Home Education A NACUBO study shows that tuition discounts have reached an all-time high

A NACUBO study shows that tuition discounts have reached an all-time high

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A NACUBO study shows that tuition discounts have reached an all-time high

The average discount on tuition at private nonprofit colleges reached another record high last year, according to a new study by the National Association of College and University Staff.

Discount rates for first-year students have reached 54.5 percent, reports preliminary estimates from the NACUBO 2021 training discount study published on Thursday. This is the number above previous year a record of 53.9 percent.

Simply put, this means that colleges waive about $ 54.50 for every $ 100 charged for tuition.

NACUBO defines the tuition discount rate measured in the study as “total grant aid awarded to first-time students as a percentage of gross tuition income and fees the institution will receive if all students pay the price of the sticker”.

While the 54.5 percent figure may be the highest ever, colleges have been steadily adhering to that figure for years.

The discount rate for all students – not just first-year students – in private colleges is 49 percent, according to a NACUBO report.

Unpacking the numbers

NACUBO figures show that from the 2012-13 school year, the average discount rate on tuition in educational institutions increased by almost 10 percent.

Results The 2021 NACUBO Tuition Discount Survey is based on responses from 359 private nonprofit colleges and universities. The study focuses on institutional grant assistance, which means that the report does not include foreign funding from public or private entities.

In total, 82.5 percent of students at all colleges surveyed received institutional assistance, which, according to a NACUBO report, “covered an average of 60.7 percent of published tuition and fees.”

Financial aid, which is financed from institutions, comes from various sources, NACUBO found out. Most of the aid – 54 percent – came from unallocated sources, such as non-budgetary common funds; 31.2% – from institutional reserves; 9.9 percent came from profit / withdrawal; and 4.9 percent from fundraising and gifts.

New in this year’s study is a look at election-based college tuition discounts. The results, according to a NACUBO press release, show that “the institutions that accept the lowest percentage of students reduce the published tuition fees.” In colleges that accept less than half of applicants, the report shows that the discount rate for first-time students is 44.8 percent, compared to 58 percent for all institutions.

“More students are receiving grants, and grants as a percentage of tuition and fees are now higher than ever in the recorded history of our data collection,” explained Ken Red, senior director. research and policy analysis at NACUBO.

The main conclusions from the report seem to differ depending on the audience. For consumers, this can be seen as a positive sign that financial assistance is readily available even to families who do not usually meet the requirements.

“I think a lot of families think they don’t have the right level of income or other characteristics to even apply for financial aid. But our data shows that more than ever, families should not take it for granted that they will not qualify for financial aid, certainly institution-based financial aid, and financial aid covers more and more of the cost of tuition “Ed said.

What this means for the higher ed

In higher education, NACUBO reports often generate unpleasant stories, with some experts warning of unsustainable tuition discounts and declining incomes, which will eventually put many colleges out of business, especially those already in financial difficulties. Others say that the reality is more complicated, and that discount rates for tuition are just one piece of a difficult financial puzzle.

Kent Barnds, executive vice president of external relations at Auguston College, who also oversees the admissions committee, finds the NACUBO report more optimistic. He believes that other indicators are more important and that focusing on learning discounts is not a reliable way to assess financial health.

“I think it’s just an unhealthy measure of what’s going on in the higher office. I think we should probably look at the strength of the balance sheets, ”Brands said. “Do colleges and universities continue to hire people? Do they increase people’s compensation? Are they investing in new programs? And I don’t think the account rate, because it’s such a narrow measure, is a very good indicator of an institution’s overall financial health. ”

In Augustana, the tuition discount rate for admission this year is 71.8 percent, up from 73.1 percent last year, but Barnds says “net income per student has risen by $ 700.”

The net income from tuition, the amount of money the college receives for each student, is ambiguous for survey respondents in the NACUBO study. While for all students this number increased by 0.6 percent, for first-time students, it decreased by 3.2 percent.

Inflation-adjusted figures “increased from last year but still fell by two per cent from five years ago,” according to a NACUBO press release, which also noted a flat enrollment.

Beth Akers, an economist and senior researcher at the center-right think tank of the American Institute of Entrepreneurship, said the study offers a combination of good and bad news. While it shows that discounts are available to consumers, many students and families still don’t know how much college tuition will actually cost because of the confusion created by sticker prices, which few end up with. pay, she said.

“On the one hand, we see that these very expensive institutions give discounts that allow less affluent students to attend when they could not otherwise. And that’s great, “Akers said. “On the other hand, if you have this pricing model with a very strong discount, you have very opaque prices, which ultimately prevents many students from even applying to the school. I think the lack of transparency, which is supported by the continuing discount on tuition, is problematic. “

At this point, she said, the prices for stickers at the college are essentially fictitious. Same for discounts.

“So, we basically get a kind of discount created by institutions that artificially inflate the price of the sticker they post on their website,” Akers explained. “So if you raise your price by $ 10 but then increase the discount by $ 10, your price and discount increased, but you didn’t change anything in the accounting at that institution.”

While she is critical of the lack of transparency in college pricing models, Akers notes that making higher education more affordable is a good thing.

For Barnds a discount on tuition increases access and accessibility. While raising tuition discount rates may be a source of concern for some higher education administrators, he suggests it signals a commitment to helping needy students.

“I believe consumers can interpret this in two ways,” Barnds said. “One of them is, as it is often interpreted in the media, that this is the beginning of a downward spiral for all higher education, because colleges give so much. But I think another interpretation is that colleges and universities make access and accessibility a priority. ”

And whether college administrators see just the cost of doing business or a sign of impending doom for the sector, the discount model for tuition is unlikely to change in the coming years, experts say.

“If I were the administrator who reviewed this information, I would understand that in order to be competitive with other institutions, I need to be aggressive with discounts and continue to accept this model and use it more in the coming years,” – said Akers. “I think that, if anything, it will guide institutions collectively on the path to greater use of discounts in the future.”

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