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Are you an administrator or marketer at a small private school? If so, you likely face unique challenges in growing your school community. Unlike large institutions with extensive resources, your budget may be more limited, and your brand may not have the same level of recognition. Yet, your school likely offers something invaluable: a personalized, high-quality educational experience that deserves greater visibility. Your marketing strategy should spotlight the unique selling points that differentiate your private school from other institutions.
How do you market a small private school? Traditional outbound marketing methods, such as print ads and direct mail, are costly and less effective in today’s digital market. Instead, try inbound marketing, a group of strategies that offer a cost-efficient and impactful way to attract, engage, and retain families interested in your school. Keep reading to explore ten effective private school marketing ideas that will grow your community.
Our expert digital marketing services can help you attract and enroll more students!
Inbound marketing is a strategy that focuses on attracting prospective families to your school through valuable content, SEO, social media engagement, and other digital efforts. Instead of pushing advertisements onto audiences who may not be interested, inbound marketing creates meaningful connections with families actively looking for the right educational institution.
If you’re wondering how to market a new private school using inbound strategies, remember that the key is to build trust and provide the right information at the right time. Parents today research extensively before choosing a school for their children. Though many outbound strategies remain relevant today, namely to increase visibility, offer useful content, address concerns, and showcase your school’s strengths. Inbound marketing can position your institution as the best choice. Now, let’s explore specific ways that you can grow your private school community.
Source: HEM
Incorporating these tactics into your marketing strategy can reach your target audience, create relationships by providing value, and incite desired action. An effective private school marketing campaign combines several, if not all, of the techniques discussed below. If any are missing from your current plan, now’s the time to start implementing them!
Your website is the foundation of your school marketing strategy. It must be visually appealing, easy to navigate, and optimized for search engines. Parents should find essential information, such as tuition, curriculum, testimonials, and admissions requirements quickly and effortlessly. A well-structured website should include dedicated pages for admissions, academic programs, extracurricular activities, and student life.
Ensuring mobile responsiveness and fast load speeds will improve user experience and increase engagement. Incorporating multilingual and culturally adapted content can expand your reach, particularly if you’re targeting international students. Regularly updating your website with blog posts, news, and event details ensures prospective parents see a dynamic, engaged school community.
Example: Are you trying to expand your private school community beyond borders? If so, you’ll want to borrow this effective SEO technique from Crimson Global Academy. Below, you’ll see that they’ve tailored their site content to different countries and used subdirectories in their URLs.
Using sub-directories (/uk/, /ca/) signals to search engines that the content is tailored for a specific region. Google prioritizes localized content in search results, meaning parents and students searching for private schools in their home country are more likely to find your institution.
The benefits of this SEO strategy are far-reaching. They include broadened international reach, higher performance in multilingual searches, and higher click-through rates due to relevance.
Source: Crimson Global Academy
A well-crafted blog is a valuable resource for current and prospective families, positioning your school as a thought leader in education. By publishing informative and engaging content, you can address parents’ most pressing concerns, showcase student success stories, and highlight what makes your school unique.
For example, you can write about how to help children transition to a new school successfully by offering expert advice and real-life experiences from parents and students. Another great topic is discussing the benefits of small class sizes and how they enhance student learning, highlighting the personalized attention and academic advantages your school provides.
You can also explore how your school’s curriculum prepares students for future success in higher education and beyond, showcasing testimonials from alumni who have excelled. Additionally, sharing success stories from students and faculty can illustrate the positive impact of your educational programs.
Finally, providing a step-by-step guide for parents navigating the private school admissions process can ease their concerns and position your school as a supportive and transparent institution. Consistently publishing high-quality blog posts improves search engine rankings, making your school more visible to families searching for private education options.
Example: The Great Lakes College of Toronto publishes blogs relevant to their prospects – students from all over the world interested in attending prestigious Canadian universities. With their target audience in mind, GLCT creates content that provides value. For example, learning tips for ESL learners, how to prepare for Canadian universities, and much more. Make sure your blog content aligns with your site visitors’ needs and provides valuable information.
