Revenue Drivers of Financial Sustainability – INDEX Data Trends Report
This month’s Notable Numbers is the first of a two-part series highlighting trends from the 2026 INDEX Data Trends Report, presented at the October Head of School/CFO Conferences. This issue focuses on revenue drivers of financial sustainability; next month’s issue will examine expense drivers.
Financial sustainability requires schools to generate sufficient revenue to support expenses over time. INDEX schools have generally done this successfully, with revenue per student growing faster than expenses per student in recent years. However, the gap between revenue and expense growth has narrowed, underscoring the importance of understanding the factors driving both revenues and expenses.
Enrollment Growth Supports Revenues
Average enrollment grew 3.5% between 2019–20 and 2025–26, while schools continued to operate at approximately 97% of enrollment capacity.
Why this matters: Enrollment growth provides additional revenue, often without a corresponding increase in expenses. However, with schools already operating near capacity, opportunities for further growth may be limited.
Tuition Increases Drive Revenue Growth
Average tuition and fees increased 4.8% in 2025–26, following increases of 5.6% in 2024–25 and 4.1% in 2023–24. Meanwhile, tuition discount rates have remained relatively stable, hovering around 17.5% in recent years.
Why this matters: Relatively high tuition increases have been a major driver of recent revenue growth. Whether schools can maintain increases at these levels over the long term will depend, in part, on affordability and families’ willingness to pay.
Endowments Strengthen Financial Reserves
Endowment income increased from 5.9% of total revenue in 2018–19 to 7.3% in 2024–25, reaching a high of 7.6% in 2023–24. Endowment value relative to annual operating expenses also increased from 138% to 171%, strengthening schools’ financial reserves.
Why this matters: Strong financial market performance has increased endowment resources, providing schools with additional revenue and a stronger financial cushion. However, investment returns are unpredictable, and schools cannot assume that recent market performance will continue indefinitely.
Source: 2026 INDEX Data Trends presentation. Figures represent averages for schools included in the trend analysis.