Bloomberg News

Colleges In U.S. Offer Highest-Ever Discount to Entice Students

May 06, 2013

Colleges In U.S. Offer Highest-Ever Discount to Entice Students

Graduates wearing mortarboards attend a commencement ceremony. Photographer: Michael Okoniewski/Bloomberg

Private nonprofit colleges are offering students tuition discounts of 45 percent, on average, in response to a changing financial environment that stems from the weak economic recovery.

Price reductions, designed to boost attendance, were at an all-time high in 2012 and outpaced the rate during the recession, according to a study of 383 private-nonprofit four-year schools, released today by the National Association of College and University Business Officers.

Some colleges are struggling with enrollment declines even after offering a reduction and enduring price sensitivity is driving the drop, according to chief business officers at institutions that have been affected. Attending some private colleges can run more than $60,000 annually, including room and board, books and other costs. Schools are using many strategies to get students to enroll, said John Walda, the group’s president and chief executive officer.

“The expectation that a private institution can maintain or grow enrollment and increase net revenue simply by offering large tuition discounts is no longer valid,” Walda said in a statement. “Price sensitivity, changing student demographics, and a dynamic, competitive landscape all point to the need for increased attention to a strong brand, good marketing, diverse revenue streams, and cost containment.”

The reduction in tuition revenue comes at a bad time for colleges, as the number of U.S. high-school graduates is expected to decline through the rest of the decade, according to a report released in January by the Western Interstate Commission on Higher Education.

Freshman Losses

More than 50 percent of schools responding to the NACUBO study suffered a loss or maintained freshman enrollment between the fall of 2011 to the next year.

NACUBO defines the tuition discount rate as grant dollars given by the school as a share of gross tuition and fee revenue. The rate for first-time, full-time freshmen jumped 2.3 percentage points from 2010, reaching 44.3 percent in 2011, according to the report.

The Washington-based group represents chief administrative and financial officers at more than 2,200 colleges and universities in the U.S.

To contact the reporter on this story: Janet Lorin in New York jlorin@bloomberg.net.

To contact the editor responsible for this story: Lisa Wolfson at lwolfson@bloomberg.net.


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