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Private Colleges Set New Records on Tuition Discounts

MAY 16, 2019

Private colleges are offering students discounts on tuition and fees at record-high rates, according to the annual Tuition Discounting Study, released on May 9 by the National Association of College and University Business Officers.  The organization surveyed 405 private, nonprofit colleges for its 2018 study.  The average tuition-discount rates for the 2018-2019 academic year are estimated at 52.2 percent for first-time freshmen and 46.3 percent for all undergraduates, according to the study.  That means that 46 cents of every dollar in tuition and fees are used for financial aid.  The new estimates continue an upward trend that has persisted for more than a decade.  Both the share of students receiving institutional grants and the size of those grants have increased.  The average grant for freshmen has climbed to $20, 255 from $10,586 in the 2008-2009 academic year, an increase of 91 percent.

Private colleges have seen rising discount rates--the percentage of revenues from tuition that is awarded to students in grants and scholarships--as troubling signs for their finances.  For the 2017-2018 academic year, colleges reported a 3.6 percent decline in net tuition revenue from freshmen, when adjusted for inflation, according to the study.  These trends suggest that most increases in tuition and fee listed prices have largely been offset by even higher institutional discounts.  The trends also raise questions about whether tuition-discounting practices are sustainable.

Larry J. McKinney
Higher Education Consultant  
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