Category: Differentiated Instruction (Fall 2006)

Tuition crisis? Not necessarily – if schools use creative financial strategies, and an attractive appeal to grandparents, argues financial adviser and veteran grandparent.

For millennia, Jews have attached the highest priority to Mesora, passing on our tradition and values to the next generation. If one is to believe the rhetoric, nothing short of saving lives has a greater pull on the Jewish consciousness than cultural transmission. At the same time, financing formal Jewish education has always been a daunting challenge, even amid today’s relative affluence.

The task of educating our children in the modern era has been borne primarily by professional educators – historically not well-paid and oftentimes affected by a collective feeling of low self-esteem. This reality is a contemporary application of the ancient Talmudic injunction for parents to educate their children, this most basic parental obligation which has effectively become delegated to professional teachers. The implicit understanding is that the teacher will be compensated. The perennial question in our modern western society is: by whom?

Traditionally, in addition to whatever financial burden parents could bear, the central Jewish community, or kehilla, raised funds to provide Jewish education to those who could not afford to do so and also offer support for capital projects, teacher training and curriculum development. The source of such funds was often wealthy Jews residing in the local kehilla. In modern times, the burden is still shared by parents and community, but even as today’s Diaspora Jewish community is the most financially comfortable in history, certain converging trends have financially strained the Jewish education network. There are several reasons for the current funding crisis:

Increasing salaries. After decades of lobbying, Jewish educators are finally being paid a reasonable wage. However, since the budget of most Jewish day schools is primarily teacher salaries, tuition has been dramatically increased to offset the rising costs. Supplemental activities. Jews want the best for their children and, in the current era, this means choosing among a bewildering array of extracurricular and recreational opportunities (e.g., camp, music, art lessons, sports, etc.), which are often expensive and compete with school tuition for available family resources
Centrality of Israel. The symbolic weight of Israel in the Diaspora Jewish consciousness, coupled with the ease with which Diaspora Jews connect with events and institutions in Israel, make a compelling case for the utilization of the Jewish philanthropic dollar. For example, a donor interested in supporting Jewish education is now torn between supporting local day schools, Jewish universities and colleges, and the wide array of yeshivot in Israel serving Israeli and Diaspora students.
Community reliance. The very primacy of Jewish education in the community has, ironically, given parents (including those who can afford to pay full tuition) the sense that it is not only their responsibility, but that of the larger community. This is particularly accentuated in the modern era of “entitlements” where we routinely expect assistance from third party institutional payors (e.g., employer financed health insurance and retirement benefits, government subsidy of a plethora of charitable institutions, government bailout of distressed industries, etc.)

This conundrum of Jewish educational funding is arguably the most talked about issue among Diaspora Jews, barring perhaps only a crisis in Israel. Everyone is looking for the mythical "silver bullet," whether from major Jewish foundations, the UJA-Federation system, or government agencies to help defray the costs of educating their children. In fact, however, the threshold issue for parents and grandparents is the extent of their commitment to the age- old premise that educating their descendents is the highest priority for Jewish parents.

This is a formidable challenge since parents already feel pressured beyond the financial breaking point and grandparents believe that their primary obligation is behind them. Clearly, some grandparents, of their own volition, make gifts to their children and grandchildren, but often it is to finance items that do not rank as high as education in the hierarchy of Jewish values, such as summer camp or taking the family to a resort for Passover or Sukkot – items that reflect the material success of the grandparents rather than the primacy of the transmission of their cultural heritage.

In my view, the challenge of financing Jewish education can only be met if members of the community who are fortunate enough to have accumulated some assets will willingly and enthusiastically make such assets available to educate their grandchildren.

In practical terms, this represents an anticipatory transfer of assets from one generation to another. Historically, people have waited until death to effectuate such transfers. But, since life expectancies have increased dramatically, giving one’s assets to enable one’s descendents to learn our values and put them into practice during the lifetime of the grandparents is an idea which, if well-promoted over a period of time by school and community leaders, may find resonance and acceptability in our community.

If the concept of grandparent assistance for tuition gains traction, there are a variety of techniques that might be considered to creatively effectuate the transfer of assets so that both the schools and the grandparent benefit. These are complex tax and legal transactions, and, therefore they are outlined here in simple terms.

Interest-free loans. A grandparent might lend a stipulated sum to the school, interest free, for the duration of the children’s education. Upon the conclusion of such period (hopefully the youngest’s graduation), the grandparent will get the money back. At a minimum, the school will have the use of the money for a significant period of time. If we assume the grandchildren are in a school for 15 years, and an annual interest rate of 5%, the school would earn an amount equal to 75% of the original loan. Furthermore, many grandparents, upon graduation, in appreciation of the education received, might consider a gift of all or part of the loan for a general a scholarship fund.
Trust. A grandparent might create a trust in which the income for the duration of the trust would be used for the grandchildren’s tuition. After they graduate, the principal of the trust would be put into a scholarship endowment fund in perpetuity to benefit children who attend that school.
Professional money managers. An idea being discussed would involve investment funds being professionally managed, with the investor providing for a percentage of the earnings to go either to a particular school or a communal Jewish education fund.

These are just a few creative examples of ways to make intergenerational funding an inherent part of the tuition structure. Once grandparents agree to become partners in providing for the Jewish education of their grandchildren, the combination of communal, foundation and, perhaps, government support should ease the financial pressure that is prevalent today.

Matthew J. Maryles is a layman who has long been active in Jewish education. He is a trustee of Yeshiva University,past chairman of several committees in UJA-Federation of New York on Jewish education, Secretary of the Gruss Foundation, former president of the Yeshivah of Flatbush, and co-chair of AMODS (Association of Modern Orthodox Day Schools.)