Source: Great Lakes College of Toronto
Social media platforms like Facebook, Instagram, and LinkedIn are powerful tools for building community and engagement. Your school can foster stronger connections with prospective and current families by posting student achievements, behind-the-scenes content, and faculty highlights.
Live Q&A sessions can address frequently asked questions about your school’s programs and admission process. Hosting interactive polls, student takeovers, and parent testimonials can increase engagement and trust.
Additionally, investing in paid social media advertising can expand your school’s reach to target families actively searching for private school options. Schools can also create private Facebook groups for prospective and current parents, providing a space for questions and engagement.
Example: This Instagram post from CLS West Covina highlights the strength of the school community. In addition to academic excellence, your private school should highlight other features of the student experience that contribute positively to learning, such as extracurricular activities, a nurturing environment, community involvement, global awareness, and more. Social media remains the perfect stage for your school’s unique selling points.
Source: CLS West Covina | Instagram
Once a prospective family expresses interest, it’s essential to maintain communication through well-crafted email campaigns. Personalized drip campaigns can guide them through enrolling, providing timely information about your school, key deadlines, and success stories from current students.
Automated email sequences can include welcome emails, event reminders for open houses, and curriculum overviews. A segmented approach, where emails are tailored to different stages of the admission journey, can significantly improve conversion rates. Sending personalized content based on user interaction, such as downloadable brochures, testimonials, and exclusive invitations, keeps families engaged throughout the decision-making process.
Video content is one of the most effective ways to give prospective families an immersive experience of your school. Creating high-quality video tours, faculty introductions, and student testimonials can provide a dynamic look into daily life at your institution. Highlighting classroom environments, extracurricular activities, and real-world student experiences can create an emotional connection with families.
Short-form videos on platforms like Instagram Reels and TikTok can help boost engagement among younger audiences, while long-form content on YouTube and your website can provide in-depth insights. Hosting live virtual tours where prospective families can ask real-time questions enhances engagement.
Many parents start their search for private schools on Google. A fully optimized Google My Business profile ensures your school appears in local search results with accurate contact details, reviews, and images. Encouraging satisfied parents to leave positive reviews can significantly enhance your school’s online reputation.
Regularly updating your profile with recent photos, upcoming events, and engaging posts can make your school stand out among competitors. Answering common parent inquiries directly on your profile, such as tuition costs and curriculum highlights, helps streamline decision-making. Additionally, responding promptly to positive and negative reviews demonstrates strong community engagement and builds trust with prospective families.
Example: This is what your private school looks like in search results when you optimize your Google My Business account. This essential feature provides an easily digestible snapshot of your institution, presents a professional image to web users, and makes it much easier for your target audience to find you.
Source: Groton School | Google
In today’s digital landscape, virtual open houses offer a convenient way for parents to learn about your school from anywhere. In-person tours and interactive virtual sessions cater to a broader audience while answering common questions in real time.
A well-structured open house should include live presentations from school leaders, faculty members, and current students who can share their experiences. Offering breakout sessions for different grade levels or programs allows parents to focus on the most relevant aspects of your school.
Additionally, incorporating Q&A panels, video tours of classrooms and facilities, and even virtual meet-and-greet opportunities with teachers can help prospective families get a more personal feel for your school’s community. Recording these sessions and making them available on your website also ensures that families who couldn’t attend live still have access to the information.
Example: Queen Anne’s School makes it a priority to offer prospects a positive first impression through in-person “Open Morning” events and a virtual tour to showcase their beautiful campus. They also offer personal tours, group tours on site, taster days, and taster boarder experiences to accommodate every prospect’s preferences. Wow future students and their families by giving them a taste of your unique student life experience.
Source: Queen Anne’s School
While organic traffic is essential, strategic paid advertising can help small private schools reach highly targeted audiences. Google Ads and Facebook Ads can be optimized to reach families searching for private school options in your area.
