Falling College Tuition Revenues Bring More Discounts for Students

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May 14, 2019

By Rebecca Heilweil

Last week, the National Association of College and University Business Officers reported that American institutions of higher education are offering students record tuition discounts.

The trade organization’s 2018 survey found that nearly half of gross revenues from tuition and fees earned by 405 private, nonprofit colleges and universities are spent on scholarships, grants, and fellowships. The mean award ー as a share of average tuition cost (or sticker price) ー has also increased from 49 to 57 percent, and nearly 90 percent of freshmen students received some sort of grant or aid.

Amid the college admissions scandal ー in which parents spent hundreds of thousands of dollars to ensure their children’s admittance to elite schools ー and presidential candidate Sen. Bernie Sanders’ calls for tuition-free public college, the report signals an increasingly complicated financial landscape for both institutions and their students.

While top flight schools continue to attract far more students than they can admit, smaller schools rely on grants to lure in freshmen to fill their classes.

“Demographically, we’re seeing a lot of people flocking to the better schools, and because we’re seeing fewer students interested in higher education in general, it makes it all-the-more difficult for the less-selective schools,” Jeff Spear, Southeastern University's chief financial officer, told Cheddar. “They wind up with fewer students, and a lower price per student, which is not a very good situation for their budgets.”

Though declining tuition revenues ー which, for the past six years, have not kept up with inflation ー aren’t great for colleges, students could benefit from the discounts, as long as they know to look past advertised tuition costs.

“Understanding the concept of ‘net price’ is more important now than ever,” Ken Redd, the trade group’s director of research and policy analysis, said in a press release. “Recent polls show that many Americans consider higher education unaffordable, but the private institutions that participate in our survey are providing substantial financial aid to most of their students, year after year.”

But that doesn’t mean students shouldn’t ask questions about the discounts they're offered. For instance, Spear said, “some schools have freshman awards only, and then the sophomores face a significant increase in their bill.” And if students are offered a static price discount, there’s no guaranteeing that schools won’t raise their prices for subsequent semesters.