Tuition discount rates hit a record high—again

Freshmen net tuition revenue growth didn't keep pace with inflation

Tuition discount rates hit another record high this academic school year: 48.6% for first-time, full-time freshmen. 

The findings come from a survey conducted by the National Association of College and University Business Officers (NACUBO). Four hundred and one colleges and universities participated in the survey: 305 small institutions, 57 comprehensive and doctoral institutions, and 39 research institutions.

Attitudes toward higher education pricing changed during the Great Recession, and a majority of colleges and universities adjusted by offering discounts to attract students and combat declining enrollment. But the practice is so common that many industry experts say it's no longer a sustainable business tactic. 

NACUBO: Tuition discount rates 'not sustainable'

"There's a real emphasis among our chief business officers and other campus leaders to preserving, to the extent they can, affordability," says Ken Redd, NACUBO's director of research and analysis. "There's a big price that campuses are paying for that. With the net tuition revenue essentially, in real terms, being flat for the last couple of years, it really does mean that institutions have to start thinking about other ways of helping to preserve the emphasis on affordability."

In the past two academic years, 88% of first-time, full-time freshmen received tuition discounts, according to the survey. And the average grant equaled about 56% of fees and tuition.

Although tuition levels have surged since 2000, net revenue has remained relatively flat—largely because of discounting practices.

This academic year, freshmen net tuition revenue grew only 1.2%—compared with 2.1% last year. But that growth was lower than inflation, so adjusted net tuition revenue actually declined slightly.

In light of this, some colleges are reconsidering their commitment to discount rates. Transylvania University gave incoming students a discount rate of about 54% in fall 2015. This year, officials started to scale back.

"We're pretty sure that it's not a sustainable path for us to keep going up and up and up," says Rhyan Conyers, VP for enrollment and dean of admissions. "Every dollar that we put into financial aid is a dollar that we can't put into supporting our students." 

Survey: Nearly one in 10 institutions have discount rates above 60%

Instead, the school is looking to limit institutional grant money awarded on top of external aid, also known as "stackable scholarships."

Other schools may consider cutting tuition sticker prices, but Transylvania is avoiding that, Conyers says, because students may perceive it as a cut to quality (Zinshteyn, Hechinger Report, 5/16; Seltzer, Inside Higher Ed, 5/16). 


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