Dive Brief:
- Projecting financial aid expenditures by cohort could help colleges avoid surprises and prevent unexpected budgetary shortfalls, especially when considering increasing tuition discounts.
- Enrollment management consultant at Scannell & Kurz Mary Piccioli writes for University Business that a graduating senior class being replaced by a more heavily discounted freshman class increase the financial aid commitment by more than a million dollars.
- Piccioli recommends gathering institutional data to make budget projections that take into account cohort retention and where transfer students fit in so any changes to the tuition discount rate can be fully understood before implementation.
Dive Insight:
A recent report from the National Association of College and University Business Officers found the average tuition discount rate for first-time, full-time freshmen was up to 48% in 2014 at private institutions from 46.5% the year before. The discount rate is defined as institutional grant dollars as a percentage of gross tuition and fee revenue.
Some schools are finding downsizing to be preferable to continued discounting, accepting a smaller pool of students that maintain high institutional standards for quality, diversity, and selectivity. Other schools that have offered steep discounts and expanded their class sizes have found the additional tuition dollars from more students doesn’t, in the end, cover the additional costs of educating them. The steadily increasing tuition discount trend is widely seen as unsustainable.