With college tuition costs skyrocketing, private colleges are increasingly offering more generous financial aid packages to struggling students – with tuition discount rates doubling since 2008.

What’s behind the tuition discount trend and how can students get in on the deal?

According to the National Association of College and University Business Officers (NACUBO), private colleges and universities (public colleges were not included in the study) use more than half of the tuition and fee revenue they garner from incoming first-year students to offer tuition discounts to these students.

The bulk of that cash is in the form of grants, scholarships and fellowships to new students attending their school.

NACUBO defines the term “tuition discount” as the ratio of institutional grant dollars to gross tuition and fee revenue, expressed as a percentage. Basically, the tuition discount rate is the percentage reduction in gross tuition revenue attributable to institutional grants. 

Big Discounts for Incoming Students

The study, which included tuition data from 405 private, non-profit colleges, estimates a 52.2% institutional discount rate in the 2018-2019 academic year for freshman and first-time students who attend college full time. Among all undergraduate students, the tuition discount rate was 46.3%. Both figures are record highs.

“This means that for every dollar in gross tuition and fee revenue collected from all students, institutions used nearly half for financial aid, including grants, scholarships, and fellowships,” the report stated.

The spread between the discount rates for first year and all undergraduate students has been growing, from 3.7% in 2000-2001 to 5.9% in 2018-2019, a sign of increased front-loading of grants over the past two decades.

The difference between the figures for freshmen and all undergraduate students is due primarily to all that grant front-loading. Approximately half of all colleges practice front-loading of grants, where freshmen get a more generous mix of grants vs. loans/work than upperclassmen. 

NACUBO isn’t the only source of data concerning tuition discounting.

An analysis of data from the 2015-2016 National Postsecondary Student Aid Study (NPSAS) demonstrates an overall tuition discount rate for Bachelor’s degree programs at four-year colleges and universities of 29.4%, with a discount rate of 18.1% for public colleges, 40.7% for private non-profit colleges and 9.2% for private for-profit colleges.

The tuition discount rates for full-time freshmen are 20.2%, 42.2% and 8.3%, respectively. 

The NPSAS figures differ from the NACUBO figures because they are enrollment-weighted and involve a broader set of colleges, according to How to Appeal for More College Financial Aid, pages 110-114. 

While the tuition discount rate is a priority for colleges, as it reflects the difference between gross tuition revenue and net tuition revenue, a discount rate based on the cost of attendance instead of tuition matters more to families, since it reflects the difference between the sticker price and the net price. The overall cost-of-attendance discount rate for Bachelor’s degree programs is 16.4%, with discount rates of 8.1% for public colleges, 27.8% for private non-profit colleges and 5.3% for private for-profit colleges.

The cost-of-attendance discount rates also provide a better indicator of how much the family can expect in institutional grants from the college.  

Getting Aggressive About Recruitment

Why the bump-up in tuition discount programs? One reason is that colleges are getting more aggressive in trying to attract more freshman on campus at a time when college enrollment numbers are falling across the board in the U.S.

That’s a long-term trend that private colleges are looking to reverse by offering more tuition discounts to students.

Colleges included in the NACUBO study have hiked institutional grants – a prime component of tuition discounts – by 91% from 2008-2009 through the 2018-2019 academic year. In cash dollar terms, that means average grants have risen from $10,586 in 2008 to $20,255 in 2018, according to the study.

“Understanding the concept of net price is more important now than ever,” said Ken Redd, NACUBO’s senior director of research and policy analysis.

“Recent polls show that many Americans consider higher education unaffordable, but the private institutions that participate in our survey are providing substantial financial aid to most of their students, year after year, which significantly reduces the actual price students and their families have to pay and may put a college education in reach,” he says.

How Students and Families Can Get In On Tuition Discounts

Freshman families looking to curb their net price for college and maximize their tuition discounts are in luck these days. It’s a task that could easier than you may think, given the trend of so many colleges offering a break on student tuition costs.

Take these action steps to fatten up your family’s tuition discounts.

Set the table. To maximize your tuition discount opportunity, your student needs to have a few aces in his or her pocket to steer admissions offices toward a price break, often in the form of merit scholarships. That includes having the following items:

  • A perfect high school grade point average
  • Sterling college admissions test scores
  • Evidence of leadership qualities (like being a student government officer, having a good job in high school or volunteering).

If you can demonstrate these abilities, your college’s admissions office is more likely to cut a deal on a tuition discount.

Approach your college before you accept the offer of admission. Don’t make a down payment at your student’s college or university if you’re opting to aggressively pursue a tuition discount. Do that, and you’re losing leverage. Instead, hold off on sending your college tuition down payment until close to the due date (May 1 at most colleges) and contact the admissions office and ask for a meeting.

At the meeting (via phone or in person) ask for a review of your student’s tuition aid possibilities and let them know you want your son or daughter to be on campus, and you want to pay the down payment, but want to get a better deal on tuition before that happens.

Sometimes the admissions office will play ball and find some extra tuition cash for you – they likely won’t want to lose you when you’re so close to committing. But, be prepared to walk away and send your child to a less expensive college.

Make sure they know you have options at other colleges. It’s okay to let an admissions officer know his or her college is number one on your student’s list. But it’s just as okay to let the college know you have other offers. In a buyer’s market, which is where colleges are these days, the more chips you have in the game, the better your chances.

It’s perfectly fine to show an admissions officer the paperwork documenting your case. With visual evidence, it’s more likely the admissions officer will offer you a better discount deal.

If you qualify, cut a better deal based on financial need. Uncle Sam will give you grants if you qualify, based on demonstrated financial need. But, what’s less well known is that some colleges will do the same.

For example, high-profile colleges like Stanford University and Princeton will throw extra cash into the till if your family’s annual income is below the school’s income threshold ($125,000 a year in the case of Stanford). Make sure to bring up income thresholds when you meet with admissions. It could very well lead to a good tuition price discount.

Even if your income is above the threshold, the college might negotiate if your income is really, really close to the threshold. Present a copy of a printout from the college’s net price calculator if the actual financial aid award letter isn’t as generous.

Focus on summer school discounts, too. Many schools will offer families an extra tuition break for lightly-attended summer classes, which count toward full credits.

You’ll often see summer session classes that cost 25% or 30% lower than comparable fall and spring classes.

The Takeaway on College Tuition Discounts

Let’s face fact facts – colleges and universities need students to stay in business, and right now the market is tilted slightly in your family’s favor, especially at less selective postsecondary institutions.

So, break out all the tools you can to take full advantage of tuition discounts. The more aggressive you are about pursuing those price breaks, the more aggressive your target college will likely be in getting you a better deal on tuition prices.

It may take some negotiating, but the job is highly doable.

The end result – more money in your pocket and less of it in your targeted college pockets – is all the incentive you should need to fight for a better college tuition deal.