Displaying retargeting ads to parents who previously visited your website can help keep your school top-of-mind. Running A/B tests on ad creatives and messaging can improve ad performance and maximize return on investment.
Providing valuable downloadable resources, like e-books, checklists, and guides, can encourage prospective families to share their contact information. For instance, a downloadable guide on “Choosing the Right Private School for Your Child” can position your institution as an industry expert while generating qualified leads. Interactive tools, such as school comparison charts and tuition calculators, can further engage visitors and increase conversion rates.
To maximize the effectiveness of downloadable resources, schools should ensure that these materials are highly relevant, visually appealing, and easy to understand. Including real-world examples, student success stories, or insights from school faculty can add credibility and value.
Additionally, placing lead capture forms strategically throughout the website, such as on admissions pages, blog posts, and program descriptions, can encourage more sign-ups. Schools can also create exclusive content for different stages of the enrollment journey, such as a “First-Time Parent’s Guide to Private School Admissions” or a “Step-by-Step Checklist for Enrollment Success,” providing tailored resources that guide families through the decision-making process. Regularly updating these materials ensures they remain relevant and aligned with current education trends.
Most parents don’t enroll immediately after visiting your website. Retargeting strategies, such as displaying ads to users who previously visited your site, can help keep your school top-of-mind. This ensures interested families receive gentle reminders to revisit your offerings and complete the application process. Email remarketing campaigns can also re-engage families who started but did not complete an application.
To enhance retargeting effectiveness, schools should segment their audience based on engagement levels, such as visitors who viewed tuition pages, downloaded an admissions guide, or attended a virtual open house. Personalized messaging, such as an email featuring student testimonials or a special enrollment incentive, can encourage hesitant families to take the next step.
Schools can also leverage dynamic display ads that adjust content based on a user’s previous website activity, like showing program-specific ads for those who viewed a particular course or highlighting upcoming admissions deadlines. Schools can effectively nurture leads and increase enrollment conversions using a multi-channel approach, combining retargeting ads with personalized email follow-ups.
Navigating the complexities of digital marketing can be overwhelming, especially for small private schools with limited resources. That’s where expert guidance can make all the difference.
At Higher Education Marketing, we specialize in helping educational institutions maximize their online presence through customized inbound marketing strategies. Whether you need assistance with content creation, SEO, social media management, or lead nurturing, our team of education marketing experts ensures that your school effectively reaches its target audience.
With over 15 years of experience, we understand the nuances of school marketing ideas and tailor our solutions to your institution’s specific needs. Our digital marketing services include:
By embracing inbound marketing, your small private school can attract the right families, establish a strong online presence, and build a thriving school community. Whether you’re looking to optimize your digital strategy, refine your content marketing approach, or improve engagement through paid advertising, HEM is here to help.
The combination of a strong website, engaging blog content, an active social media presence, and targeted email marketing ensures that your school remains visible and competitive in the evolving field of education.
Our expert digital marketing services can help you attract and enroll more students!
Question: How do you market a small private school?
Answer: Traditional outbound marketing methods, such as print ads and direct mail, are costly and less effective in today’s digital market. Instead, try inbound marketing, a group of strategies that offer a cost-efficient and impactful way to attract, engage, and retain families interested in your school.
Question: How to market a new private school?
Answer: The key is to build trust and provide the right information at the right time. Parents today research extensively before choosing a school for their children. Though many outbound strategies remain relevant today, namely to increase visibility, offer useful content, address concerns, and showcase your school’s strengths. Inbound marketing can position your institution as the best choice.
The case will be heard at London’s High Court April 1-3, the Independent Schools Council (ISC), which represents private schools in the UK, revealed this week.
It’s the latest step in its furious battle to overturn a policy – key to the Labour party’s election manifesto before it regained power in July 2024 – to start levying VAT on private school fees.
The ISC said its case, led by prominent human rights barrister Lord Pannick KC, would argue that the VAT policy “impedes access to education in independent schools” and is therefore incompatible with the European Convention on Human Rights.
In the case, the ISC is supporting six families impacted by the policy, and the defendent in UK Chancellor Rachel Reeves.
