Tuition Discounting Continues to Climb

Fall 2025 data shows tuition discounting rates have hit another record high.

Preliminary estimates put the average discount rate for the 2025–26 academic year at 57.1 percent for first-time, full-time undergraduates at private colleges and 51.3 percent for all undergraduates, according to the latest study conducted by the National Association of College and University Business Officers. That’s up from 54.5 percent in the 2024–25 academic year for first-time, full-time undergraduates and 50 percent for all undergraduates, based on finalized discounting data released as part of the study, which has been conducted annually since 1994.

This year’s study was completed by 258 private, nonprofit colleges. (It notes that preliminary estimates are likely to change partly because the survey is completed in the fall, before enrollment and related financial aid data are finalized in the spring.)

NACUBO officials said the discount rates speak to a high degree of institutional support.

“Institutionally funded scholarships, grants, and fellowships remain central to efforts to attract, support, and retain students from a broad range of backgrounds,” NACUBO president and CEO Kara Freeman wrote in the report’s foreword. “The findings in this report underscore the continued importance of tuition discounting as institutions work to balance mission, enrollment goals, and long-term financial sustainability. NACUBO remains committed to supporting campus leaders with timely research, benchmarking, and analysis to inform these critical decisions.”

Funding for institutional aid comes from various streams, the study noted, including a mix of philanthropy (5 percent), endowment earnings and withdrawals (11.5 percent), and institutional reserves (32.5 percent). However, the majority of funding for institutional student aid—50.9 percent—does not have a dedicated source, according to data for the 2024–25 academic year.

Wealthier institutions, though, are more likely to lean on their large endowments for student aid. Colleges with endowments over $1 billion were more likely to pay a larger percentage of student aid from those funds and “can sustain higher discount rates with less risk,” the study noted.

Gary Stocker, founder of College Viability LLC, which focuses on financial transparency, told Inside Higher Ed by email that “a defining observation in the report is that tuition discounting has already reached a point of diminishing economic returns.” He argued that discounting has failed “to generate sustainable financial health” for many colleges and “is being used as a survival tool in a declining market.”

NACUBO also found that between the 2023–24 and 2024–25 academic years, net tuition and fee revenue declined by 2.2 percent per first-time, full-time undergraduate and 1.9 percent for all undergraduates. On average, institutions netted $21,300 per head in tuition revenue for first-time, full-time undergraduates in AY 2024–25 and $24,257 for all undergraduates.

Stocker noted that “the best measure of financial sustainability for tuition-dependent private colleges” is net tuition revenue per student—and that some of the new report’s findings should cause alarm.

“Colleges are forgoing more than half of their potential tuition revenue from students in the form of unfunded institutional grants just to sustain baseline enrollment figures,” he wrote to Inside Higher Ed. “In many cases, heavy tuition discounting does not result in enrollment growth.”

He added that the report is a look at an industry “that has significantly cannibalized its own net revenue capacity” via tuition discounting, which has resulted in severe financial challenges for many small, regional, tuition-dependent colleges whose “survival is measured in months.”

As tuition discounts climb and net revenues fall, the study notes that colleges are deploying new admissions and financial aid strategies to increase enrollment and retention. The most commonly reported strategy (57.1 percent) was launching “new efforts focused on already-enrolled students.” Some have also responded to the uncertainty driven by the Trump administration’s various changes to federal financial aid. Nearly 10 percent of respondents noted that they modified institutional grants in anticipation of federal student aid policy changes. Only 8.6 percent did not deploy new enrollment or retention strategies.