The recently released NACUBO Tuition Discounting Study for 2011 starts off with the following quote: "Many four‐year private nonprofit (independent) colleges and universities use tuition discounting strategies in order to increase their undergraduate enrollments. Unfortunately, data from the 2011 NACUBO Tuition Discounting Study (TDS) suggests that this strategy is no longer working effectively at a large number of colleges and universities."
From our perspective, this view of the data gathered in the study is overly simplistic, and points out limitations in the analysis. For many institutions across the country, discount rates have increased over the last few years NOT because those institutions have introduced more generous packaging policies in an effort to increase enrollments, but because they have been compensating for losses in state aid; helping families who are unemployed as a result of the economic climate; trying to “shape” their classes (e.g., increase socio or economic diversity); trying to “hold their own” in an increasingly competitive climate; or some combination of the above. While the full report does acknowledge the impact of the economy, it would have been helpful to know how other sources of grant aid had shifted at institutions that increased discount rates versus those that decreased discount rates. Similarly, it would have been helpful to know how the percent of students applying for aid and expected family contributions of aid filers were linked to whether institutional discount rates increased or decreased.
Certainly some institutions quoted in the “In Their Own Words” section noted that they had attempted to use increased investments in financial aid to increase enrollments and weren’t successful. Others, however, talked about significant success with implementing new pricing and discounting strategies to increase net tuition revenue. S&K would love to see NACUBO do in-depth interviews with the successful institutions. Our guess would be that one of the secrets to their success would be that they took a data-driven approach to adjusting their policies. Short of doing such interviews, perhaps NACUBO should expand the survey slightly to include such questions as:
- Did you use econometric modeling to understand the price sensitivity of your market before adjusting pricing or discounting strategies? (Actually, I have to give credit to Emily Sinsabaugh, Vice President for University Relations at St. Bonaventure University, for this question!)
- Did government grant aid (federal and state) increase or decrease this year?
- Did the percent of students demonstrating financial need increase or decrease this year?
- Did average need of those demonstrating need increase more than your tuition and fees increased?
What are your thoughts on the NACUBO Tuition Discounting Study for 2011?
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About the author: Kathy Kurz retired after 18 years as Vice President of Scannell & Kurz. Her area of expertise is developing strategic financial aid and retention programs designed to enhance enrollment and net tuition revenue results. She previously served as Associate Vice President at the University of Rochester and Director of Financial Aid at Earlham College.
Connect with Kathy on LinkedIn.