Tuition Discounts at Private Colleges Hit Historic High

on May 16, 2017

Private colleges and universities are discounting their tuition at the highest rates in history, according to the National Association of College and University Business Officers (NACUBO).

 

The tuition discount rate is the percentage reduction in gross tuition revenue from total institutional grant aid given to students.

 

The 411 private nonprofit institutions that participated in the 2016 NACUBO Tuition Discounting Study had an estimated 49.1 percent tuition discount rate for first-time, full-time students in 2016-2017. That marks the highest discount rate in the history of the survey.

 

“In each of the past 12 years, private colleges and universities have increased their freshman tuition discount rate — culminating in this year’s record-high estimate of nearly 50 percent,” said Ken Redd, NACUBO director of research and policy analysis.

 

“As the findings from the 2016 NACUBO Tuition Discounting Study suggest, many private colleges are greatly expanding their aid programs to meet the needs of more students and families, but these financial aid expenditures are contributing to a financial strain for some institutions.”

 

According to NACUBO, for every dollar private intuitions grossed in tuition revenue from freshmen, almost half was used for grant-based financial aid. Grants, unlike loans, are free money that does not need to be paid back.

 

For all undergraduate students, the institutional tuition discount rate was a record setting 44.2 percent. 

 

Other key findings from the study include:

  • Net tuition revenue from first-time, full-time students grew by an estimated average of 0.4 percent, which is a decrease from 1.5 percent in 2015-2016.
     
  • About 39 percent of respondents reported declining enrollments. Those decreases were noted in the freshman class and total student body and were an increase from 37.5 percent last year. 
     
  • Chief business officers appear to be questioning the viability of tuition discounting. Among respondents, only 44 percent said they expect discounting will be sustainable for their institutions in the long term.
     
  • On the other hand, 41 percent of respondents either said they consider tuition discounting unsustainable or sustainable in only the short term.

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