Discount rates at private colleges reach record levels

The discounts on tuition and fees offered to incoming freshmen by private colleges and universities accelerated during the COVID-19 pandemic, according to the annual Tuition Discounting Study published by the National Association of College and University Business Officers (NACUBO).

Analyzing responses from 361 private, nonprofit institutions, NACUBO calculated an average tuition discount rate, defined as “the total amount of institutional grant aid awarded…as a percentage of the gross tuition and fee revenue the institution would collect if all students paid the sticker price.” Preliminary numbers from 2020-21 indicate that the rate reached all-time highs of 48.1 percent for all undergraduates and 53.9 percent for first-time, full-time, first-year students—a 9.6 percentage point increase compared with 2011-12 numbers.

More grant aid going to a greater share of students

The share of students receiving institutional aid also rose: institutions provided 89.7 percent of first-time undergraduates and 82.8 percent of all undergraduates with institutionally funded grants, fellowships, and scholarships. Inside Higher Ed notes that NACUBO’s calculations do not include grants from other “private organizations, governmental entities and organizations that require institutional matching funds where the outside organization develops the award criteria.”

Nor do they include federal coronavirus relief money, meaning that some students likely received those emergency grants on top of the discounts reported in NACUBO’s analysis, Ken Redd, the organization’s senior director of research and policy analysis, told Higher Ed Dive.

Students also received larger awards than in prior years; institutionally funded grants covered, on average, 60.3 percent of first-time students’ and 54.3 percent of all students’ sticker-price tuition and fees. The data, researchers said, reflects families’ need for greater financial support amid the pandemic’s economic fallout.

Still, Redd expects that discount rates will continue climbing even after the pandemic ends, as private colleges compete for a shrinking pool of potential students. The latest data indicates that “tuition discounting remains an important tool for private, nonprofit institutions to enroll and retain students while making a college education more affordable and attainable for them,” he says.

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