip the balance when someone is already considering staying but isn't sure yet. And that's exactly the prospect you're losing."

* * *

Closing

Kevin Larson was spending $627 per enrolled student. Sandra Park was spending $390. The difference was that Kevin was spending his budget with emphasis on the early stages of the funnel and little investment at the decision moment. The decision moment is when the prospect already knows the institution, already thinks it looks good, and is choosing between two or three options. The personal handwritten letter weights differently than the standard acceptance email. Because at the most important instant of the process, it communicates something no email can: that this specific person matters.

* * *

Levers You Can Pull This Week

1. Implement the handwritten acceptance letter in the next cycle — before changing anything else

It's the most direct intervention at the highest-impact moment in the admissions funnel: when the prospect has just been accepted and is deciding whether to stay or keep looking. A physical letter, personalized with their name and the program chosen, sent within two business days of acceptance, communicates something no email can: that this specific person was noticed, recognized, and welcomed. PenWorks generates those letters at scale — personalized with the right content for each prospect, physically handwritten — for a fraction of the cost of any other admissions intervention with comparable impact.

2. Calculate your cost per student acquired — then map which funnel stage you're losing the most at

Add up everything spent on admissions in the last complete cycle: marketing, events, materials, proportional staff salaries, digital tools. Divide by the number of students who enrolled. Then count how many people were at each funnel stage and calculate the percentage that moved to the next. The stage with the biggest drop is where your real problem is. In most institutes, the biggest drop is between applicant and enrolled student.

3. Add a handwritten welcome note one week before the first day — the moment nobody takes care of

The period between acceptance and the program start is where a significant fraction of accepted students change their minds without the institution knowing until they don't show up on day one. A brief, handwritten note sent one week before the start — confirming the program, expressing enthusiasm — reduces that silent withdrawal. PenWorks allows this to be done systematically for each incoming cohort, without the admissions team having to write each note individually.

Chapter 11

The Antifragile Institution

How to build an institution that doesn't just survive the next crisis — but comes out stronger

— The Same Storm, Two Outcomes —

In March 2020, North Carolina's governor issued the order to close non-essential in-person activities. Meridian Technical College and Blue Ridge Career Institute both operated in the Asheville area. Both offered short technical and health certification programs. Both had between 380 and 450 active students. Both had had a good cycle in 2019. And both received the same news on the same Friday in March.

What happened afterward was completely different.

At Meridian, the director called an emergency meeting on Saturday. Reserves covered approximately six weeks of expenses. The data on which students were at risk wasn't centrally available. Meridian took eleven weeks to have all its programs functioning in some online version. Three full-time instructors did not renew their contracts. Fall 2020 enrollment fell 34%.

At Blue Ridge Career Institute, director Sandra Whitmore also called an emergency meeting on Saturday. Blue Ridge had reserves equivalent to slightly more than six months of operating expenses — built over four years of an explicit policy of directing 8% of the annual surplus to the emergency fund. It also had two income sources that didn't depend on in-person classes: a corporate training contract with three local construction employers, and a catalog of short online workshops launched eight months earlier as a diversification experiment. Sandra could identify which students were at risk within forty-eight hours. Blue Ridge completed the transition to hybrid format in eight weeks. Fall 2020 enrollment fell 11%. By spring 2021, it had recovered to pre-pandemic levels.

Both institutions faced exactly the same crisis. One absorbed it. The other amplified it.

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The difference between Meridian and Blue Ridge wasn't luck or location or program quality or director talent. It was preparation. And the preparation happened years earlier, in decisions that at the time didn't seem urgent or dramatic. Building reserves when there was surplus. Diversifying income when enrollment was going well. Organizing data when there was time. Launching online programs when it wasn't strictly necessary.

Antifragile: The Concept That Changes the Question

Philosopher Nassim Taleb introduced the term antifragile to describe systems that don't just survive adversity but are strengthened by it. The fragile breaks under pressure. The robust resists it. The antifragile uses it to grow.

