Tuition discounts are at an all-time high, according to the NACUBO study

The average tuition discount at private nonprofit colleges reached another record high last year, according to a new study by the National Association of Colleges and University Business Officers.

According to preliminary estimates from the 2021 NACUBO Tuition Discounting Study released on Thursday, the discount rate for first-time graduates has reached 54.5 percent. This number is higher than the previous year’s record high of 53.9 percent.

Simplified, this means colleges charge around $ 54.50 for every $ 100 for tuition.

The institutional tuition discount rate measured in the NACUBO study “defines the total institutional grant aid given to first-time graduates as a percentage of total tuition and fee revenue if all students pay the sticker price.”

While 54.5 percent may be the all-time high, colleges continue to grow steadily year after year.

The NACUBO report shows that the discount rate for all graduates – not just first year students – is 49 percent in private colleges.

Unpacking numbers

NACUBO figures show an increase of about 10-percentage-points in the average institutional tuition discount rate for all graduates from the 2012-13 academic year.

The results of NACUBO’s 2021 Tuition Discounting Study are based on feedback from 359 private, non-profit colleges and universities. The study focuses on institutional grant assistance, which means that funding from outside government or non-government organizations is not included in the report.

In total, 82.5 percent of all surveyed colleges received undergraduate institutional support, which the NACUBO report noted covered “an average of 60.7 percent of published tuition and fees.”

Institutionally funded financial support comes from a variety of sources, NACUBO found. Most of the aid, 854 percent, came from unspecified sources, such as unsubsidized general funds; 31.2 percent came from institutional reserves; 9.9 per cent came from endowment earnings / withdrawals; And 4.9 percent came from fundraising and gifts.

This year’s study focuses on college tuition discounts based on new hall choices. According to a NACUBO press release, the results indicate that “institutions that enroll the smallest percentage of students offer lower discounts on their published tuition.” Colleges that accept less than half of their applicants, the report found, have a 44.8 percent discount for first-time graduates, compared to 58 percent for all institutions.

“More students are receiving grants, and grants as a percentage of tuition and fee costs are now higher than the recorded history of our data collection,” explained Ken Reid, senior director of research and policy analysis at NACUBO in the mid-1990s.

Top acceptance from the report seems to vary according to the audience. For consumers, this can be interpreted as a positive sign that financial aid is readily available, even for families who do not normally qualify.

“I think many families feel that they do not have the right income level or other characteristics to apply for financial aid. But what our data shows is that, more than ever, families should not feel that they are not eligible for financial aid, of course institution-based financial aid, and financial aid covers a larger and larger portion of tuition costs. ”

What does this mean for higher ad?

Across higher education, the NACUBO report often creates devastating-and-depressing narratives, with some experts warning of volatile tuition discounts and shrinking revenues that will eventually put countless colleges out of business বিশেষ especially those already struggling financially. Others say the reality is more complex and tuition discount rates are just part of a complex financial puzzle.

Kent Burns, executive vice president of external relations at Augustana College, who also oversees the admissions office, took a more optimistic view of the NACUBO report. He believes other metrics are more important and focusing on tuition discount rates is not an accurate way to assess financial health.

“I think it’s just an unhealthy measure of what’s going on in higher AD I think we should probably look at the strength of the balance sheet, “Brands said.” Are colleges and universities continuing to hire people? Are they compensating people? Are they investing in new programs? And I don’t think discount rates, Because it’s a narrow measure, a very good measure of overall financial health for an organization. “

In Augustana, the tuition discount rate for this year’s admission class is 71.8 percent, down from 73.1 percent last year, but Burns says “net income per student has increased by $ 700.”

Net tuition income, the amount a college receives for each student, is a mixed bag for NACUBO survey survey respondents. While this number increased 0.6 percent for all graduates, it decreased 3.2 percent for first-time graduates.

Adjusted for inflation, the number has “increased year-on-year but is still two percent lower than five years ago,” according to a NACUBO press release, which also notes flat listings.

Beth Ackers, an economist and senior fellow at the Center-Right Think Tank at the American Enterprise Institute, says the study offers a mix of good and bad news. While it shows that discounts are readily available to consumers, many students and families still do not know exactly what it will cost to attend college due to the confusion created by the price of stickers, he said.

“On the one hand, we are offering discounts to these very high-value institutions that enable less affluent students to attend when they are not otherwise. And that’s a great thing, “said Aarks. “On the flip side, when you have this very discounted price model, you have a very opaque price, which prevents many students from even applying to school. I think the lack of transparency that supports and continues to support tuition discounting is problematic. “

At the time, he said, the price of college stickers was largely imaginary. Same for discount rates.

“So we’re basically looking at a discount made by companies by artificially increasing the price of stickers posted on their website,” Axes explained. “So if you increase your value by $ 10, but then increase your discount by $ 10, both your value and the discount increase, but you don’t change anything about accounting in that organization.”

While he criticizes the lack of transparency in college pricing models, Axes notes that making higher ADs more affordable is a good thing.

For brands, tuition discounting increases access and purchasing power. While tuition discount rates may be a cause for concern for some higher education administrators, he suggested that it reflects a commitment to help needy students.

“I guess there are probably two ways consumers can explain this,” Burns said. “One way that is often interpreted in the media is to start a downward spiral for all higher education because colleges are giving so much. But I think another explanation is that colleges and universities are prioritizing access and affordability.”

And whether college administrators see it as a sign of cost overruns or impending doom for the sector, the tuition discounting pattern is unlikely to change in the coming years, experts say.

“If I were an administrator looking at this information, I would realize that in order to compete with other organizations, I would have to be aggressive with my discounts and embrace that model and use it more and more in the years to come,” . “I think, if anything, it will set organizations together to use more discounts in the future.”

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