Price sensitivity is costing us students, say business officers

A new report from the National Association of College and University Business Officers (NACUBO) finds lukewarm returns on tuition discounting, Rick Seltzer writes for Inside Higher Ed.

To create the report, NACUBO partnered with 411 private colleges to track tuition discount rates, revenue, and financial health.

NACUBO found that the average tuition discount rate for first-time, full-time students was 49.1%, and for all undergraduates, it was 44.2%—both record-breaking numbers.

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In spite of rising tuition discount rates, 57.7% of the private colleges and universities surveyed by NACUBO saw a decline in total undergraduate enrollment between the fall of 2013 and fall of 2016. Chief business officers (CBOs) largely blame rising price sensitivity for the enrollment declines. Around 68% of CBOs at colleges that saw falling enrollment cited price sensitivity as the reason. The next most commonly cited reasons were increased competition and changing demographics.

At institutions where first-year enrollment increased, 65% of CBOs said it was because of enhanced recruiting and marketing.

And although net tuition revenue per full-time freshman increased for by 0.4% between 2016 and 2017, that increase doesn't keep up with inflation, Seltzer reports.

The NACUBO study echoes findings from another recent analysis, which found that colleges that discounted tuition the most actually saw tuition net revenue decline.

Despite the mixed results, some leaders at private colleges are not yet discouraged by the tuition discounting model. For example, tuition discounting remains an important tool for Kevin F. F. Quigley, president of Marlboro College, who says the tactic was useful in increasing enrollment for the school's incoming freshmen from 50 in the fall of 2015 to 71 in 2016 (Seltzer, Inside Higher Ed, 5/15; NACUBO release, accessed 5/16).

Read more: A study finds tuition discounting led to revenue loss at some institutions, but experts say there are some gaps in the research

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