The tuition discount rate (institutional grant dollars as a share of gross tuition and fee revenue) for first year students at private, non-profit, four-year institutions has increased to 44.8% for the 2012-2013 academic year and is predicted to rise to over 46% in 2013-14, according to a recent report
from the National Association of College and University Business Officers. Colleges and universities use tuition discounting strategies as a way to aid students who might otherwise be unable to pay the “sticker price” to attend. Tuition discounting is also a strategy that is used to increase enrollment and attract talented students. It has recently become especially important as 17% of institutions saw a drop of more than 10% in their freshmen enrollment from Fall 2012 to Fall 2013.
Among the report’s other noteworthy findings:
- 87.7% of freshmen received an institutional grant in 2012-13, a figure that is projected to grow to 88.9% in 2013-14.
- The average institutional grant in 2013-14 is projected to cover over half of tuition and fees.
- 80% of institutional aid is going directly to help meet students’ demonstrated financial need.
- Due to high discount rates, the average growth in tuition revenue per freshman has only grown 1.7% in 2012 and is expected to decrease -0.5% in 2013 (both numbers adjusted for inflation).
- Over the last 13 years, institutions as a whole have experienced relatively flat net tuition revenue (0.4%) which according to the report, means that gross tuition revenue and other fees have primarily gone back to students in the form of aid.
- Among the institutions who responded to the survey (over 400), undergraduate enrollment had decreased at half of them. Reasons cited include families and students having a higher price sensitivity, colleges dealing with increasing competition from other institutions and the decreasing pool of traditional students.
- Institutions with increases in enrollment cited better marketing and recruitment strategies as keys to their success.