A recent study conducted by the National Association of College and University Business Officers (NACUBO) found that private colleges and universities use nearly half of the tuition and fee revenues they collect from incoming freshman to fund institutional grants. Let’s take a look at what this information reveals about the state of higher education.
NACUBO Study Results
Research was collected from 404 private, nonprofit institutions. Specifically, the study noted that higher education institutions reported an estimated 49.9% tuition discount rate for first-time, full-time students in 2017-18. In other words, every dollar in gross tuition and fee revenue earned from those students went directly to financial aid–grants, scholarships, and fellowships. When broadened to all undergraduate students, the estimated tuition discount rate hovered around 44.8%; both numbers represent record highs.
Rising Tuition Discount Rates
The average cost of tuition and fees for private colleges and universities has been rising steadily over the last decade. Thanks to financial aid, though, incoming students have only experienced an 18.8% rise (as compared to the 42.1% increase from 2008-09). Notably, an estimated 88.7% of freshman and 79.5% of undergraduates received grant aid that covered more than half of tuition and fees.
News of rising tuition discount rates is promising for rising college freshman and their families who may be considering lower cost higher education alternatives. Unfortunately for private higher education institutions, though, this news means that tuition revenue at these schools remains very constrained.
Final Thoughts
Even though tuition rates are rising, colleges and universities aren’t seeing that money being funneled back into their school. In this case, higher education seems to be caught in a vicious cycle: schools need to raise tuition and fees to make ends meet, but because students can’t afford the costs on their own, they need to rely on financial aid to close the gap.
So the million dollar question remains: how do colleges and universities earn more revenue without solely relying on tuition and fees?
RevenueVision is a financial and operational management platform designed specifically to improve revenues, reduce costs, and optimize performance for auxiliary businesses in higher education. RevenueVision allows you to blend and trend data from disparate systems and business partners in a way that is not possible in BI tools, thus enabling you to make sound and proactive business decisions. Using the RevenueVision data platform, you can produce the analyses and forecasts needed to improve your operations and your bottom line.
Contact us today for more information on how RevenueVision can help your higher education institution improve your revenues.
