Submitted by Admin on Sat, 08/29/2015 - 09:56

Many private colleges and universities continue the long trend of increasing discount rates in the 2014-15 academic year, estimates in The 2014 NACUBO Tuition Discounting Study (TDS) show. Discount rates for both first-time, full-time freshmen and all undergraduates reached all-time highs, as did the percentage of students receiving institutional grant aid.

Among the 411 private, nonprofit institutions surveyed by NACUBO, the average discount rate for first-time, full-time freshmen is an estimated to have reached 48 percent in 2014-15, up from 46.4 percent in 2013-14. The estimated average discount rate for all undergraduates is 41.6 percent, up from 39.8 percent the previous year. The average discount rate is defined as institutional grant dollars as a percentage of gross tuition and fee revenue.

Thanks to institutional grant aid, the vast majority of students enrolled at surveyed institutions paid less than the institutions' sticker prices. Approximately 89 percent of all first-time, full-time freshmen enrolled at surveyed schools received institutional grant aid, which covered, on average, 54.3 percent of tuition and fees. When expanded to all undergraduates, 77 percent of students received institutional grant aid, which covered an average of 48.9 percent of tuition and fees. Both estimates-the percentages of students receiving aid and the shares of tuition and fees that aid covered-have increased over the 2013-14 rates.

"The 2014 NACUBO Tuition Discounting Study provides more evidence that students and families should look beyond sticker prices when evaluating the right college for them," said NACUBO President and CEO John Walda. "As college affordability conversations continue, the study shows private colleges and universities are tackling the issue in part by increasing discount rates and providing more grant aid to more students."

Institutions with very large endowments used more of those funds to cover institutional grant aid. While overall, endowment funds provided about one-tenth of total institutional grant aid, on average, institutions with more than $1 billion in their endowments covered 32.3 percent of institutional grant aid with endowment funds. Schools with total endowments of below $25 million covered just 6.5 percent of institutional grant aid with those funds.

As institutions provide greater discounts to more students, net tuition revenue is decreasing. After adjusting for inflation, that revenue hasn't grown, on average, in the past 13 years, the NACUBO reports show.

And despite rising discount rates, enrollment has decreased at many institutions surveyed. At schools where enrollment has fallen over the past four years, chief business officers were most likely to cite price sensitivity as a driving factor. Institutions that have effectively increased or held steady enrollment numbers credit improved marketing and recruitment strategies and increases in financial aid as reasons for the growth.

50 Percent Off A College Education? Not Such A Good Deal After All