Last year, private nonprofit colleges discounted tuition at record rates: the average tuition discount rate was 53.9% for first-time undergraduates. That means that among this year’s college freshmen, for every $1,000 of list price tuition, only $461 was actually paid, according to initial data from NACUBO. While the pandemic certainly increased colleges’ need to discount tuition to bring students to campus, the rate is consistent with long-standing trends: for the 2019-2020 school year, the discount rate was 51.2%. What was different in 2020-21 is that net tuition revenue actually declined; in previous years, discounting was offset by tuition increases such that absolute tuition revenue saw nominal increases.
Besides the pandemic, colleges are fighting some trends that seem to indicate that tuition discounting is likely to remain high. Primary among them: Census data shows a shrinking number of young people who might attend college in the future. Peak numbers occurred in 2010; undergraduate enrollment has shrunk by about 5% since then.
We hear so much about hyper-selective schools, but most colleges actively compete for students. That means that students who cast a wider net have far more leverage in negotiating aid packages than they might think, and that leverage is likely to increase going forward.