(Washington, DC)–Private colleges and universities are discounting their tuition revenue at the highest rates yet, a new report from the National Association of College and University Business Officers (NACUBO) shows.
By offering grants, scholarships, and fellowships, the 411 private nonprofit institutions that participated in the 2016 NACUBO Tuition Discounting Study averaged an estimated 49.1 percent institutional tuition discount rate for first-time, full-time students in 2016-17—the highest in the history of the survey. This means that for every dollar in gross tuition revenue from those freshmen, institutions used nearly half for grant-based financial aid. Among all undergraduates, the estimated institutional tuition discount rate was similarly record-setting at 44.2 percent.
*6/22/17: This graph has been updated due to a data entry error.
Average institutional tuition discount rates are rising as larger percentages of students receive grants and scholarships from their institutions, and the awards cover more of their costs. An estimated 87.9 percent of freshmen and 78.5 percent of all undergraduates received grant aid in 2016-17, covering more than half of tuition and fees, on average, for both cohorts.
More than three-quarters of all institutional grant aid was used to meet students’ financial need. Institutions with the largest endowments were most likely to give aid to financially needy students: At schools with endowments worth more than $1 billion, 90.8 percent of all grant and scholarship funds met need.
“In each of the past 12 years, private colleges and universities have increased their freshman tuition discount rate–culminating in this year’s record-high estimate of nearly 50 percent,” said Ken Redd, NACUBO director of research and policy analysis. “As the findings from the 2016 NACUBO Tuition Discounting Study suggest, many private colleges are greatly expanding their aid programs to meet the needs of more students and families, but these financial aid expenditures are contributing to a financial strain for some institutions.”
The 2016 NACUBO Tuition Discounting Study points to other trends that are putting financial pressure on some schools. Net tuition revenue from first-time, full-time students grew by an estimated average of 0.4 percent this academic year, down from 1.5 percent in 2015-16 and 2.1 percent the year before. Meanwhile, 39.1 percent of respondents reported declining enrollments in both their first-year class and total student body, up from 37.5 percent last year.
Amid the challenges, some chief business officers appear to be questioning the viability of tuition discounting. Among respondents, 44 percent said they expect discounting will be sustainable for their institutions in the long term (as long as other net revenue strategies are successful, some added) while 41 percent either said they consider it unsustainable or sustainable in only the short term.
To learn more about tuition discounting and the results of NACUBO’s latest report, please contact Katy Hopkins McCreary at 202.861.2503 or firstname.lastname@example.org to set up an interview with a NACUBO spokesperson. The full 2016 NACUBO Tuition Discounting Study is available for purchase on the NACUBO website.
NACUBO, founded in 1962, is a nonprofit professional organization representing chief administrative and financial officers at more than 2,100 colleges and universities across the country. NACUBO's mission is to advance the economic viability, business practices, and support of higher education institutions in pursuit of their missions. For more information, visit www.nacubo.org.
About the NACUBO Tuition Discounting Study
Since 1994, the annual NACUBO Tuition Discounting Study has measured tuition discount rates and other indicators of institutional grant aid awards provided by four-year private, nonprofit (independent) colleges and universities to undergraduate students. While many public colleges and universities may also award institutional grants, the study has focused on independent institutions because they typically award the largest proportion of such aid.