The annual tuition discounting survey of private, nonprofit, four-year colleges conducted by the National Association of College and University Business Officers shows that many institutions are balancing the full price of college with institutional grants. The tuition discount rate for a first-time, full-time freshman hit a record 44.8 percent in 2012-13 and is projected to reach another record at 46.4 percent in 2013-14.
More significant to the institutions themselves, net-tuition revenue has not grown in the past 13 years. The study, released on Wednesday, showed that colleges have seen a net tuition growth of 0.4 percent on average and adjusted for inflation. The loss of tuition revenue puts a strain on institutions that have fewer alternative resources at their disposal.
Accepting more students to drive up tuition revenue is not a ready alternative for all: undergraduate enrollment was down at half of the 401 institutions that responded to the survey. Respondents at institutions that have lost freshman enrollment between 2010 and 2013 cite students’ price sensitivity, increased competition from public and private institutions, and changing demographics as top reasons for falling enrollments.
While the numbers overall are not good, some higher education officials believe that institutions are adapting positively to changing times.
“Every year when the NACUBO study is released, and in recent years at least, showing an increase in the discount rate and net revenues growing slowly if at all, analysts start talking about how the trend can’t continue and some private colleges will be forced to close,” said Donald Heller, dean of the College of Education at Michigan State University. “The message I take from the data is that these tuition-dependent, low-endowment private colleges are actually proving to be incredibly resilient in the face of challenging economic times.”
In the face of limited growth, colleges must find ways to control costs or find alternative revenue sources. “Whether it’s through operating more efficiently, or hiring more adjuncts and fewer tenure stream faculty, or by cutting back on building and amenities, most are managing to survive,” said Heller. “The challenge, of course, is to be able to implement this cost cutting while still offering a quality education.”