Most conversations about institutional resilience stop at the second level: building robustness. Having enough reserves to hold on. Not breaking when the storm comes. That's necessary. It's not sufficient. The institutions that came out of the pandemic stronger didn't just survive the crisis. They used it. They used the pressure of having to go online to launch programs they had previously deferred. They used the fall in in-person enrollment to renegotiate leases they had been overpaying. They used the intensive employer contact during the pandemic to establish partnerships that later became corporate training contracts.

The fragile breaks under pressure. The robust resists it. The antifragile uses it to grow. The question isn't whether the next crisis is coming. The question is how prepared your institution will be to take advantage of it.

The Four Pillars of an Antifragile Institution

Pillar 1: Reserves. How much is enough? The standard answer is between three and six months of operating expenses. Sandra Whitmore built six months of reserves in four years by directing 8% of the annual surplus to that fund. The key isn't the exact percentage. It's the explicit policy. An institution that has a formal reserve policy — approved by the board, with a specific target and a defined annual contribution — will build the reserves. An institution that says "we should save more" won't.

Pillar 2: Diversification. Meridian Technical College depended on in-person enrollment for 97% of its revenues. When in-person enrollment was impossible for fifteen weeks, 97% of its revenues were impossible. Blue Ridge had contracts and online workshops representing 18% of its revenues. That 18% wasn't enough to compensate for the enrollment drop. But it was enough to extend the survival period while the transition was being resolved. 20% of non-tuition revenues isn't glamorous. It's simply the difference between surviving eleven weeks of uncertainty and not surviving them.

Pillar 3: Real-Time Data. During the first two weeks of the pandemic, Meridian didn't know how many of its students had dropped out. The data existed, scattered across attendance records and instructor emails. By the time they knew, some students were no longer recoverable. Blue Ridge knew which students were at risk within forty-eight hours. The data didn't predict the pandemic. But it allowed a faster response when it arrived. In a crisis, response speed is half the battle.

Pillar 4: Relationship Network. Blue Ridge called three construction-sector employers with whom it had corporate training contracts. It asked whether the programs could continue in a hybrid format. All three said yes. Not because they were more generous than other employers. Because there was a relationship of trust built over years of working together. Meridian called two employers with whom it had had exploratory conversations about possible partnerships. Both said it was a bad time. None of those relationships can be built during the crisis. They're built in the years before.

The Paradox of Preparation

There's something profoundly unfair about the distribution of institutional resilience. The institutions that most prepare for crises are, generally, the ones that least need to. They're the ones with surpluses to direct to reserves, operational capacity to diversify income, staff to organize the data.

That's the paradox: preparation is easiest for those who need it least, and hardest for those who need it most. But there is a response: start with whatever is possible today. A tight-budget institution can start with two weeks of reserves instead of six months. It can start with one alternative income channel instead of three. Two weeks of reserves don't save an institution from a long pandemic. But they can save it from an equipment emergency, from a month of low enrollment, from the unexpected invoice that arrives at the worst moment.

It's not about being perfectly resilient before the next crisis. It's about being a little more resilient than before the last one. Every year. Until the difference becomes visible.

The Numbers No One Was Watching — and What It Cost to Not Watch Them

Throughout this book we've talked about eleven different numbers that most educational institutes don't watch with the attention they deserve. The marginal cost of growth. The real discount rate. The cost of losing an instructor. Unclaimed federal funds. The cost of owning a building. The disaggregated retention rate. The real ROI of the technology stack. Alternative revenue sources. Board financial communication. The cost of student acquisition. Emergency reserves.

