The Week
Low Income, Pricey Tuition A4 | No Robots, Please, We’re Grading A16
People A19 | In Brief A21 | In Focus A22
M. SCOTT BRAUER FOR THE CHRONICLE
A Harvard Researcher
Studies the Paths
Taken by Muslim
Clerics A10
Small Private Colleges Lose More Students
Despite Rise in Tuition Discounting
By ERIC KELDERMAN
TUITION discounting reached a record high in 2011-12 at pri- vate nonprofit colleges, but
the common technique for attract-ing students often failed to have the
desired effect, especially at small,
less-selective institutions, according
to a report released last week.
Colleges use the discounts to
entice students who might otherwise be unable or unwilling to pay
full tuition. The discount rate, expressed as a percentage, measures
how much of a college’s gross tuition and fees is returned to students in the form of financial aid.
Many private colleges rely on a
high-tuition, high-discount pricing
model in order to make ends meet
and keep enrollment steady.
A report from the National Association of College and University
Business Officers, based on a survey
of 383 private colleges conducted
last fall, says that the discount rate
reached an average of 45 percent
for first-time, full-time freshmen in
2011-12, up from 44 percent in 2010-
11. The average discount rate for all
undergraduates was 40 percent
for the colleges surveyed, although
nearly 35 percent of respondents decreased their rate or held it flat.
A new record high for the average amount of tuition discount at
private colleges isn’t surprising:
The figure has gone up steadily for
at least the past dozen years. But
the reason for the most recent increases is that students and their
families have become more frugal
about college costs in the wake of
the recession, the report said.
“This all-time high indicates that
institutions are responding to a
changing student environment, stemming from the weak economic recovery,” the report’s authors conclude.
LESS DEMAND
More significant are data from
the survey showing that small, less-selective colleges are losing students
despite increasing the amount of tuition they diverted for financial aid.
The discount rate for freshmen
at small colleges, defined as bac-
calaureate institutions with enroll-
ments of less than 4,000, was more
than 46 percent in 2012, and has
increased by nearly 6 percentage
points since 2008. During the same
period, the discount rate for larger
master’s, doctoral, and research in-
stitutions has climbed from about
38 percent to 41 percent.
Discounts reached
an average of 45
percent, the highest
rate ever for first-time,
full-time freshmen at
the private colleges.
Even with increased aid, both
freshman and undergraduate enrollment declined for more than 83
percent of the survey’s small colleges, which made up nearly 300 of
the 383 respondents.
But enrollment declines occurred at less than 12 percent of
master’s- and doctoral-level institutions with more than 4,000 students, and at less than 5 percent of
research universities.
For many of the colleges that
gained enrollment, one key was to
dole out more financial aid, the report says.
But that step—raising the institution’s discount rate still more—
meant that the higher enrollment
provided little or no overall growth
in revenue. Adjusted for inflation,
net tuition revenue has “essentially
been flat for the last 12 years,” the
report concludes.
“When an institution discounts
too deeply in order to meet their
enrollment goals, it can mean that
the institution will not raise enough
tuition revenue to offset for the cost
of educating all students,” the re-
port said. “Generally speaking, an
institution operating in this way is
considered unsustainable as their
net tuition revenue is falling.”
Richard H. Ekman, president
of the Council of Independent Col-
leges, said the debate over the dis-
count rate is an old one, and the lat-
est figures are not necessarily reason
for alarm. “At various times, people
have thrown up their hands in hor-
ror saying this can’t keep going,” then
Continued on Page A4
Small Colleges Do the Most Tuition Discounting
The share of gross tuition dollars that small private institutions recycle as financial aid to first-time,
full-time freshmen reached almost half in 2012, according to a Nacubo survey of 383 colleges.
INSIDE
VIEWS ......... A36
GAZETTE . . . . . . . A41
CAREERS . . . . . . . . A45
THE CHRONICLE
REVIEW . . . SECTION B
Small institutions
(enrollment of 4,000 or less, awarding
mostly associate and bachelor's degrees)
50
40 39.0%
30
20
10
33.0%
32.0%
Research institutions
(awarding doctoral degrees)
Comprehensive/doctoral institutions
(enrollment above 4,000, awarding
master’s and doctoral degrees)
46.2%
41.4% 40.0%
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
SOURCE: NATIONAL ASSOCIATION OF COLLEGE AND UNIVERSITY BUSINESS OFFICERS
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