Private colleges spent an amount equivalent to about 37 percent of all of their tuition and fee revenue on scholarships for students in the fall of 2010, an all-time high, according to an annual “tuition discounting” survey. The estimated tuition-discount rate for first-time freshmen—42.4 percent—was also a record high, according to a report on the survey by the National Association of College and University Business Officers.
Many of the 381 institutions in the survey, which also provides data on actual tuition-discount rates for the academic year beginning in the fall of 2009 (36.1 percent for all students and 41.6 percent for freshmen), said they had upped their discount rates to help more students from families suffering from the economic slowdown.
“However, such assistance to more students came at a heavy price to a number of institutions,” the report says. That’s because net tuition, on average, grew by less than 2 percent in 2009 and by just under 3 percent in 2010—notably lower than the average increase of 4.3 percent from 2001 through 2007.
The aid colleges are awarding is covering less of students’ costs, the report shows. In 2008 the average institutional grant for first-time freshmen covered 52.3 percent of the average sticker price for grant recipients; in 2009 it fell to 48.5 percent, and it was estimated to cover 49.1 percent for those entering in fall 2010.
A college’s tuition-discount rate is the measure of its “sticker price” that it actually provides from its own resources.
The higher a college’s discount rate, the less gross revenue from tuition and fees is actually available to cover expenses, although the discount rate that NACUBO calculates also factors in revenue from endowment earnings that are used to make institutional grants to students.
The findings suggest a high number of colleges have had to lower average aid awards to provide them to a larger share of students. The report estimates that a record 87.5 percent of all first-time full-time freshmen received financial aid from their institution in the fall of 2010, an increase from the 86.9-percent rate in 2009. During the seven years preceding 2009, that rate was in the range of 80 to 82.2 percent.
The “2010 Tuition Discounting Study Report,” which is available for sale on the NACUBO Web site, was based on responses from 303 small institutions with enrollments under 4,000; 49 comprehensive and doctoral institutions; and 29 research universities.
