NBOA’s Tuition Discounting Report analyzes national trends in tuition discounting rates; types of tuition discounting; students receiving discounts; funding need-based financial aid and merit aid, as well as trends in enrollment, tuition and fees and discounting.

The report also includes formulas to help schools calculate their overall tuition discount rate and discount rates by division, and a benchmarking worksheet that includes strategic discussion questions. The fully updated report is based on financial data from 439 member schools in NBOA’s Business Intelligence for Independent Schools (BIIS) data reporting platform.

Executive Summary

Tuition discounting, including need-based financial aid, merit aid/scholarships and tuition remission for employee children, is an important element of independent schools’ business models. Even though many independent schools do not charge in tuition what it costs to educate their students and manage their facilities, the continued rising price of an independent school education is a barrier to many families interested in our missions. Tuition discounting makes an independent school education more affordable for families from a variety of socioeconomic backgrounds. At the same time, not collecting the full tuition price could negatively affect schools’ financial health. Mission-aligned tuition discounting is important but should not come at the cost of financial sustainability.

The purpose of this report is to help business officers, heads of school, boards of trustees and other independent school leaders understand key trends in tuition discounting. The analysis is based on tuition discounting data from 439 schools for 2020–21, 2021–22 and 2022–23 in Business Intelligence for Independent Schools (BIIS), NBOA’s signature data reporting platform. Examining the trends in tuition discounting for a consistent set of schools allows for a clearer picture of the changes in key indicators over time.

To understand the changes in the data during this three-year time frame, it is important to keep in mind the following factors. These years were notable for being a time of change, particularly in the areas described below, which may have impacted the trends in tuition discounting explored in this report.

• The years covered in this study were the peak COVID-19 pandemic years, bringing much uncertainty to independent schools’ finances and operations. Many school leaders were concerned about how schools would meet the financial needs of families possibly requesting more need-based financial aid while contending with their own financial pressures, including increased costs and rising inflation. In fact, a spring 2020 survey conducted by NBOA revealed that most schools, more than 80%, projected increases in both their financial aid budgets and the number of students receiving financial aid in the coming years — the years included in this study. These fears were not realized, as the percentage of tuition discounting dedicated to need-based financial aid decreased from 2020–21 to 2022–23. 

• Economic turmoil affected schools’ endowment investment returns, often a source of funding for need-based financial aid and merit aid/ scholarships. The Commonfund Study of Independent Schools, conducted by the Commonfund Institute in partnership with NBOA, illustrated the whiplash-like effects of the market on schools’ endowments with a 25.8% average annual total net return in fiscal year 2021, a –11.3% average return in 2022 and a 9.2% return in 2023. 

• The vast majority of schools in this study used a third-party financial aid service to determine the amount of need-based financial aid awarded to a student (92% of schools in 2020–21 rising to 94% in 2022–23). These service providers collect, compile and check families’ financial information and documentation, and calculate a recommended financial aid award. Schools use this information to make final financial aid determinations. During the three-year period examined in this study, 27% of schools changed the service used. Changing the service provider could alter the factors schools considered or calculations they used to determine need-based financial aid awards, possibly affecting the trend in the tuition discounting rate calculated for this report. 

• The peak pandemic years brought about changes in how and where employees work, including work from home opportunities and schedule flexibility. These changing workplace expectations have not yet taken hold in independent schools, where for many roles, consistent daily schedules and in-person interactions are critical to meeting many schools’ missions. As employers, independent schools reported struggling in recent years to attract and retain high quality employees, including faculty and support staff, who are looking to enjoy new workplace freedoms not available in independent schools. 

The analysis conducted for this report cannot decisively determine which of the above developments, if any, led to the changes observed in schools’ tuition discounting data. Nonetheless, these trends provide valuable information to the independent school community on an important facet of many schools’ financial model. Even more importantly, schools should track their own school’s tuition discounting trends and the effects on the school’s financial health and sustainability. School leaders can use the tuition discounting worksheet at the end of this report to record the school’s values for key indicators, benchmark against industry trends and initiate conversations about what this information reveals about tuition discounting at their school.

Credit: NBOA's Tuition Discounting Report (2024)