Analysis Of Lovett And Private Schools

Private schools are organizations follow the supply and demand model but it is the way in which they follow it that is important. Lovett and private schools, in general, are affected by input costs, the rise of substitutes (charter schools), and the income of consumers. Essentially when input costs rise it puts pressure on schools to raise prices. And when other schooling opportunities emerge it takes away students from privates schools. Finally, when consumers receive higher income they have more money to spend on goods.
Charter schools are government-funded schools that are selective and feature better education relative to public schools which are also free. Charter schools are a direct substitute for private schools due to the fact that
For private schools like Lovett, they are nonprofits. Therefore the goal of revenue is to barely surpass the costs. For Lovett, it spends its largest chunk of money on the salaries of employees and it is 66% of the expenses. As dictated by the budgeting summary this will be over 1.2 million dollars next year. This is a direct factor to why the tuition is also increasing next year. The tuition will always increase or decrease to meet the input costs. However, the schools like Lovett have a boundary that they must pay close attention to. They have to balance what people can actually afford with how much money they spend. As stated by John Lewis in his article as schools input costs increase drastically they accommodate for this by continuously raising tuition. The cause of this raise is recently due to the increasing demand for financial aid. The greater financial aid the more accessible the school is to a larger group of incomes. Yet this also increases the tuition to people not on financial aid. The net outcome is likely a slight increase in the supply of
Yet private schools which are often a costly option are primarily populated by the wealthier people of our society. One eye glaring statistic for the Atlanta area is that the top 5% wealthiest people have increased their average income by over 30% in the last 6 years. This rapid increase is affecting the market for private schools. The more money amongst the upper class presumably equals the more demand for private schools. But the problem is that this wealth is not being dispersed amongst all classes of wealth. When the rich get richer they are taking away from the lower classes. Additionally, Lovett could see a problem in the coming years as the tuition is increasing as a cost of the Top 5%’s income. It has gone from 15% of their income to over nearly 25% in the last 16 years and with this increase, it could grow to high. And when this happens Lovett would likely see a drop in