Discounting Heads

By Kevin Kiley

Despite spending nearly 43 percent of their gross tuition revenue from first-time, full-time freshmen on institutional aid for those students, many private colleges and universities had a harder time enrolling students last year, with almost half seeing no growth or a decline in enrollment for 2011, according to survey results released today by the National Association of College and University Business Officers.

The combination of higher discount rates – or institutional grant aid awarded to undergraduates as a percentage of an institution’s gross tuition revenue – and enrollment troubles at some institutions meant colleges and universities were not able to capture significantly more revenue from tuition increases last year. After all forms of aid were factored in, colleges increased tuition revenue only by an estimated 3 percent over last year, an increase that falls just under the inflation rate of 3.2 percent, and well below the 5 percent increase seen the year before. The problems were particularly pronounced at nonselective small colleges without much programmatic diversity.

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