What is the Net Tuition Revenue Number Dilemma? (illustrative example)

At the top of this page, we introduced the Net Tuition Revenue Number (NTRN) Dilemma in brief. Let’s now walk through a simple example that illustrates it more clearly.

The Scenario

Imagine you're a college with:

• A listed tuition of $20,000

• A full cost of attendance of $35,000 (including room, board, and other expenses)

• 10 enrollment slots left to fill

To fill your last ten enrollment slots, you’re deciding whether to enroll:

• Ten students from low-income families, who cannot contribute out-of-pocket but can reasonably provide $15,000 through government grants, loans, and work

• Ten students from high-income families, who can pay the full $35,000 out-of-pocket

Also, consider that each college employee costs $100,000 in total compensation (salary + benefits).

Your options

You’re choosing between three enrollment strategies:

1. Enroll 10 high-income students with no grant aid

• NTR: $200,000

• Calculation: ($20,000 - $0) × 10

2. Enroll 10 low-income students and provide them with $20,000 in grant aid each

• NTR: $0

• Calculation: ($20,000 - $20,000) × 10

3. Enroll 10 low-income students and provide them with $10,000 in grant aid each

• NTR: $100,000

• Calculation: ($20,000 - $10,000) × 10

The Scenario

• Option 1: You can hire two additional employees (or avoid firing two), but you only enroll high-income students.

• Option 2: You enroll low-income students and minimize their debt/work burden, but you lose funding equivalent to two employees.

• Option 3: You still enroll low-income students and only lose funding for one employee, but students must take on more debt or work.

These decisions are often excruciating for college leaders. They must weigh access to education, student debt, staffing, and educational quality—all sensitive and impactful issues to consider.

Beyond the example

While real-world decisions are more complex, the core dilemma remains. Additional factors introduce new layers. Considerations include:

• Application quality: Option #1 would involve need-aware admissions if the students from low-income families submit stronger applications. Options #2 and #3 would contain class-based affirmative action if stronger applications came from high-income families.

• Yield: Students may not enroll unless the college provides them with a certain amount of institutional grant aid. For example, fewer low-income students may enroll in Option #3 than in Option #2. 

• Feedback effects: Reducing NTR to enroll less wealthy students may require a reduction in spending—potentially making the college less attractive to future students, especially to those who pay full tuition.

• Societal support: More external funding (from government or private sources) can ease the dilemma by reducing reliance on student-provided NTR.

A Broader Societal Dilemma

The last consideration leads to a larger question:

How much support should society provide to colleges to reduce their dependence on NTR?

More public or private funding provides opportunities for colleges to:

• Focus less on students’ economic backgrounds during recruitment and admissions

• Set a lower listed tuition level or provide more generous institutional grant aid

• Improve the quality of their educational offerings

But society must also balance this against other priorities—like healthcare access. In short: dilemmas abound.