Colleges Give Students Record Discounts in Hope of Increasing Enrollment

U.S.

Tuition discounts given by private colleges and universities have reached an all-time high according to a new report. A tuition discount is defined as the portion of total tuition funneled back to students as grant-based financial aid.

That number for first-time, full-time college freshman reached 48.2% in 2016-2017 and is expected to reach 49.9% in the 2017-2018 academic year – the highest level recorded. The discount for all undergraduates in the 2017-2018 year rose to 44.8%, also a new record.

The report, the 2017 Tuition Discounting Study, is an annual study published by the National Association of College and University Business Officers. The findings highlight a years-long trend of declining enrollment and increased competition for students, and higher-learning-institutions’ efforts to reverse it.

It’s a story with two conclusions,” said Senior Director of Research and Policy Analysis at NACUBO, Ken Redd. “First from the standpoint of the students, many more undergraduates are benefiting from more grants that are getting larger and covering a greater share of tuition costs. That’s good news for students and financial aid generally.”

“But from the standpoint of tuition being used to pay for the grants, the colleges are getting more constrained and this has led to a strain in tuition revenue for many private colleges and universities,” he added.

Net-tuition revenue, which accounts for the majority of revenue for private institutions, has been stagnate or shrinking for the last five years, the study said. A phenomenon attributable to rising discount rates. The report found that a greater share of students are now receiving grants and that the average grant covered a larger share of the average tuition price.

“About 89 percent of first-time, full-time freshmen received institutional grants in 2017-18, and the average grant award in 2017-18 covered 56.7 percent of tuition and fees, up from 55.3 percent in 2016-17,” the study reads.

This also presents another dilemma for institutions, Redd said. “The conundrum that schools have found in the past is that when they cut tuition, people thought the school has less value.”

“When you cut tuition, it also means less financial aid to students. Do students prefer lower prices and less financial aid, or higher prices with more financial aid? It remains to be seen,” he added.

Photo by Tax Credits via Flickr

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