The AIR Professional File
Fall 2013, Article 133
Tracking the Discount: Tuition Discount Rates, Net Tuition Revenue, and Efforts to Inform Institutional Practices
Natalie Pullaro Davis, Kenneth E. Redd
This article uses findings from the 2012 Tuition Discounting Study (TDS) conducted by the National Association of College and University Business Officers (NACUBO) to provide a framework for institutional researchers to develop and adapt their own custom tuition discounting definitions and formulas.
Under tuition discounting, colleges and universities use a portion of their gross tuition and fee revenue dollars to provide academic merit scholarships and other grants to reduce undergraduate students’ tuition and fee charges. Higher education institutions typically use discounting to attract undergraduates who would otherwise be unable or unwilling to pay to enroll. Although discounting practices are often used successfully, they have the potential to erode net tuition revenue (gross tuition and fees – grant aid) in some circumstances. Institutional researchers and others on campus should continually monitor their enrollment and tuition and fee prices to gauge their institutions’ competitiveness in the market. The article begins with a detailed description of tuition discounting and then uses data from the TDS to answer five research questions: (1) What is the annual tuition discount rate at 4-year private colleges and universities? (2) What revenue sources are used to fund institutional grants? (3) Has the rising discount rate led to increasing net tuition and fee revenue at private colleges and universities? (4) What effect has discounting had on overall enrollments of undergraduate students and on enrollments at different types of institutions (small, comprehensive/doctoral, and research institutions)? (5) What share of institutional grant dollars is used to meet students’ demonstrated financial need?
The article concludes with advice for institutional research offices that want to use the data and trends presented as a basis for analyzing trends in institutional grant aid and net tuition revenue at their own campuses.
Natalie Pullaro Davis, National Association of College and University Business OfficersKenneth E. Redd, National Association of College and University Business Officers
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