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New NACUBO Study Demonstrates Link Between Tuition Discount Rates and Underrepresented Minority Student Enrollment

January 4, 2018

Last month NACUBO released Tuition Discounting and College Access for Underrepresented Students as part of its Perspectives series. The authors examined the relationship between changes in first-time freshmen tuition discount rates and enrollment of underrepresented minority undergraduates, particularly students who are African American, Hispanic, Native American, Native Hawaiian or Pacific Islander, or those who identify as two or more races.

The study uses five years of data from NACUBO's annual Tuition Discounting Study (TDS) as well as data from the National Center for Education Statistics' Integrated Postsecondary Education Data System (IPEDS). The sample comprises 200 four-year, private nonprofit colleges and universities that participated in the TDS each year from 2012 to 2016. These schools were divided into four quartiles (each group with 50 institutions) based on changes in their first-time freshmen (FTF) discount rates from academic year 2011-12 to 2015-16. FTF tuition discount rates changed, on average, by -5.2 percentage points for schools in Quartile 1, by 2.3 percentage points for schools in Quartile 2, by 6.2 percentage points for schools in Quartile 3, and by 16.1 percentage points for schools in Quartile 4.

As the table indicates, the proportion of entering freshmen who were underrepresented minority (URM) students increased, on average, by 3.3 percentage points across all sample institutions. Colleges and universities that increased their FTF tuition discount rate the most (those in Quartiles 3 and 4) experienced the largest increases in URM freshmen as a proportion of their FTF cohort.

Average Percentage of FTF URM Students within a Cohort, by Tuition Discount Rate Change Quartiles

On average, students attending colleges and universities that increased their tuition discount rates the most (those in Quartiles 3 and 4) were also more likely to receive institutional aid covering a larger percentage of their tuition and fees. For example, in 2015 schools in Quartile 1 awarded institutional aid to 82.5 percent of their first-time freshmen, with the average award covering 56.9 percent of students' tuition and fees. Schools in Quartile 4, in contrast, awarded institutional aid to 91.9 percent of their first-time freshmen, with average discounts covering 61.8 percent on their tuition and fee prices. Thus, institutions that increased their enrollment of URM first-time freshmen the most also had the highest increases in the proportion of FTF receiving institutional grant aid.

As colleges and universities increased access for students by providing increased tuition discounts, they also experienced declines in net tuition revenue. On average schools in Quartile 4 experienced a drop in net tuition revenue per first-time freshmen from $19,515 in 2011 (in 2015 dollars) to $15,389 in 2015. Readers should note that colleges and universities do have other sources of revenue; IPEDS data indicate that overall average revenue increased across sample groups.

In addition to examining the relationship between tuition discount rates and enrollment of first-time freshmen from underrepresented backgrounds, the full Perspectives piece addresses changes in proportions of URM students as part of schools' total undergraduate population, the overlap of race and family income, and future considerations for diversity and inclusion on campuses.

A complimentary copy of Tuition Discounting and College Access for Underrepresented Students is available to NACUBO members and available for purchase to non-members.

NACUBO Perspectives is a series of occasional, independent papers authored by thought leaders, offering points of view on critical and emerging issues in higher education.

Contact

Lindsay Wayt
Assistant Director, Research and Policy Analysis
202.861.2531
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Lesley McBain
Assistant Director, Research and Policy Analysis
202.861.2596
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