Every college buys its class twice

The first payment is measured, and it is small

An institution that tracks the number can tell you what it spends to recruit one student. Among the continuing and online education units that measure it, enrolling one undergraduate costs $1,505 in marketing spend and enrolling one graduate student costs $3,804, with an average of $157 to generate a single graduate inquiry (UPCEA/Search Influence, 2024).

Most institutions cannot tell you. The enrollment consulting firm RNL asked more than 200 graduate business marketing and recruitment leaders for their cost per enrolled student in 2023. Thirty-two produced a figure. Those 32 averaged $4,825, and the same report carries a consultant estimate of $3,500 to $5,000 for everyone else (RNL, 2023). The two studies also draw the line in different places. RNL's figure includes prorated staff salaries, and the UPCEA figure generally excludes them, so the two describe different budgets and should be read separately.

Even unmeasured, the work is heavy. Law schools processed 12.2 applications for every enrolled first-year student in the 2025 cycle (computed from LSAC volume data). Specialized art and design colleges review 8.6 portfolios and admit 4.0 students for every one who enrolls (computed from IPEDS data across 42 institutions). Medicine runs the longest funnel of all. Its schools handle 45.5 applications per matriculant, the student who actually enrolls (computed from AAMC 2025 data). No one has published a cost per matriculant anywhere in medical education.

Every measured figure for the first payment sits between $1,505 and $4,825 per enrolled student, and the spread reflects program level and what each study counts.

The second payment is set in April

On a Thursday in late April, the director of financial aid at a private college opens an appeal from an admitted student. The family has forwarded a competing award that is $6,000 a year larger and wants an answer before the May 1 deposit deadline. The director pulls the student's file and checks an aid budget that was last reconciled in March. Approving another $5,000 a year takes eleven minutes. What admissions spent to put this application on the director's desk is a number the aid office has never seen.

Decisions like that one add up to the largest acquisition cost in the institution. Private nonprofit colleges expect to give back 57.1% of first-year tuition as institutional grant aid in 2025-26. The share of published tuition returned to students as grants is called the discount rate, and it ran 54.5% in final 2024-25 data after sitting near 48% a decade ago (NACUBO 2025 Tuition Discounting Study, 258 institutions). Nine in ten first-year students receive institutional aid. NACUBO reports that 50.9% of institutional student aid has no dedicated funding source behind it, so the award is tuition the college has agreed never to collect. What remains after aid is called net tuition revenue: $21,300 per first-time student and $24,257 per undergraduate across all class years (NACUBO, 2025).

At a 1,000-student entering class, one point of discount costs about $450,000 a year, and the cost recurs for as long as that class stays enrolled (computed from NACUBO 2025 figures).

The same shape repeats in four sectors

Set the two payments side by side and the same picture appears in every sector, with a different party writing the second check.

At private colleges the institution writes the second check itself, as grant aid: roughly $25,500 per first-time student per year (computed from NACUBO 2025 figures). At public universities the state writes most of it. The vehicle is the appropriation, the annual operating payment a legislature makes to its campuses, and it averaged $12,082 per full-time-equivalent student across all public higher education in fiscal 2025; a full-time-equivalent is the standard count that converts part-time enrollment into full-time units. Students at four-year institutions added $10,505 in net tuition. On the same all-public basis, total education revenue reached $19,443 per student, and fiscal 2025 brought the first per-student decline in appropriations since 2012 (SHEEO State Higher Education Finance report, FY2025).

The state's check increasingly follows performance. Outcome-based formulas now carry 9.0% of appropriations at four-year public institutions and 13.3% at two-year institutions, about $9.5 billion in all (computed from SHEEO's FY2025 performance-funding tables). Tennessee's outcomes formula pays universities as students reach 24, 48 and 72 credit hours, and community colleges at 12, 24 and 36, with a 40 percent premium on outcomes for focus populations (Tennessee Higher Education Commission, outcomes-based funding formula narrative). Because the appropriation renews every year a student stays, one point of first-year retention at a 4,000-student entering class returns about $780,000 in year one and roughly $2.3 million a year once four classes carry it (computed from SHEEO FY2025 figures).

Community colleges run the smallest version, and the proportions flip. Net tuition is $2,668 per full-time-equivalent student and fell 5.0% last year (SHEEO, FY2025). California's funding formula pays a district $1,510 to $2,463 when one student completes transfer-level math and English in the first year (computed from the state's Student Centered Funding Formula), so a single milestone payment approaches a full year of tuition. Most community colleges require no deposit, which means the acquisition loss has no event to mark it: the student applied, was admitted, and never registered.

Law schools show the second payment at full professional scale. Institutional grants reach 80% of full-time law students, with a median award of $24,176 a year (ABA Standard 509 disclosures, AY2024-25). Averaged over every entering student, that is roughly $18,900 of forgone tuition a year and about $57,000 across a three-year degree, against private tuition of $60,352 (computed; tuition from Education Data Initiative, AY2025-26). A study of 36 private law schools measured the sector's discount at 35-39% of gross tuition (NACUBO/AccessLex, 2016).

The two payments never meet in one report

The recruiting budget is an expense line in the operating budget, approved before the year begins and owned by marketing or admissions. Institutional aid is booked as a discount. On the financial statement it is subtracted from gross tuition before net revenue is reported, so most aid never appears as spending anywhere. Half of institutional student aid, 50.9%, has no dedicated funding source behind it (NACUBO, 2025).

