Now is a great time to get a deal on a private college education.
The average tuition discount rate — or the amount of grant aid colleges offer as a percentage of their tuition and fee revenue — will reach nearly 50% for first-time, full-time freshmen in the 2017-2018 academic year, up from 48.2% the year before. That’s according to a survey of private, nonprofit four-year colleges conducted by the National Association of College and University Business Officers (NACUBO). That level of discounting marks a record high for the 24-year-old survey.
“From a student’s perspective, that’s a good finding,” said Ken Redd, the senior director of research and policy analysis at NACUBO. “From the perspective of campuses, which have to use more and more of their revenue to try to afford this kind of aid, that’s certainly an area of concern.” The average discount rate for students of all years in these private colleges was 44.8% for the 2017-2018 academic year, up from 43.2% during the previous year.
The increase in the rate of discounts is in part because there’s a desire among families — and consumers, generally — to get a deal. Both the dollar amount and the number of students receiving scholarships has ticked up over the years, the report notes. That’s why the average discount rate offered by these private colleges is now at record highs. Nearly 90% of first-time, full-time freshman received some kind of discount during the 2017-2018 school year, NCUBO found.
The amount of scholarship aid private schools offer to students has been ticking up for years. In the wake of the Great Recession, these colleges offered more scholarships to lure families squeamish about paying nearly $35,000 on average for tuition and fees. Changing demographics have also pushed colleges to offer discounts, amid competition for students. (The number of students graduating from high school has been relatively low over the past several years.)
Simply lowering the listed or sticker price doesn’t seem to attract students in the same way as offering more aid does, Redd said. Some colleges have experimented with that approach and have found that has “not been a long-term sustainable model,” he added.
But all of this discounting can put colleges in a precarious position, financially. Over the past several years, a slew of colleges have closed or consolidated due to shaky finances. “Colleges are definitely concerned,” Redd said.
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