Tuition Discount Rates Rise Again, Signaling Potential Challenges for Private Colleges

August 25, 2015

Tuition-discount rates at private, nonprofit colleges have once again hit an all-time high, and appear to be holding down net tuition revenue, according to preliminary estimates from the National Association of College and University Business Officers’ annual survey.

The projected discount rates for 2014 are 48 percent for first-time full-time freshmen and 41.6 percent for all undergraduates.

That’s likely to be the most attention-grabbing finding from the association’s latest Tuition Discounting Study, released on Tuesday. While rising discount rates are often seen as a warning sign for the sector, the other data in the report, based on responses from 411 colleges belonging to the association, may present even grimmer evidence of financial challenges ahead.

Colleges might decide to provide more institutional aid as part of a strategy to grow enrollment, or increase net revenue, or both. If those were the outcomes participating colleges were going for, though, the strategy doesn’t seem to be working terribly well for them, at least not as a group.

Forty-eight percent of responding colleges indicated that freshmen enrollment stayed steady or decreased between fall 2013 and fall 2014. Nearly a third reported steady or decreased enrollment for both freshmen and all undergraduates.

Meanwhile, projected average net tuition revenue for full-time freshmen barely budged in 2014, growing by a projected 0.4 percent. Once inflation is factored in, it dropped by 2.5 percent. The net-tuition revenue trend for all undergraduates was similar.

"Because independent colleges and universities receive one-third of their operating revenue from net tuition revenue, on average," the report says, "such losses could limit schools’ ability to meet their educational and public-service missions."

All in all, it’s not a pretty picture for private colleges. And workable solutions are hard to come by. The report closes on a worried note, saying that "any continuation of the lower enrollments and declines in net tuition and fee dollars seen in the 2014 data could bring even greater challenges to many four-year independent colleges and universities."

Beckie Supiano writes about college affordability, the job market for new graduates, and professional schools, among other things. Follow her on Twitter @becksup, or drop her a line at