NACUBO

My NacuboWhy Join: Benefits of Membership

E-mail:   Password:   

 Remember Me? | Forgot password? | Need an online account?

Business Officer Magazine
Loading

A Current Look at Tuition Discounting

Rate stability is shown in NACUBO’s 2005 Tuition Discounting Survey findings.

By Jessica Shedd and Christina Redmond Daulton

What’s the status of tuition discounting? Results from the NACUBO 2005 Tuition Discounting Survey of four-year, independent, nonprofit institutions show a slight increase in the average tuition discount rate for full-time freshmen, after a slight decrease in 2004. Over the past three years, however, the rate has remained relatively stable. In fall 2005, the average discount rate for full-time freshmen (38.6 percent) returned to the rate reported in the 2003 study (38.8 percent).1

More than half of the 426 institutions responding in 2005—233 institutions—have participated in the Tuition Discounting Survey for over 10 years, providing a context for this year’s data and tuition discounting practices over the past decade. Trends show that a sharp increase in tuition discounting rates occurred in the early 1990s, with continued growth throughout the decade, but that rates have begun to level off over the past three years. The study results over the course of the past decade indicate that the majority of the increase in the average freshman discount rates has been driven by the increasing percentage of students receiving an institutional grant (a 6 percentage point increase between 1996 and 2005), as opposed to an increase in the average grant covering a larger proportion of tuition and fees (a 2 percentage point increase between 1996 and 2005).

The 2005 study indicates that both a higher percentage of full-time freshmen received a tuition discount in fall 2005, and institutional awards covered a higher percentage of tuition and mandatory fees compared to last year’s results. Of the 426 participating institutions in this year’s survey, an average of 83.5 percent (82.8 percent in 2004) of full-time freshmen at responding independent institutions received an institutional grant, with grants covering an average of 47.1 percent (46.4 percent in 2004) of tuition and mandatory fees.

Institutional Comparisons

As in prior years, participating institutions were broken into three categories for the purpose of peer analysis: Small Colleges, Lower Tuition (SCLT); Small Colleges, Higher Tuition (SCHT); and Large Colleges and Universities (LCU). The categories are based on tuition and mandatory fee rates (excluding room and board) and the number of full-time freshmen enrolled in fall 2005. In 2005, 426 independent institutions participated in the survey. Of those:

  • 277 fall within the SCLT category (colleges with an enrollment of fewer than 850 full-time freshmen and a tuition and mandatory fee rate of less than $25,000);
  • 84 fall within the SCHT category (colleges with an enrollment of fewer than 850 full-time freshmen and a tuition and mandatory fee rate of greater than or equal to $25,000); and
  • 65 fall within the LCU category (colleges with an enrollment of greater than or equal to 850 full-time freshmen).

Institutions within the SCLT category had the highest average freshman discount rate (40.4 percent) and the largest percentage of freshmen receiving a grant (90.8 percent) in comparison to the other categories. However, though institutions within the SCHT category awarded institutional grants to a smaller percentage of freshmen (71.7 percent), these institutions awarded institutional grants that covered more than half (54.9 percent) of tuition and fees—the highest of any of the institutional categories. The tuition discounting practices at LCUs resembled that at SCHTs, with LCUs awarding grants to 68.0 percent of students on average but covering almost half (48.8 percent) of tuition and fees.

Average Tuition Discount Percentages: Full-time Freshmen
2005 Data
Mean Median N
SCLT 40.4% 40.8% 277
SCHT 37.9% 37.1% 84
LCU 31.7% 31.8% 65
All 38.6% 39.3% 426
Percentage of Freshmen Receiving Institutional Grants
2005 Data
Mean Median N
SCLT 90.8% 95.1% 277
SCHT 71.7% 72.7% 84
LCU 68.0% 68.1% 65
All 83.5% 91.9% 426
Average Institutional Grant for Freshmen As a Percentage of Tuition & Fees
2005 Data
Mean Median N
SCLT 44.3% 45.0% 277
SCHT 54.9% 52.2% 84
LCU 48.8% 45.1% 65
All 47.1% 46.6% 426

Demographic Characteristics

In an effort to provide further descriptive analysis by peer group, NACUBO analyzed the average freshman tuition discount rate, the percent of freshmen aided, and the average grant for freshmen as a percentage of tuition and mandatory fees by three demographic characteristics: region, Carnegie Classification, and women’s colleges. In 2005, institutions grouped under the Baccalaureate Colleges Carnegie Classifications had the highest average freshman discount rates; Doctoral/Research Universities had the lowest (34.9%). Overall, the Plains region—including the states of Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota—had the highest average freshman discount rate (43.4 percent) compared to any of the regions. The Southwest—Arizona, New Mexico, Oklahoma, and Texas—had the lowest (31.1 percent).

Average Tuition Discount Percentages: Full-time Freshmen
Carnegie Classification
2005 Data
Mean Median N
Baccalaureate Colleges--General 41.1% 42.5% 92
Baccalaureate Colleges--Liberal Arts 40.9% 40.8% 105
Masters Colleges and Universities I 37.9% 39.0% 121
Masters Colleges and Universities II 37.7% 38.9% 34
Doctoral/Research Universities--Extensive and Intensive 34.9% 35.5% 49
All Institutions 38.6% 39.3% 426
Average Tuition Discount Percentages: Full-time Freshmen
Region
2005 Data
Mean Median N
Far West 37.0% 38.2% 34
Great Lakes 41.3% 41.4% 74
Mid East 38.3% 38.1% 110
New England 34.4% 34.9% 54
Plains 43.4% 44.8% 45
Southeast 39.7% 41.9% 76
Southwest 31.1% 33.5% 26
All Institutions 38.6% 39.3% 426
States Within Regions
Far West: Alaska, California, Hawaii, Nevada, Oregon, Washington
Great Lakes: Illinois, Indiana, Michigan, Ohio, Wisconsin
Mid East: Delaware, District of Columbia, Maryland, New Jersey, New York, Pennsylvania
New England: Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont
Plains: Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota
Southeast: Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee, Virginia, West Virginia
Southwest: Arizona, New Mexico, Oklahoma, Texas
Note: Due to the small sample size, the "Rocky Mountains" region was not included in the above tables.

NACUBO is grateful to all participating institutions for their support of the study and contribution in making it a success. For more information on NACUBO’s Tuition Discounting Survey and other NACUBO research efforts, please visit the NACUBO research Web pages.

1. While this study chronicles and compares year-to-year changes in tuition discounting, the institutions in the sample vary each year. Slight fluctuations in year-to-year discount rates or components should be interpreted with caution.

Jessica Shedd is director and Christina Redmond Daulton is manager, research and policy analysis, at NACUBO.