Dive Brief:

  • Tuition discounts at private nonprofit colleges are expected to reach a new record this academic year, averaging 52.6% for first-time, full-time students in their first year of college, according to new annual data from the National Association of College and University Business Officers (NACUBO).
  • The rate measures institutional grants as a percentage of revenue from tuition and fees. Among all undergraduates, discounts averaged 47.6% for the 2019-20 academic year, with bachelor’s institutions just under 53%.
  • The data, which was gathered before the pandemic, shows net tuition revenue and enrollment decreased year-over-year across the 366 schools polled —​ issues the crisis stands to worsen.

Dive Insight:

It’s well-known that students typically pay less to attend an institution than its posted sticker price. While that amount varies by student, it is creeping upward overall.

Underscoring the rising discount rates is growth in the share of students receiving aid from their schools and how much they get, the report explains. Four in five undergraduates received institutional support this year. On average, those funds covered about 55% of their tuition and fees. In the last decade, the share of students receiving grants rose six percentage points while the share of tuition and fees the aid covers climbed by 10 points.  

Schools are increasing their focus on aid. But while around 80% of grants distributed this year were need-based aid or merit aid being used to meet financial need, the researchers point out that colleges can set their own standards for eligibility. In the year or so before the pandemic, several institutions raised the income threshold to qualify for need-based aid and some developed support specifically for higher-income students.

Tuition discounts for all undergraduates averaged 47.6% for the 2019-20 academic year, up from 36.4% in 2010-11. 

Hallie Busta/Education Dive, data from 2019 NACUBO Tuition Discounting Study

 

As tuition discounts rose year-over-year, enrollment and net tuition revenue — adjusted for inflation —​ fell. 

The crisis could deepen those decreases. Schools are already losing out on revenue from auxiliary services, such as room and board money they refunded students. Many are being pressed to pay back a portion of tuition. Heading into the fall, colleges that are unable or choose not to reopen their campuses may lose out on additional income.

“That’s the fear of many campuses,” said Ken Redd, senior director of research and policy analysis at NACUBO. “If they won’t be able to reopen fully in the fall, what impact will that have on student enrollments, and then in turn, what impact will that have on generating revenue from room and board and other charges from which they generate a fair bit of revenue?”

While a few institutions have committed to continuing classes online in the fall, many more say they aim to open campus.

Heightened competition for students is one driver of enrollment decreases, according to the report.

Hallie Busta/Education Dive, data from 2019 NACUBO Tuition Discounting Study

 

Redd expects tuition discounting will continue to increase, particularly in light of the pandemic’s economic impact on students and their families. Combined with pre-pandemic revenue and enrollment trends, that trend could trouble institutions’ finances. 

He attributes a decrease of more than 1% each in net tuition revenue at bachelor’s and master’s institutions, which tend to be heavily tuition-dependent, at least in part to “intense competition for students.” That competitiveness was already underway and will continue, driven by an ebb in new high school graduates and calls for schools to lower tuition.

Slightly more than half of institutions responding to NACUBO’s survey saw either no change or a drop in enrollment of first-time, first-year undergraduates from 2016 to 2019. The most commonly cited reasons for the decrease were heightened competition from other schools, affordability concerns among students and changing demographics of prospective learners.

The economic crisis has already warned several schools off following through with tuition increases planned for the upcoming academic year. Others have promised free tuition to entice students to enroll, or are letting them defer payment.

Source Article