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Private Colleges Offer Record Discounts as Tuition Costs Rise
Big grants for freshmen help students but hurt schools’ budgets
By Jake Holland / WALL STREET JOURNAL
May 9, 2019
Private colleges and universities are offering bigger discounts for freshmen amid fierce competition for a price-conscious pool of students.
Tuition-discount rates for first-time, full-time freshmen hit a record 52.2% in the current school year, according to preliminary results from a National Association of College and University Business Officers survey of 405 private, nonprofit schools. The 2018-2019 figure is up from 50.5% in the previous year.
Over the past decade, the average institutional grant for first-time freshmen has increased to over $20,000 this year, up from about $10,600 in the 2008-09 year. About 90% of freshmen received grant aid from private colleges and universities in the 2018-2019 year, according to the study. Those discounts, on average, cover about 60% of the tuition and fee sticker price.
Increasing tuition-discount rates have resulted in flat or declining net tuition revenue growth, which hasn’t kept pace with inflation over the past few years.
Ken Redd, senior director of research and policy analysis at NACUBO, said many of the private institutions have increased aid to help low- and middle-income students attend the increasingly pricey institutions and to secure enrollments at a time when many schools must compete aggressively to fill their freshman classes.
But private colleges, especially smaller institutions with smaller endowments, have had to innovate to offset declines or stagnations in tuition revenue. About 15% of respondents said they implemented new pricing strategies, like freezing or slashing sticker prices, to boost net tuition revenue.
The big takeaway for families is that because 9 out of 10 first-time freshmen receive grants, everyone should apply for financial aid, Mr. Redd said.
“It is definitely worth the time and effort to not focus on the sticker price, but on your odds of getting financial aid and researching the amount of aid that can be,” he said.
Big grants for freshmen help students but hurt schools’ budgets
By Jake Holland / WALL STREET JOURNAL
May 9, 2019
Private colleges and universities are offering bigger discounts for freshmen amid fierce competition for a price-conscious pool of students.
Tuition-discount rates for first-time, full-time freshmen hit a record 52.2% in the current school year, according to preliminary results from a National Association of College and University Business Officers survey of 405 private, nonprofit schools. The 2018-2019 figure is up from 50.5% in the previous year.
Over the past decade, the average institutional grant for first-time freshmen has increased to over $20,000 this year, up from about $10,600 in the 2008-09 year. About 90% of freshmen received grant aid from private colleges and universities in the 2018-2019 year, according to the study. Those discounts, on average, cover about 60% of the tuition and fee sticker price.
Increasing tuition-discount rates have resulted in flat or declining net tuition revenue growth, which hasn’t kept pace with inflation over the past few years.
Ken Redd, senior director of research and policy analysis at NACUBO, said many of the private institutions have increased aid to help low- and middle-income students attend the increasingly pricey institutions and to secure enrollments at a time when many schools must compete aggressively to fill their freshman classes.
But private colleges, especially smaller institutions with smaller endowments, have had to innovate to offset declines or stagnations in tuition revenue. About 15% of respondents said they implemented new pricing strategies, like freezing or slashing sticker prices, to boost net tuition revenue.
The big takeaway for families is that because 9 out of 10 first-time freshmen receive grants, everyone should apply for financial aid, Mr. Redd said.
“It is definitely worth the time and effort to not focus on the sticker price, but on your odds of getting financial aid and researching the amount of aid that can be,” he said.