Stepped Up Discounting and Private College Enrollment

Stepped Up Discounting and Private College Enrollment
  • Opening Intro -

    The competition for college students is a keen one, something particularly felt by private colleges and universities.

    To lure students to privately funded institutions, such colleges must step up the tuition discounting to compete against taxpayer-funded public schools.

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A recently released survey from the National Association of College and University Business Officers, however, reveals that discounting is not stemming the flow of students away from private schools.

Steep Tuition Discounting

Last Friday, the 2012 Tuition Discounting Study (TDS) was released by the NACUBO, revealing that tuition discounting is not reversing the trend of declining enrollment. Such discounting is used by private institutions to make it possible for students to afford a school they might otherwise not attend.

Discounting is widespread and now averages 45 percent for freshmen students according to the survey. The average discount for all private college students is about 40 percent, up from 33 percent 10 years earlier.

The discount rate measures 53.1 percent for the 86.9 percent of college freshmen receiving aid. That means the remaining 13.1 percent of students do not receive a tuition break, accounting for the 45 percent discount average for all first-time students.

Endowments and Giving

Discounting at colleges and universities with healthy endowments and strong annual giving programs means these efforts are having little effect. However, for the hundreds of small private schools that rely much more on tuition and fees to cover costs, the stepped up discounting comes at a price. And that price is often a cut in services.

Survey respondents were permitted to provide answers anonymously in a bid to gauge how individual schools are handling discounting. Some respondents noted that their schools have changed the discount rate as part of an effort to attract more students while working harder to recruit students that do not need aid.

Acceptance Rate Correlation

The survey found a strong correlation between the student acceptance rate and discounting. Those colleges that routinely accept more than 50 percent of student applicants offered more aid than those schools that accept fewer than 50 percent of all applicants. Schools that offered the biggest discounts had the greatest success in enrolling students, but often at a cost to the institution’s bottom line.

No growth or declining enrollments were reported by more than half of all respondents. The report’s authors concluded that the “weak economic recovery” is the main reason why students are looking for the best deal, avoiding enrolling at small, private institutions with fewer than 4,000 students enrolled in greater numbers. Price sensitivity is the main reason why many students look elsewhere.

Long Term Effects

The long term effects of continued deep discounting will likely force some of the smaller institutions to seriously weigh whether they have what it takes to continue operating. Outright mergers or shared programs may help some colleges while others may decide that offering a quality education is something they can no longer guarantee and, instead, could opt to shut their doors.

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Categories: Campus News