The case is being heard on an expedited basis following a successful argument from Lord Pannick that parents needed certainty because they are already feeling the effects of the policy.
ISC CEO Julie Robinson said the organisation’s aim was to “protect the rights” of families and young people “who are having their choice removed from them”.
“This is an unprecedented tax on education – it is right that its compatibility with human rights law is tested,” she continued. “We believe the diversity within independent schools has been ignored in the haste to implement this damaging policy, with families and, ultimately, children, bearing the brunt of the negative impacts this rushed decision is already having.”
This is an unprecedented tax on education – it is right that its compatibility with human rights law is tested
Julie Robinson, ISC
Reeves confirmed in October that the party would be slapping a 20% tax on fees for January 2025, leading to fears from independent boarding schools that their intake of international students could plummet.
Experts predicted that although some schools would choose to swallow the loss of revenue, most would be forced to raise their fees an average of 10-15% to cover costs.
An online private school told The PIE News earlier this month that it has seen a “five-fold” surge in interest from parents since the VAT policy was announced last year.
CEO of Minerva’s Virtual Academy, Hugh Viney, credited the rise in demand to the VAT policy, as he said the school’s fees are “good value” and much less than most private schools at under £8,500 per year – a price that has always included VAT and is therefore unchanged by the new legislation.
RANDOLPH, Vt. — The thermostat was turned low in the admissions office at Vermont State University on a cold winter morning.
It’s “one of our efficiencies,” quipped David Bergh, the institution’s president, who works in the same building.
Bergh was joking. But he was referring to something decidedly serious: the public university system’s struggle to reduce a deficit so deep, it threatened to permanently shutter several campuses after dramatic drop-offs in enrollment and revenue.
While much attention has been focused on how enrollment declines are putting private, nonprofit colleges out of business at an accelerating rate — at least 17 of them in 2024 — public universities and colleges are facing their own existential crises.
State institutions nationwide are being merged and campuses shut down, many of them in places where there is already comparatively little access to higher education.
“Public institutions are not exempt from the challenges” facing higher education, Bergh said. “We are already seeing it, and we’re going to see more of it, and it’s particularly acute in some more rural states, where there’s a real need to balance limited resources but maintain access for students.”
Vermont is a case study for this, and an example of how political and other realities make it so hard for public universities and colleges to adapt to the problems confronting them.
“The demographics of fewer traditional-age college students, the over-building of these campuses, the change in the demand for what we need for our workforce in terms of programs — this is something that’s happening everywhere,” said Vermont State Rep. Lynn Dickinson, who chairs the Vermont State Colleges System Board of Trustees.
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Public university and college mergers have already happened in Pennsylvania, Georgia, California and Minnesota, and public campuses have closed in Ohio and Wisconsin. A merger of public universities and community colleges in New Hampshire is under study.
When state university and college campuses close, the repercussions for communities around them can be dire.
Until this month, local students had a college “in their backyard,” said Thomas Nelson, county executive in Outagamie County, Wisconsin, where the two-year Fox Cities outpost of the University of Wisconsin Oshkosh this spring will become the sixth public campus in that state to be shuttered since 2023, after a long enrollment slide. “We’ve had this institution for 60 years in our community, and now it’s gone.”
Not only students are affected. In many rural counties, “there really isn’t a lot beyond the university,” Nelson said. “So that’s going to be devastating for the economy. It’s going to kill jobs. It’s going to be one more strike against them when they are competing with other communities with more amenities.”
Attempts to close these campuses attract the intervention of politicians, who have more control over whether public than private nonprofit colleges in their districts close. After all, “they own the place,” said Dan Greenstein, former chancellor of Pennsylvania’s State System of Higher Education, who — after that state’s enrollment fell by nearly one-fifth — led a reconfiguration that resulted in six previously separate public universities there being merged into two systems.
Even trying to rename a public university can have political consequences. When Augusta State University in Georgia was combined with Georgia Health Sciences University to become Georgia Regents University, there was a local outcry over the fact that “Augusta” was no longer in the name. Within two years, the merged school had yet another new name: Augusta University.
