Tuition discounting by private colleges and universities reaches new high

Sticker prices at private colleges may be sky high, but what many students actually pay has been lower as those schools aggressively compete by dangling deep tuition discounts.

Now, a new study finds that for the first time, entering and returning undergraduates at those schools, on average, are paying less than half of the published tuition price.

For private campus recruiters in Western Pennsylvania and elsewhere, the National Association of College and University Business Officers’ study bolsters arguments about their actual affordability versus public institutions, even though sticker prices at public schools are thousands of dollars less.

The escalating discounts year after year also strain many private schools — especially those with small endowments. They tap earnings from those endowments and even unbudgeted general funds to make their campuses financially viable choices for students.

NACUBO studied 341 private, nonprofit colleges and universities nationally for its yearly survey, which dates to 1994. Its Monday release comes as students approach May 1, a day high school seniors traditionally declare their campus choices for fall.

The study finds that on average the institutional tuition discount reached 56.2% for full-time, first-year students during the 2022-23 school year. Among all undergraduates at those schools, the average discount was about half, 50.9 %.

It also found schools opted to do without revenue they could otherwise get by charging published or “sticker prices,” instead channeling that into grants, fellowships and scholarships.

The studyshowed continuing growth in the share of students receiving institutional grant aid and the portion of campus costs those awards covered.

During this academic year, 90.9% of first-time undergraduates at institutions surveyed received institutional grant aid. It covered an average of 62.1% of published tuition and fees.

Among all undergraduates, 82.9% received grant aid, covering an average of 57.6% of the published price.

“Discounting tuition is a key way independent colleges and universities make education affordable for students,” said Ken Redd, senior director of research and policy analysis at NACUBO. “At the same time, leaders remain mindful of the impact institutional grant expenses may have on their school’s overall finances.”

Each year, some private colleges make headlines by cutting their published prices.

Washington & Jefferson College, example, announced in November that it would cut its published tuition price nearly in half for fall 2023, a 44% price reset.

At the time, the school with roughly 1,150 students called the move “price simplification.” It brought tuition to $27,605, not counting other expenses including room and board.

Contacted on Tuesday to discuss how the reduction had impacted student interest and applications, Keli Henderson, senior director of communication and marketing, said in an email that no one was available at Washington & Jefferson to discuss that matter or the NACUBO survey.

Last fall, W&J President John Knapp said this about his school’s up-front price cut: “We are aware that families are more cost conscious than ever today, and we’re responding to that by simplifying our pricing,”

Marlin Collingwood, vice president for enrollment at Point Park University in Pittsburgh, said Tuesday he was not surprised by the latest NACUBO report given how widespread discounting has become, how student financial aid needs have increased since the pandemic and how skepticism about higher education’s value has risen.

“The question for the last decade in higher education has been, ‘Should we all just lower our prices?’” Because I don’t care what school you are talking about, we are all discounting,” he said.

At the same time, he said an upfront reduction can lead to problems if families conditioned to expect financial aid want a further reduction, even beyond the discounted price. He said prestige and image remain considerations for some administrators pondering the pros and cons of an upfront tuition reduction.

“Do you want to be Marshalls, or do you want to be Saks Fifth Avenue? — to put it in retail terms,” he said.

Point Park tuition and fees for 2023-24 total $36,240 a year ($46,150 in the Conservatory of Performing Arts), but 94% of students receive financial aid in varying amounts to reduce the total, he said.

Some schools, including Allegheny College, have unveiled targeted reductions.

Last fall, it announced it would pay the entire tuition up to four years for Pennsylvania students coming from families making $50,000 and under. Its “Commitment to Access Program” involves first-year and new transfer students who started last fall, plus those enrolled students for 2023-24.

Drexel University in Philadelphia, meanwhile, announced a 50% tuition cut for students coming from community colleges in Pennsylvania and New Jersey.

Headquartered in Washington D.C., NACUBU is a professional organization representing chief administrative and financial officers at more than 1,700 colleges and universities.