Private colleges and universities take a lot of flak for their sky-high tuition rates, but they’re also knocking quite a lot off those steep sticker prices. According to Inside Higher Ed, the National Association of College and University Business Officers has found that these schools make only 54 cents for every dollar of tuition. More:
The “high tuition, high discount” business model is often confusing to students and parents, but it’s how things are done at most private colleges: the colleges charge high prices and then offer students they want huge discounts. The discount comes in the form of need-based aid for low-income students and “merit” aid for students with characteristics that make them desirable to a college. At wealthy colleges, endowments may have actual funds to replace lost tuition revenue, but most colleges are just waiving the chance of getting more.This so-called discount rate – the college’s aid dollars as a percentage of tuition and fees – is again at an all-time high.In fall 2013, the average discount rate was 46.4 percent for first-time, full-time freshmen, according to NACUBO’s survey of 401 private nonprofit colleges. The discount rate is up from 44.8 percent in 2012 as 57 percent of colleges in the survey reported enrollment declines, in part due to growing concern about college costs
And then there’s this:
[…] in inflation-adjusted dollars, the net revenue per student at private colleges has not grown at all in the past 13 years. (That inflation adjustment is made using the Higher Education Price Index, not the Consumer Price Index, which is used to track inflation in the broader economy.)
If you are looking for a sign of the inevitable shake-up of the higher education system, look no further.