“Public institutions are complex structures,” said Ricardo Azziz, who led that consolidation, served as president of the resulting institution and now heads the Center for Higher Education Mergers and Acquisitions at the Foundation for Research and Education Excellence. “They’re influenced by politics. They’re influenced by elected officials.”
Related: ‘Easy to just write us off’: Rural students’ choices shrink as colleges slash majors
When the proposal to close campuses in Vermont was met with public and political resistance, state planners backed down and decided instead to merge them, laying off staff and cutting programs. That did not go well, either, and resulted in raucous public meetings, votes of “no confidence,” plans that were announced and then rescinded and a revolving door of presidents and chancellors. Only now, in its second year, has the process gotten smoother.
Alarm bells started sounding about problems in Vermont’s state universities before the Covid-19 pandemic. With the nation’s third-oldest median age, after Maine and New Hampshire, according to the Census Bureau, the state had already seen its number of young people graduating from high school fall by 25 percent over the previous decade.
Enrollment at the public four-year and community college campuses — not including the flagship University of Vermont, which is separate — was down by more than 11 percent. A fifth of the rooms in the dorms were empty. And with the birthrate in the state lower than it was before the Civil War, there was no rebound in sight.
These trends have contributed to the closings of six of Vermont’s in-person undergraduate private, nonprofit colleges and universities since 2016.
“We’d be keeping our head in the sand if we didn’t think that those same forces were going to affect our public higher education system,” said Jeb Spaulding, who, as chancellor at the time, merged two of Vermont’s five state colleges, in Johnson and Lyndon, in 2018.
The red ink continued to flow. Two years later, just after Covid hit, Spaulding recommended that three of the five public campuses be shut down altogether — Johnson and Lyndon, plus Vermont Technical College in Randolph.
Related: Colleges are now closing at a pace of one a week. What happens to the students?
“What we needed to do was save the Vermont State Colleges System as a whole,” which has 145 buildings for fewer than 5,000 students, Spaulding recalled. That same problem of excess capacity is affecting higher education nationwide.
“It was well known that we had too much bricks and mortar for the number of traditional-type students that were going to be available in Vermont,” Spaulding said. “We saw all that coming, and we had started a process of educating people and working on what would be a realistic public-sector consolidation plan so that we could actually put our resources into having a smaller constellation, but well financed and up to date.”
The reaction to the plan was explosive, even in the midst of a pandemic. At socially distanced drive-by protests, critics brandished signs that said: “Start Saving: Fire Jeb.” Within four days, the proposal to close campuses was withdrawn. A week after that, Spaulding resigned.
“I guess I didn’t realize that in the public realm, you can’t make the kind of difficult decisions that if you were at a private institution you would have to make,” he recounted. “When the politics got involved, then it became clear to me that there was no way that I was going to be able to get that through.”
Instead of closing the campuses, the state decided to combine them with the other two, in Castleton and Williston, all under one umbrella renamed Vermont State University, or VTSU. In exchange, the blended institutions would be required to cut spending to help reduce a deficit estimated at the time to be about $22 million.
That decision was almost as contentious. As in Georgia, even the name was controversial. Alumni petitioned in vain for the new system to be called Castleton University instead of Vermont State, to preserve the legacy of the state’s oldest and the nation’s 18th-longest-operating higher education institution, founded in 1787, instead of demoting it to “Castleton Campus.”
Related: A trend colleges might not want applicants to notice: It’s becoming easier to get in
Beth Mauch, who as chancellor has overseen VTSU and Vermont’s community college campuses since January, said she gets this kind of sentiment. “There are community members who have had these institutions in their community. There are folks who are alumni of these institutions who remember them in a certain way,” said Mauch. “Really, they are in the fabric of a community.”
That close relationship between the universities and their communities only resulted in additional friction when 23 full-time faculty positions were cut, out of the then-existing 208. So were an equal number of administrators and staff. Not only were there more beds and buildings than were needed for the number of students, there were too many faculty compared to other comparably sized universities, a planning document said.
