There has been a great deal of news about the rising cost of college tuition. However, discounts at private colleges and universities are actually on the rise.
Private colleges are offering students larger grants relative to tuition prices than ever before, according to a new analysis by the National Association of College and University Business Officers.
Grants and scholarships are often called “gift aid” because they are free money — financial aid that doesn’t have to be repaid. Grants are often need-based, while scholarships are usually merit-based.
The average school’s discount rate for full-time freshmen students reached 50% in the 2017-2018 academic year, up from 39% in 2007-2008, NACUBO found. (It surveyed more than 400 private colleges.)
The average college grant will jump to $20,255 in 2018, up from $10,586 in 2008.
The findings underscore the importance of looking beyond a school’s “sticker price,” which is expected to average $38,301 for tuition and fees at private colleges in the 2018-2019 academic year for first-time, full-time freshmen.
In reality, the typical family will pay closer to $18,400, school officials say.
“Families should ignore the listed price for a school and apply for financial aid, ” said , senior directory of policy analysis and research at NACUBO.
Nearly 90% of first-time, full-time freshmen students received grants in 2017-2018.
Redd points to a couple of reasons to explain why colleges are stepping up their discounts.
Despite the economic recovery, many families still can’t come up with the money needed to cover four years at a private college today, he said. The median household income, after accounting for inflation, was $59,039 in 2016, little different than it was in 2000 ($58,544).
Meanwhile, colleges are competing for new students. More than 40% of schools NACUBO looked at reported a decline in freshmen enrollment between 2015 and 2018, with the majority of colleges citing “price sensitivity” among students as the culprit.
To be sure, even with the discounts, families continue to pay more for college, said Mark Kantrowitz, the publisher of SavingforCollege.com.
Families also have to consider the price of room and board, which is also on the rise.