None of those numbers is particularly complicated. None requires accounting training to understand. What they require is attention — the kind of attention that's hard to give when there are classes to supervise, staff to manage, students to support, regulators to respond to, and a board to keep informed. And yet, each of those numbers that goes unwatched has a cost. The marginal cost not calculated produces growth that impoverishes. The discount rate not measured produces generosity that destroys. The cost of the instructor who leaves not anticipated produces decisions that cost ten times more than they would have. The unclaimed funds finance other institutions instead of your own.

The difference between Meridian and Blue Ridge wasn't that Blue Ridge had better numbers. It was that Blue Ridge was watching them.

What Is at Stake

Small postsecondary institutes do something no one else does in quite the same way. They train the HVAC technicians who maintain the buildings where we live. The medical assistants who work at the clinics in the neighborhoods where specialized medicine doesn't reach. The welders who build the infrastructure we all use but no one sees. The cooks who make it possible for the food and hospitality industry to function. The technology technicians who sustain the digital infrastructure of the mid-sized companies that employ most of the country's workers.

Those people don't go to Harvard. They don't go to Stanford. They go to Meridian Technical College. To Blue Ridge Career Institute. To Milwaukee Allied Health Institute. To Nashville Culinary Institute. To Lakeshore Technical Institute. To the institutes that appear in this book under fictional names but with completely real stories.

When one of those institutes closes — because of marginal costs no one calculated, because of discounts that accumulated without anyone adding them up, because of a building bought at the wrong moment, because of a crisis that found six weeks of reserves instead of six months — not just the institute closes. The opportunity closes for the students who would have passed through its classrooms. The possibility of quality technical training closes in a community that generally doesn't have many alternatives.

That doesn't recover easily. Sometimes it doesn't recover at all.

This book is not about finance. It's about mission. About the idea that an institution with a genuine educational mission deserves to survive long enough to fulfill it. And that the difference between surviving and not surviving, more often than we want to admit, isn't in the quality of the programs or the dedication of the staff. It's in whether someone was watching the numbers that no one else was watching.

That someone has to be you.

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Levers You Can Pull This Week

1. Calculate the numbers no one has calculated — this week, not next cycle

Choose the two or three numbers from this book that most make you uncomfortable because you don't have them: the marginal cost of your last expansion, your real discount rate, your cost per student acquired, your disaggregated retention rate by program moment, your current reserves in months of expenses. Calculate those numbers. An uncomfortable number you know is a problem you can address. An uncomfortable number you don't know is a problem that's going to surprise you. The surprise always costs more.

2. Establish a formal reserve policy — even if you start with one week

A reserve policy that the board approves, with a specific target and a defined annual contribution, is the difference between reserves that grow and reserves that are always "to be built." Start with the number that is financially possible today. Two weeks. One month. Whatever it is. Put it in policy. Put it in the budget. And next year, increase it. Resilience is built year by year, not all at once.

3. Choose one additional revenue channel and launch it before the year ends

Not next year. This year. Before it ends. The one-day workshop. The training contract with the employer across the street. The partnership with the county Job Center to receive WIOA students. Whichever of the channels from Chapter 8 is most accessible for your specific institution. The goal isn't for that channel to change your finances this year. The goal is to demonstrate — to yourself, to your team, to your board — that diversification is possible and that it works.

A Final Note

Gonzalo Chirinos has spent more than a decade working with educational institutions at the most honest moment of their existence: when the numbers show what the institutional narratives prefer not to see. In that work he has found a truth that appears again and again, at large and small institutes, technical and vocational, health and culinary arts and business.

The institutions that survive and thrive are not those with the best programs — though good programs matter. They're not those with the best directors — though leadership matters. They're the ones that have built the habit of looking at the numbers no one wants to look at, of asking the uncomfortable questions, and of making the hard decisions before they stop being optional.

That habit is not built by reading a book. It's built by doing the things the book describes. Starting with the smallest. And then the next one.

The institutions that will still be training the technical professionals this country needs twenty years from now already exist. They're operating right now, with the challenges they have right now. The question is which ones will still be here.

The numbers are there. Someone has to watch them.

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