Tuition discounting on the rise at private colleges

The average discount rate at private colleges topped 50 percent this past academic year, according to a new study from the National Association of College and University Business Officers (NACUBO).

Respondents to the survey reported an average 56 percent tuition discount for first-time, full-time students, and 52 percent for all undergraduate students, both historic highs. More than 90 percent of undergraduates at these institutions received some institutional grant aid last year.

It’s a sign that the practice of tuition discounting—using institutional grants and “merit scholarships” as a recruitment and retention strategy—is still on the rise. 

“Tuition discounting is a key component in the enrollment and retention toolkit,” Kara D. Freeman, NACUBO president and chief executive officer, wrote in a statement. “This year’s study shows that while institutions continue to deal with economic and pandemic-related headwinds, affordability remains a priority.”

Tuition discounting, also known as non-need merit aid, has been widely criticized as a method of competing for wealthy, high-achieving students who can pay a larger slice of skyrocketing sticker prices than their lower-income peers. The practice often results in fewer institutional dollars for students with high demonstrated need.

The NACUBO report also found that net revenue had increased slightly at private colleges and universities—though that growth, less than 1 percent, does account for inflation. In addition, 53 percent of small private colleges reported net enrollment increases from the 2022–23 academic year to 2023–24.