Preliminary estimates for the 2025–26 academic year show private colleges are discounting tuition by 57.1% for first-time, full-time undergraduates, according to a new study by the National Association of College and University Business Officers (NACUBO). The average discount rate for all undergraduates at private institutions is projected to reach 51.3% in the same period.
The finalized discount rate for 2024–25 was 54.5% for first-time, full-time students and 50% for all undergraduates. During that year, net tuition and fee revenue declined by 2.2% per first-time, full-time undergraduate and by 1.9% for all undergraduates. Institutions netted an average of $21,300 per first-time, full-time undergraduate and $24,257 per all undergraduates in tuition revenue.
“Institutionally funded scholarships, grants, and fellowships remain central to efforts to attract, support, and retain students from a broad range of backgrounds,” said Kara Freeman, president and CEO of NACUBO. She added, “The findings in this report underscore the continued importance of tuition discounting as institutions work to balance mission, enrollment goals, and long-term financial sustainability.”
The study, conducted annually since 1994, included responses from 258 private, nonprofit colleges. Preliminary estimates may shift, as the survey is completed in the fall before final spring enrollment and aid data are available. In 2024–25, institutional aid funding came from philanthropy (5%), endowment earnings and withdrawals (11.5%), institutional reserves (32.5%), and 50.9% from sources with no dedicated funding. Colleges with endowments over $1 billion were more likely to draw from endowment funds to support aid and sustain higher discount rates with less financial risk.
“A defining observation in the report is that tuition discounting has already reached a point of diminishing economic returns,” said Gary Stocker, founder of College Viability LLC. He wrote that heavy discounting often fails to produce enrollment growth and described the practice as a survival tool in a declining market. Stocker added that institutions are “forgoing more than half of their potential tuition revenue from students in the form of unfunded institutional grants just to sustain baseline enrollment figures.” He warned that many small, regional, tuition-dependent colleges face severe financial strain, with survival measured in months.
Among institutions with rising enrollment, 71% credited improved recruitment or marketing strategies, while only a third attributed gains to increased institutional aid. At schools with declining enrollment, 67.7% cited increased regional competition, 62.1% pointed to price sensitivity, and 53.2% noted changing demographics. Most institutions—57.1%—reported launching new strategies focused on already-enrolled students, while only 8.6% implemented no new enrollment or retention tactics.