Business schools show the gap at its widest. No published MBA discount rate exists. Harvard Business School, which publishes its own aid, disclosed fellowships reaching 43% of MBA students at an average of $47,300 (Harvard Business School annual report, fiscal 2025). Across accredited business schools, applications to master's programs rose 25% while new entrants rose 6%, and MBA yield, the share of admitted students who actually enroll, fell from 58% to 50% between 2020-21 and 2024-25 (AACSB).

The size of the second payment is a pricing choice. For families earning under $30,000, private historically Black colleges and universities and other private colleges land at nearly the same net price. The others discount $27,617 from a higher sticker price; HBCUs award $11,592 and charge less from the start (IPEDS data via the Urban Institute).

Where the second payment is visible, it moves like a market. Law schools report the test scores of their entering classes on the Law School Admission Test, the LSAT, which is scored from 120 to 180. The median entering score rose 1.79 points in a single year, and 28 schools now report medians of 170 or higher, up from 5 a decade ago (ABA Standard 509 disclosures).

The award decision now sets the price of entry

The stakes of each April decision rose this year. Grad PLUS, the federal program that let graduate students borrow up to the full cost of attendance, ended for periods of instruction beginning July 1, 2026. Federal graduate borrowing is now capped at $50,000 a year and $200,000 in total for professional students, with $20,500 a year and $100,000 in total for master's students. A private professional cost of attendance of $83,730 leaves about $33,730 a year beyond federal borrowing (computed; cost of attendance from Education Data Initiative, AY2025-26). The award letter increasingly decides whether the seat can be financed at all.

An enrollment review that stops at marketing spend has examined the smaller payment. The questions that reach the larger one are award questions: which aid dollars changed a decision, which awards were matched against competing offers, and what one point of discount or retention is worth on this campus. One point of discount at a 1,000-student private entering class costs about $450,000 a year. One point of first-year retention at a 4,000-student public cohort returns about $780,000 in year one (both computed).

Methodology

Here is every computed figure in the piece, with its arithmetic.

• 12.2 applications per enrolled law first-year. 523,132 applications divided by 42,817 enrolled first-year students, 2025 admissions cycle (LSAC volume data).
• 8.6 portfolios reviewed and 4.0 admits per enrolled art student. IPEDS applications, admits, and first-year enrollment totals across 42 specialized private nonprofit art and design institutions; applications divided by enrolled equals 8.6, admits divided by enrolled equals 4.0.
• 45.5 applications per medical matriculant. Total applications divided by total matriculants, AAMC 2025 FACTS data.
• About $25,500 of institutional aid per first-time student at private nonprofits. NACUBO 2025 reports $21,300 net tuition per first-time student at a 54.5% final discount rate. Implied gross tuition is $21,300 / (1 - 0.545), about $46,800. Aid equals gross minus net, about $25,500 per year.
• About $450,000 per point of discount at a 1,000-student entering class. One percent of implied gross tuition ($45,000 to $47,000 depending on which NACUBO cohort figure anchors the estimate) times 1,000 students gives $450,000 to $470,000 a year; the piece carries the conservative $450,000. The cost recurs each year the class remains enrolled.
• About $780,000 per point of retention at a 4,000-student public cohort, year one; about $2.3 million at steady state. One percent of 4,000 is 40 students; 40 times $19,443, total education revenue per full-time-equivalent student across all public higher education (SHEEO FY2025), is $777,720, carried as $780,000. At steady state the improvement sits in roughly three post-first-year classes at once: 120 students times $19,443 is about $2.33 million a year, carried as $2.3 million.
• About $18,900 of forgone tuition per entering law student per year, about $57,000 across the degree. 79.15% of the Fall 2025 entering class received institutional grants at an average median award of $23,911 (ABA 509 data); 0.7915 times $23,911 is $18,926, carried as $18,900. Times three years is about $56,800, carried as $57,000. That is roughly 31% of current private law tuition of $60,352 (Education Data Initiative, AY2025-26), consistent with the 35-39% discount measured across 36 private law schools in 2016 (NACUBO/AccessLex).
• $1,510 to $2,463 milestone payment. Computed from the per-outcome rates in California's Student Centered Funding Formula success allocation for completion of transfer-level math and English in the first year; the range reflects the formula's differing rates across student groups. The comparison base is $2,668 net tuition per full-time-equivalent student (SHEEO FY2025); the top of the milestone range is 92% of that figure, described in the text as approaching a full year of tuition.
• $33,730 a year beyond federal borrowing. $83,730 private professional cost of attendance (Education Data Initiative, AY2025-26) minus the $50,000 annual professional borrowing cap.
• The performance-funding total. $3,709,830,078 at two-year institutions plus $5,745,483,529 at four-year institutions is $9,455,313,607, carried as about $9.5 billion (computed from SHEEO's FY2025 performance-funding tables).

Figures carried as published rather than computed here: all NACUBO, SHEEO, UPCEA/Search Influence, RNL, ABA 509, AACSB, AAMC, Urban Institute, Harvard Business School, and Education Data Initiative figures named in the text, each with its source and year at the point of use.