Tuition Discount Rates at Private Colleges and Universities Hit All-Time Highs

By Georgio Salas.
Updated May 19, 2022

WASHINGTON (PRWEB) May 19, 2022 - Average private college and university tuition discount rates continue to climbbut a new analysis from the National Association of College and University Business Officers (NACUBO) shows correlation between the longstanding financial aid strategy and admissions selectivity.

In the 2021 NACUBO Tuition Discounting Study, 359 private, nonprofit colleges and universities reported an estimated 54.5 percent average institutional tuition discount rate for first-time, full-time, first-year students in 2020-21 and 49 percent for all undergraduatesboth record highs. By providing grants, fellowships, and scholarships, these institutions forgo about half the revenue they otherwise would collect if they charged all students the tuition and fee sticker price.

Most undergraduate students at these institutions received grant aid this year, and the awards were, on average, the largest theyve ever been. In AY 2021-22, 82.5 percent of all undergraduates at institutions surveyed received aid, which covered an average of 60.7 percent of published tuition and fees.

While financial aid increased, there was less positive change in other key indicators. Net tuition revenue per undergraduate increased year-over-year but is still down two percent from five years ago, after adjusting for inflation.

Enrollment was relatively flat overall, as an increase in first-year students was diluted by a decrease in enrollment among other undergraduates. To fund the majority (54 percent) of grant aid awards this year, institutions reported using undedicated sources of revenue, including unbudgeted general funds, unplanned contributions, and foregone revenue.

Despite relatively flat enrollment and declines in net tuition revenue over time, our data show that institutions continue to use their own resources to deliver on their commitment to access and affordability, said Ken Redd, senior director for research and policy analysis at NACUBO.

The extent to which private institutions discount their published tuition may differ. For the first time, the NACUBO study examined tuition discounting by undergraduate admissions selectivelyand found that institutions that admit the smallest percentages of students discount their published tuition less. At selective/highly selective institutions (defined as those that offer admission to less than 51 percent of applicants), the median institutional discount rate for first-time undergraduates in 2021-22 was 44.8 percent, more than 13 percentage points lower than the median institutional discount rate for institutions overall (58 percent).

These results suggest that although the most selective colleges and universities still heavily discount tuition, these schools do not rely on tuition discounting as an enrollment strategy to the same extent as other institutions, Redd said.

In a spotlight section, the report examined the potential continued effects of the COVID-19 pandemic. Results show that while more than 71 percent of institutions charged a separate price for in-person versus online/hybrid learning in Fall 2020, only 3.2 percent of institutions did so by Fall 2021indicating that strategies have shifted as some of the worst effects of the pandemic have waned and institutions have resumed many pre-COVID operations.

These private, nonprofit colleges and universities made significant efforts to make higher education more affordable, even as they navigated the impacts of the COVID-19 pandemic, Redd said. Business and finance officers play a critical leadership role in finding efficiencies and new ways to offer high-quality postsecondary education without growing tuition revenue.

About NACUBO Founded in 1962, the National Association of College and University Business Officers (NACUBO) is a nonprofit professional organization representing chief administrative and financial officers at more than 1,700 colleges and universities across the country. NACUBO works to advance the economic vitality, business practices, and support of higher education institutions in pursuit of their missions. For more information, visit http://www.nacubo.org.