Neighbors of the campuses, and their elected representatives, didn’t see it that way.
“The people that work at the colleges are local. Everyone knows people that work at these colleges,” said Billie Neathawk, a librarian at what was formerly Castleton University for more than 25 years, and a union officer. “They’re related to people. Especially in a small state like Vermont, everybody knows everybody.”
The layoffs went through anyway. There were also cuts to majors. Ten academic programs were eliminated, 10 others changed locations and still others were consolidated. That meant students at any campus could take the remaining courses in a format combining in-person and online instruction that the system dubbed “In-Person Plus.”
Lilly Hudson, a junior at Castleton, said she prefers learning in a classroom. “It’s just such a difference to be able to see people and meet your professors and go in person,” said Hudson, who is majoring in early education. But she was also able to take a class online from another campus that wasn’t available on hers.
That can be an underappreciated upside to mergers, said Greenstein, now managing director of higher education practice at the consulting firm Baker Tilly. “You can only run as many programs, majors and minors as you can enroll students into,” he said. But by merging institutions and letting students take courses from other campuses online, “now they can go from 20 programs to 80 or 90.”
While that seemed a step forward, the consolidated university’s inaugural president, Parwinder Grewal, next announced that, to cut costs, its libraries would go all-digital and give away their books, the Randolph campus would no longer field intercollegiate sports teams, and athletics on the Johnson campus would move from the NCAA to the less prestigious U.S. Collegiate Athletic Association.
Related: Universities and colleges search for ways to reverse the decline in the ranks of male students
This proved another blunder in a state so fond of its libraries that it has the nation’s highest per-capita number of library visits, and where rural communities rally around even Division 3 athletics. Faculty and staff unions and student government associations on every campus voted “no confidence” in the university’s administration. Athletes transferred away. Grewal was loudly booed when he met with students.
“There was a hot streak there where, every email, we were, like, now what’s going on?” said Raymonda Parchment, a student who was halfway toward her bachelor’s degree at the time.
The library and athletics decisions were eventually reversed, too, and Grewal was out before he’d served a full year. But the damage was done. When the new university finally debuted, at the start of the 2023-24 school year, freshman enrollment was down by about 14 percent from what it had been at the separate campuses the year before.
“I know a lot of friends whose programs were consolidated and shuffled around,” said Parchment, in an otherwise empty study room on the snow-covered Johnson campus. “That was probably the biggest change for students that had direct impact on them. Some people’s programs don’t exist anymore. Some people’s programs have been moved to a different campus.”
Vermont is still working out the kinks, said Bergh, the system’s current president, who was the president of private, nonprofit Cazenovia College in New York when it closed in 2023.
Although first-year enrollment went up about 14 percent this fall, he said, “We’re still surfacing places where our systems aren’t talking to each other as well as they should be, and that we need to correct.”
Parchment likes that it’s easier now to move from one campus in the system to another, without having to go through the red tape of the transfer process. She graduated at the end of the fall semester after moving from Castleton to Johnson to be closer to an internship.
And no campuses were ultimately closed, as had been proposed — a relief to students, prospective students and community members, Parchment said. “Because if you can’t afford to go out of state for college, and you can’t afford to pay for maybe a dorm for a couple of years, where does that leave you if there’s no school within commuting distance?”
Hudson, the Castleton student, whose father is a sixth-generation farrier — a specialist in trimming, cleaning and shoeing horses’ hooves — agreed.
The campuses are “in the middle of an area where there’s a lot of rural towns,” she said. Keeping them in operation means that students nearby who want to go to college “don’t have to pick up their lives and move.”
But Spaulding, the former chancellor, warned that public higher education budget and enrollment problems aren’t likely to subside, in Vermont or many other states.
“I don’t think the storm is over by any stretch of the imagination.”
Contact writer Jon Marcus at 212-678-7556 or [email protected].
