Announcing Our Pilot Study: Increase Your Net Tuition Revenue

Fathom is looking for business officers at public and private universities who are interested in increasing net tuition revenue by strategically reducing discount rate.

Discounting Strategies and Private Nonprofit Universities

Universities are investing in the education of their student bodies at record levels. In a 2012 study of 383 private nonprofit universities, the National Association of College and University Business Officers (NACUBO) determined that 87% of all first-time, full time freshmen receive an institutional grant. For the broader undergraduate population in 2012, this same study showed that the average grant covers 47.9% of tuition and fees, up from 46.5% in 2011.

The heavy use of discounting strategies is affecting private nonprofits. In a U.S. Department of Education 2010 financial aid survey , four-year independent higher education institutions awarded 70.3% of all institutional grants provided in the surveyed fiscal year (National Center for Education Statistics, 2010). The heavy use of discounting strategies by these universities allows them to remain competitive by attracting and retaining students who are unable or unwilling to pay the full sticker price. But the discount rate forces universities to take drastic net tuition revenue cuts simply to continue enrolling students.

What is Net Tuition Revenue?

Net tuition revenue is the remaining revenue from tuition and fees paid to colleges and universities – after accounting for institutional grants applied to tuition expenses. Institutional grant dollars include investments in grants, scholarships, and fellowships funded by the university. Your institution can influence the net tuition revenue by adjusting total tuition pricing (i.e. the “sticker price”), and the total level of grant money made available to students (i.e. the “discount rate”).

Understanding Tuition Discount Rate

Tuition discount rate is the total amount of institutional grant dollars expressed as a percentage of gross tuition and fee revenue. For example, if your college has 10,000 students, and charges an average of $20,000 per year in tuition and fees, you can expect a gross tuition of $200 million for a given academic year. If your college is funding $80 million dollars of financial and merit-based aid, we would calculate a 40% tuition discount rate.

The Fathom Pilot Study

As a leading higher education marketing agency, Fathom is looking for a university partner who wants to reduce overall tuition discount rate. The exclusive pilot study would involve statistical analysis of the current student body and predictive modeling of the incoming freshmen class. Fathom will pay all costs of data modeling and third party data used to determine the relative price-sensitivity of the salient groups within the prospective student body.

Your university would agree to test new pricing for a portion of the student body in a controlled study to determine the relative impact of pricing changes against student groups with predicted low price sensitivity. For most major universities, reducing the discount rate by as little as .25% to .5% could tremendously benefit the net tuition revenue.

For details or to express interest in participating in the pilot study, contact Joe Kneale, Director of Integrated Marketing for Fathom EDU.

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About Joe Kneale

A graduate of the Katz School of Business at The University of Pittsburgh and Kent State University. Joe has been with Fathom for over 4 years, beginning with management of paid advertising campaigns, moving on to a role managing enterprise-level digital marketing strategies for technology companies like YouSendIt, leading the email marketing and marketing automation practice of the business, and finally, in his current role, serving the Education business unit as the Director of Integrated Marketing. Joe is dedicated to helping Institutions solve the marketing and revenue opportunities facing Higher Education in the Digital Age.

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