TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Wednesday, May 17, 2017

Private College Tuition Discounts Hit All-Time High Of 49%

49%National Association of College and University Business Officers, Private College Tuition Discounts Hit Historic Highs Again:

Private colleges and universities are discounting their tuition revenue at the highest rates yet, a new report from the National Association of College and University Business Officers (NACUBO) shows.

By offering grants, scholarships, and fellowships, the 411 private nonprofit institutions that participated in the 2016 NACUBO Tuition Discounting Study averaged an estimated 49.1 percent institutional tuition discount rate for first-time, full-time students in 2016-17—the highest in the history of the survey. This means that for every dollar in gross tuition revenue from those freshmen, institutions used nearly half for grant-based financial aid. Among all undergraduates, the estimated institutional tuition discount rate was similarly record-setting at 44.2 percent.


Average institutional tuition discount rates are rising as larger percentages of students receive grants and scholarships from their institutions, and the awards cover more of their costs. An estimated 87.9 percent of freshmen and 78.5 percent of all undergraduates received grant aid in 2016-17, covering more than half of tuition and fees, on average, for both cohorts.

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Sounds about right. I had two kids start college in 2016, both attending different private schools. Each get about half off their total tuition bill through various and sundry grants, awards, and scholarships ... though both schools inexplicably consider student loans as some sort of "aid" that they take credit for in their bizarro world of quasi-accounting. (I think if they are going to mislead on that issue, they ought to be responsible for making the loan payments too.)
They schools also try to raise additional funds from parents (who are already footing the exorbitant tuition bills), which just baffles me. I'm not their alumni; if they want to get donations, they ought to be able to get it from people who actually attended the school and feel they got value for doing so. In other words, they should wait to ask my kids for extra money once they are out and working; that's who would be best able to judge whether they got their monies-worth.

Posted by: ruralcounsel | May 17, 2017 4:18:15 AM

That discount number is spot on for my son who graduated from a private college in 2013. While not a scientific study or anything, the size of the “grant” was such that 100% of the money in my son’s name and about a third of my cash was drained by the time he graduated. I am a single dad and luckily they did not consider my ex’s income in the calculation. I wrote a letter, a truthful letter, that my ex with the exception of a single pair of shoes provided zero support for our sons. Thankfully, they believed me.

The published tuition is a worst-case scenario for those deemed too rich by the college admissions staff, sort of a privately administered tax system.

Posted by: Lee | May 17, 2017 8:31:03 AM

So it's not just the law schools, then.

Posted by: Steve Diamond | May 17, 2017 10:31:24 AM

Apples and oranges, Steve. Different lending options, different normative parental contributions, different price points (HLS is now approaching $95k year; the most expensive undergrads are just cracking $70k), and need-based loans predominate at undergrad institutions, as opposed to the merit-based discounts at law schools. Also the sample size of 411 private non-profits is less than one-quarter of the number of private non-profit colleges in the US (~1700), to say nothing of the other institutions out there: public universities, for-profits, and community colleges. So we are only getting a slice of the picture here, and not necessarily a perfectly representative one.

Posted by: Unemployed Northeastern | May 17, 2017 12:40:33 PM

There's got to be a way to negotiate beyond just the 'grants' models. I make a decent income now.. but can't afford $30/k year for public schools let alone private. Any advice on how to negotiate for some of these?

Posted by: Special Ed | May 23, 2017 12:42:01 PM