This story about public college closings was produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education. Additional reporting by Liam Elder-Connors. Sign up for our higher education newsletter. Listen to our higher education podcast.
Two quick additions/clarifications to this: The definition of full-pays is those students who receive no institutional funds. EM people don’t care where the cash comes from, only the discount. Second, yes, I know some institutions use endowments to pay for institutional aid. That percentage is likely very small, although concentrated at a few institutions.
Before we begin, here is what this post does not do:
Got it? Good.
This will show you the discount rate on first-year students at about 1,000 four-year, private, not-for-profit colleges in 2021-22. Discount as I define it is the total unfunded institutional financial aid divided by the total charged (gross) tuition and fees. A university that charges (published tuition and fees times the number of students) $10,000,000 and awards $4,000,000 in aid has a discount rate of 40%. At most colleges, this discount is simply an accounting transaction, much like a coupon to save a dollar on a sandwich at Subway. That, of course, is a gross over-simplification of the “what” of discounting, and it doesn’t touch the “why” of discounting at all. But if you want an explanation, I’ll gladly talk to your trustees for a reasonable fee.
And there is a difference between discount and net revenue, although at any given tuition charge, the two are perfectly related. Unfortunately, as you’ll soon, see, colleges all set their own tuition. To wit:
As a college, you don’t care where the cash comes from: Pell grants, state grants, loans, or the student’s family. This means, hypothetically, a student with low institutional aid might pay less than one with more aid. Confused? Good.
Here is the data, in three views. The first two are box and whisker plots, where half of the colleges fall inside the gray box on each column to show you the middle 50%.
The first view shows net revenue per freshman student, arrayed by the institution’s Carnegie type. Use the controls to filter region, highlight region, or highlight an individual college. To do the latter, type any part of the name in the box, hit enter, and select from the options. Hover over dots for details; each dot is a college.
The second view is identical, but it shows discount rate, the number people obsess over while missing the more important net revenue figure.
The third view shows those two values arrayed, with the same highlighters, allowing you to filter on Carnegie type, or even the percentage of the students who are full-pay (that is, they get no institutional aid at all.)
You’ll soon see that discount and net revenue don’t seem to be big issues at the big name, strongly endowed institutions. That’s because, at many of these places, undergraduate education is essentially a sideline business, and only a minor source of revenue. The money they bring in (or don’t) on this presumably core function of the university is managed to best optimize to reputation or selectivity, or other factors (including, sometimes, mission).
Note that I’ve done my best to remove some outliers with wild data that throw the charts off. Many of these are colleges I have never heard of, and they’re tiny. Others are places with strong religious missions (like Yeshivas or Seminaries) that may be externally funded in ways this can’t account for.
Enjoy
This is always a popular topic, but the subject is misunderstood. I want to talk about discount rate at private colleges.
For those who always ask, no, I don’t do this for public universities. It may be helpful to compare institutions within a state, but beyond that, state funding models and the mix of resident and nonresident tuition rates make comparisons across borders mostly meaningless. And for the more knowledgeable who might wonder, I assume that all institutional aid is unfunded; that is, it’s not coming in as a revenue stream from an external source to provide funding.
Let’s do an exercise to help you understand discount: Suppose you run an ice cream store, and you have more ice cream than you can sell. You might offer a coupon, let’s say for 50% off a cone.
The cone you normally sell for $4, you now sell for $2. You just take less money for it. There is no one there to hand you two extra dollars to make up for the gap. The Department Store store down the street sells a very similar cone in its food court for $8, but offers a 75% off coupon. They decide to take $2 for the cones they sell in order to be competitive with you.
The Gourmet Ice Cream Shop around the corner sells cones for $12, because they think their ice cream is much better, their store nicer, and their location more convenient to the subway station. On occasion, they will tell the kids at the orphanage they’ll give them a free ice cream cone, but everyone else pays. And finally, Mel’s Fair Deal Ice Cream store sells ice cream cones for $2.50, but never offers coupons.
