The Discount Rate for Private Colleges and Universities Continues to Rise

The Discount Rate for Private Colleges and Universities Continues to Rise
  • Opening Intro -

    Student discounts are on the rise.

    It is a given that the published or sticker price for many colleges and universities is seldom reached.

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Instead, many educational institutions provide a discount to students based on financial need, cost sensitivity and increased competition from other schools.

NACUBO TDS

The National Association of College and University Business Officers regularly tracks the discounting that institutions employ, finding that the tuition discount rate is on the rise for private colleges and universities.

Indeed, in its 2013 NACUBO Tuition Discounting Study (TDS) based on data assembled from 401 private, nonprofit four-year colleges and universities, the discount rate for first-time, first-year freshman students rose slightly to 44.8 percent. Moreover, the NACUBO estimates that the rate will reach 46.4 percent for 2013-2014, the highest level in the history of the study.

Because many prospective students are unable or unwilling to pay full price, private institutions must respond by lowering the price for certain students. Also, in a bid to increase student enrollment, tuition discounting may be employed. Those institutional grants add up and deplete precious financial resources.

Price Sensitivity Matters

College Business Officers (CBO) report that many prospective students are lost to other institutions because of tuition costs. Some 17.2 percent of participating institutions reported that at least 10 percent of their freshman enrollment was lost, with price sensitivity one reason for that loss.

A smaller pool of younger college students, increased competition from other institutions and changing demographics were other reasons cited for the loss of incoming students.

Institutional Grants on the Rise

Colleges and universities are generously opening their wallets to assist their students. The NACUBO study found that on average 87.7 percent of freshmen received an institutional grant in 2012-2013, increasing to an estimated 88.9 percent for 2013-2014.

The study also shows that 80.4 percent of grant dollars awarded by private, four-year institutions met students’ financial need in 2012-13.

“With four out of five dollars going to students to meet financial need, the overwhelming majority of institutional dollars are being used to ensure access by students who otherwise may not be able to afford a college education,” noted John Walda, NACUBO president and CEO.

Adjusted for Inflation

While college and university costs continue to grow, with institutional funding those increases have been held down. Indeed, when factoring in inflation, the increase for the past 13 years has been just 0.4 percent, demonstrating that educational institutions are providing more money for financial aid than they are pouring those funds into the schools.

See AlsoStepped Up Discounting and Private College Enrollment

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Categories: Campus News