Private nonprofit institutions are providing their students with historic levels of tuition discounts and institutional grant aid, but it’s coming at a cost to their net tuition revenue, a new analysis from the National Association of College and University Business Officers (NACUBO) has found.
Institutions on average offered a 54.8% tuition discount rate for first-time, full-time undergraduates and 51.9% for all undergraduates in academic year 2022-23. This represents a 7.7% uptick between 2014-15 and 2022-23 for first-year students.
Early projections for 2023-24 show the tuition discount rate has risen to 56.1%.
Private nonprofits also showered their students with institutional grant aid in 2023-24, covering an estimated 62.2% of tuition and fees for 90.3% of its first-time students and 83% for 58.3% of all undergrads.
While the numbers representing this academic year are preliminary and likely to change, the report suggests they are solid increases over the year prior. Over 320 institutions across the Baccalaureate, Masters’s, Doctoral and Special Focus Carnegie levels participated in this year’s study. An average of 378 have done so since NACUBO began collecting data for the Tuition Discounting Study in fall 2014.
Institutions have largely depended on undedicated revenue sources—such as general funds, unplanned contributions and foregone revenue—to provide grant aid. Institutional reserved and endowment earnings made up 30.3% and 11.3% of such discounts, respectively.
“Discounting strategies can help institutions increase the enrollment and retention of undergraduates, as well as meet revenue goals,” the report read.
However, data suggests that while private institutions have flexed more grants, net tuition revenue is not rising at a comparable rate. Between 2022-23 and 2023-24, net tuition and fee dollars per first-time, full-time undergraduate increased by half a percentage point on average but decreased by 1% after adjusting for inflation. Researchers noted that overall net tuition revenue has “largely remained steady or declined” throughout the years of the study.
Enrollment has looked more promising, growing by 1% in the last academic year for all undergraduates and a whopping 9.8 percentage points between 2014-15 and 2023-24 for first-time students. Small baccalaureate institutions fared the best; about 54% reported increasing enrollment within the last year and a 3.7% net tuition increase.
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Nevertheless, tuition discounts and grants may still prove to be an essential piece of the puzzle. Of the 125 institutions to report declining enrollment, 59.2% expressed concern over students’ sensitivity to price. Sixty-one percent also noted increased competition, which correlates with the 40% who also argued about the decreased pool of 18-24 students.
Other ways to increase enrollment and revenue
Participating private nonprofit institution members offered ways they were looking to attract students other than through institutional grants and discounts.
Of the 155 institutions to report increasing undergraduate enrollment, 67% credit their uptick to improved recruitment and marketing strategies.
Other reasons were:
- Improved admissions processing systems and procedures (41.3%)
- New academic programs (30.3%)
- Increased financial aid (29%)
- Higher yield of accepted students (27.1%)
- Updated/new facilities (21.9%)
