Dive Brief:

• Tuition discounts at private institutions reached historic highs during the 2016-17 academic year, pushing a retention strategy that slows tuition revenue growth and hurts colleges' bottom lines, according to an annual report by the National Association of College and University Business Officers and reported about in an article in Inside Higher Ed.
• According to the study, first-time full-time freshmen tuition discounts reached an all-time record of 48.2% in 2016-17, and likely increased to just under 50% for this academic year. For all undergraduate students, discount rates reached 44.8%, which is also a record high for the industry.
• Some experts say that the discounting strategy works well for individual students, but puts institutions at a disadvantage in trying to keep students from year to year with near static rates, particularly those who face affordability challenges. “If most aid is need-based and college students are needier, that percentage is just going to go up,’’ Kent John Chabotar, founding partner of MPK&D consultants and president emeritus of Guilford College, told Inside Higher Ed.

Dive Insight:

There are two schools of thought when it comes to big tuition discounts. On one side, there is a chance that discounting tuition in order to serve the needs of financially challenged students may actually harm them, because discounted high-sticker prices may dissuade students from applying to certain schools without examining full aid packages.

But there can be outliers, real or imagined, in how discounting can help build enrollment. At Champlain College, for example, officials plan to reduce tuition costs for adults in online learning programs, hoping that an increase in enrollment will offset potential net revenue losses.

But the potential pitfalls are something that the Association of Governing Boards warns against. "Neither shutting out students with financial need nor encouraging them to accrue unmanageable levels of debt is a viable long-term strategy," according to a governance brief on the organization's website. "Boards that understand the issues can shape policies to ensure that their college will not follow a path leading to financial instability for either its students or the institution."