Has Tuition Discounting Run Its Course
For Private Colleges with Less than 2,000 FTE
The following chart[1] shows that private colleges are no longer getting a positive return on tuition discounts because FTE enrollment exhibits a long-term negative trend in growth. Therefore, it is inefficient to continue increasing tuition discounts because they are not attracting more students. There are two unfortunate outcomes of decaying enrollments from ever-larger tuition discounts:
- Falling enrollments generate less tuition revenue.
- Rising tuition discounts yield smaller cash flows from each student.
This suggests that private colleges with fewer than 2,000 FTE must find a new strategy to increase revenue and cash flow. New strategies could include:
- New academic programs
- Partnerships with other colleges or local agencies
- Contracts with businesses,
- New athletic programs.
Alternative to revenue generating strategies to manage cash flow would be to:
- Cut costs
- Sell off unused property
- Consolidate offices and sell surplus buildings
- Kook for expense sharing with other colleges
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The chart used IPEDS data for private colleges offering a four-year program for the years 2017 to 2023 with an enrollment less than 2,000 FTE. During that period, there were 473 private colleges, which was 54.5% of a total data set that included colleges larger than or equal to 2,000 FTE. ↑
As a small college faces financial distress, it is extremely difficult to afford new strategies. When a college is in deep financial distress, taking expeditious action is essential for survival.