This institution charges $50,000 for tuition. We have 2,000 students. That’s $100 million. Where is it? What did the administration do with all that money? Can someone just explain it to me?”
All across the country parents, students, alumni, faculty and staff concerned about and frustrated by the price of education utter similar statements. But the fact is that not all students (and in some cases, not even a majority) pay the full price of tuition.
Wait, what? Yes, the math is correct, but the numbers in the equation are incorrect. Why? Two words: discount rate.
In 2020 the National Association of College and University Business Officers surveyed 361 private nonprofit colleges and universities and found tuition was discounted an average of 53.9 percent for first-time, full-time, first-year students in 2020-21. Meaning: a tuition price of $50,000 is an average of $26,950 per student after discounts (scholarships). The purpose of a discount rate is to net the budgeted revenue and yield the number of students an institution can accommodate, and make sure each student is willing and able to continue for all four years.
Related: Financial Aid Leveraging