Tuition is Up, But So Are Tuition Discounts

Like prices for everything else, college costs are rising once again. After two years of historically low increases in tuition-- where college prices actually decreased in inflation-adjusted terms-- college cost increases are returning to previous norms. Syracuse and Boston University both raised tuition more than 4%; the University of Virginia is raising by more than 8%. All while your 529 account balance is tumbling thanks to declines in the stock and bond markets.

If there's a silver lining, it's this: tuition discounting is at an all-time high. In fact, preliminary estimates from NACUBO show that the average tuition discount rate for first-year students at private nonprofit colleges and universities was 54.5% this year. That means that for every $100 of tuition charged, only $45.50 is collected. In fact, almost 90% of first-time students received some form of aid, covering an average of 60% of tuition and fees.

That does not mean that everyone automatically got a 54% or 60% discount on college. In fact, more selective colleges-- those that admit less than half of applicants-- discounted less. The average discount rate for selective colleges was 44%, compared with 58% at less selective schools.

And whatever you may have heard to the contrary, colleges are working harder than ever* to enroll students: last year, net tuition revenue per first-time undergraduate fell by 3.2% in inflation-adjusted dollars. For returning students, costs have remained flat relative to inflation.

How do you find out what colleges are likely to offer your student significant discounts? A few resources:

• Net price calculators give good estimates of what a student is likely to receive. Every college is required to have a net price calculator; find it on the college's website or by googling "[college name] net price calculator." Beyond the net price calculator, visit the school's financial aid web page to see additional available scholarships.

• Collegedata's Financials tab shows what types of aid-- need-based and/or merit-- a college gives, to whom and average amounts.

• College Navigator shows net price by income level for current students.

What's not helpful for determining how much a college will cost? Your EFC. That's because colleges are not required to meet your financial need, and most do not meet 100% of need through grants. Families with low EFCs will find many colleges that offer generous need-based scholarships but should not expect that every college will meet their financial need. Your EFC is most helpful in determining whether you're likely to be eligible for need-based aid, or if you should instead focus on colleges that offer merit scholarships.

* "Working harder than ever" = "Offering larger scholarships than ever."

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