If everyone uses your coupon, your store has a discount rate of 50%, and your net revenue per cone is $2. But of course, some people will pay $4. If everyone uses the coupon at the Department Store, their net revenue per cone is also $2. But their discount rate is 75%.
The Gourmet Store is more generous with the orphans than people realize; about half of their cones are given away. So their discount rate is also 50%, but their net revenue per cone is $6. And finally, Mel’s Fair Deal Ice Cream has a discount rate of 0% and a net revenue of $2.50 per cone.
It’s important to remember that none of these stores cares where the cash comes from. It could be from the customer’s pocket, from a parent or aunt, government food stamps, or a loan they take out from the government. You count the cash, not the source of the cash.
Now, guess what? Almost all college aid is discount, much like those coupons the ice cream stores hand out. It’s simply the college agreeing to take less cash than its published tuition rate. If tuition is $40,000 and you offer a $20,000 discount or scholarship, you simply take $20,000 to educate the student, and write the rest off as an accounting transaction.
The need for higher discounts in higher education are driven by tuition prices that are too high for most people to pay. Colleges have to discount, or they’re going to have costs associated with making too much ice cream to sell that they can’t pay.
(This is the part where someone will want to comment and extend the analogy ad infinitum: Which ice cream is better? Is one really worth six times more? Why don’t you make more flavors to attract more customers instead of discounting the vanilla to bring people in? Does your cost of ice cream production get lower if you produce a lot more? Can’t you do research and optimization to figure out who should get the coupons when to maximize profit? And if so, couldn’t you lower price a lot and drive the others out of business? Couldn’t you offer the coupon to fewer people and hope more pay full price? Please don’t be that person. I’ll do a workshop for you if the price is right.)
So, to easily calculate discount, in case it’s not clear, take the amount you have to discount and divide by the published price. For a college, the discount rate is total institutional (unfunded) grant aid/total gross tuition. For average net revenue, take total gross revenue, subtract institutional (unfunded) grant aid, and divide that number by the number of students.
For instance, if your sticker tuition is $40,000 and enroll ten students, your total gross tuition is 40,000 x 10, or $400,000. If you award $100,000 in unfunded aid to make that enrollment happen, your discount rate is 100,000/400,000, or 25%. After you take the aid away from tuition, your average net revenue is (400,000 – 100,000)/10, or $30,000 per student. That’s how much cash you have to work with to do things like pay faculty, cut the grass, heat the buildings, and run the administration.
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Now, below, you can dive into college discount rates, net revenue, mixes, and the shape of the industry. This data set is very rich, and I may do another angle on this topic later. But for now:
Discount arrayed (the first view using the tabs across the top) arrays about 950 four-year, traditional, private colleges. I’ve removed lots of religious seminaries, some very small institutions, and, frankly, some suspect data from this for the sake of clarity. This is IPEDS data so it’s reliable, but never perfect.
Each college is a dot, colored by region and sized by freshman enrollment relative to the set displayed. The view shows discount rate on the x-axis, and average net revenue on the y-axis.
You can use the filters at right to limit the set further. You can’t break anything, and you can reset the view using the controls at the bottom. Try this: Use the First-year students filter to look at colleges with at least 2,000 freshmen. Then look at those colleges with fewer than 250. Interesting, no?
The reference lines are the unweighted average of all 950 institutions in the set.
Institutional grant policy shows how many colleges and how many students fall into institutional grant aid categories. Some institutions give aid to 100% of all students. The vast majority give aid to 90% or more.
And finally, the Full-pay and Pell shows two variables: The percentage of students who get no aid (full-pay students) and those who get Pell grants at the institution shown. And remember, it doesn’t matter where the cash from full-pay students comes from: That group includes some students whose parents write a check, and some who might get a Pell and whose parents take out an ill-advised PLUS loan for the cost of attendance.
The point? Discount rate is important for similar institutions in the same region, but as thing unto itself, it’s kind of meaningless. Net revenue is more important, for the most part, but at some institutions where undergraduate education can almost be called a sideline business, even net revenue is not important as it might seem.