The National Association of College and University Business Officers (NACUBO) recently released their 2015 Tuition Discounting Study. While the average quoted “sticker price” tuition went up again as expected, so did the “tuition discount rate”.
For academic year 2015-16, the average institutional discount rate—or the percentage of total gross tuition and fee revenue institutions give back to students as grant-based financial aid—was an estimated 48.6 percent for first-time, full-time freshmen and 42.5 percent for all undergraduates. In other words, these private colleges put about 42 cents on every dollar of tuition and fee revenue toward scholarships and grants.
NACUBO found that 88% of first-time, full-time freshmen and 78% of all undergraduates were awarded some amount of aid. The amount awarded was roughly half of the sticker price for freshmen. The tuition discount rate has been rising rather steadily over the past decade or more:
Now, I am not saying college tuition is cheap. However, I do think that knowing how these things work can make parents and students smarter consumers. Even though we often think of universities as benign non-profits, in reality many are quite aggressive marketing machines. I’ve written more about tuition discounts before, but here are my brief takeaways:
- Don’t immediately write off private colleges with high sticker prices. The total costs may be much lower than you think. Private colleges have a lot of discretion, and your application may fit their desired characteristics.
- Always apply for financial aid. Odds are that you’ll get something, and you could get a lot if they like you for whatever reason (academic numbers, sports, special interests and extracurriculars, other background factors).
- Your freshmen aid package may be much more generous than in future years.
Try toAlways get your future aid package amounts in writing.
- You can even negotiate your aid package with them further after getting your acceptance letter. The worst they can say is no.