A new report from the National Association of College and University Business Officers (NACUBO) found that private colleges continue to reach historic highs with tuition discounting. In the 2019-20 academic year, private four-year institutions offered an average tuition discount rate of 48.5% — an all-time high and increase over the prior year’s record rate.
Tuition discounting refers to the average percentage of tuition that is discounted through institutional aid, scholarships, and tuition waivers. The trend has grown over 10 percentage points over the past five years. Reasons for discounting include recruiting top students, improving affordability, and responding to market pressures.
Private college leaders cite financial competitiveness as the primary driver of increased discounting. They point to rising tuition at public colleges, expansion of private student loan options, and growth of college rankings that factor in net price as reasons discount rates continue rising. Meeting operational budgets relies on discounting to generate sufficient net tuition revenue.
While discounting expands access for some, it also poses risks. High rates can negatively impact colleges’ bottom lines, limit price transparency, produce an “arms race” mentality, and disproportionately benefit higher-income families. They make it harder to limit price increases, foster over-reliance on tuition as a revenue source, and may discourage the pursuit of alternative revenue streams.
There is no evidence discount rates have plateaued yet according to NACUBO. However, some experts call for stabilizing discounting to ensure financial sustainability, affordability in practice beyond discounts, and a fair and equitable system. Finding the right “tuition discount equilibrium” will be crucial to balancing access, affordability, and institutional health over the long run.
Alternative approaches could also help address core issues in a holistic, sustainable manner. These include reevaluating how discounts are calculated and reported, developing tiered pricing models, implementing need-based aid policies, attracting non-tuition revenue sources, controlling costs, and promoting price transparency. With time, innovation may produce new solutions and enable private colleges to achieve their missions in an affordable, responsible, and impactful way.
The NACUBO report highlights a trend that deserves considered reflection and response rather than dismissing out of hand due to its perceived benefits. Extreme or unchecked tuition discounting creates real risks, so leaders must pursue balancing discipline with flexibility going forward. By thoughtfully evaluating practices, setting reasonable limits, and developing innovative strategies, private colleges can continue improving access while securing a just, sustainable, and prosperous future for students, institutions, and society. The possibilities for progress are high if the will and foresight exist to change the trajectory before it’s too late.