Student Acquisition Cost in 2025

Summary

• Key Stat: Student acquisition costs now average nearly $2,800 per student for U.S. private universities—almost six times more than public institutions—as a demographic cliff intensifies competition.

• Key Learning: Traditional recruitment is failing because today's students expect instant responses; 78% of students enroll with the first institution that responds, and delays cause massive lead drop-off.

• Key Action: To lower costs, universities must adopt a "speed-to-lead" strategy and systematically reactivate the thousands of dormant leads already sitting in their CRM.

• Solution: AI platforms like Havana automate instant, 24/7 outreach via call, text, and email to engage every new lead and revive old ones, significantly lowering acquisition costs.

Introduction: The High-Stakes Race for Enrollment in 2025

Student recruitment has evolved into an expensive, data-intensive, and highly competitive endeavor. As we head into 2025, university marketers and enrollment leaders face mounting pressure to meet enrollment targets while controlling spiraling costs.

At the heart of this challenge lies a critical metric: Student Acquisition Cost (SAC) – the total marketing and admissions expenditure required to enroll one new student. This key performance indicator has become the focal point for university CFOs and enrollment managers as they navigate a recruitment landscape marked by demographic shifts, increased competition, and evolving student expectations.

This comprehensive report, brought to you by Havana, provides an in-depth analysis of student acquisition costs in 2025. We'll examine authoritative benchmarks from the U.S. and key international markets, explore the headwinds making recruitment more difficult, and uncover the technology-driven solutions that offer a path to greater efficiency and return on investment.

As pioneers in AI-powered student communication, Havana understands the critical importance of speed, personalization, and efficiency in recruitment. Our AI platform helps institutions reduce their acquisition costs by reactivating dormant leads and ensuring every new inquiry is engaged instantly through calls, texts, and emails. This report equips you with the data and strategies needed to navigate the challenges ahead and optimize your enrollment funnel.

The Cost of a Student in 2025: A Benchmark Analysis

The U.S. Landscape: A Deep Dive into the Numbers

The cost of acquiring students in higher education has reached unprecedented levels. To fully appreciate the financial investment required, let's break down the recruitment funnel from initial inquiry to enrolled student:

The Price of a Lead: At the top of the funnel, institutions are spending approximately $140 on digital advertising to generate a single prospective student inquiry (Search Influence, 2025). This represents just the initial cost of getting a potential student into your funnel – with no guarantee of conversion.

The Cost of an Enrolled Student: The true cost per enrollment is substantially higher. For professional, online, and continuing education programs, the average marketing and admissions expenditure reaches $2,849 per new student (Search Influence, 2025).

The costs vary significantly by program level:

• Graduate students: $3,804 on average, with some estimates placing costs between $3,500-$5,000 per student (Inside Higher Ed, 2024)

• Undergraduate students: $1,505 on average

• Non-degree/certificate programs: $599 per student

The Public vs. Private Institution Gap: One of the most striking disparities in student acquisition costs exists between public and private institutions:

• Four-year private institutions spend an average of $2,795 to recruit a single undergraduate (Ruffalo Noel Levitz, 2022)

• Public institutions spend only around $494 per student on average

This means private colleges are investing 5 to 6 times more per new student than their public counterparts. Moreover, recruitment costs for private institutions have jumped by 32% since 2020, compared to just a 5% increase for public institutions (Ruffalo Noel Levitz, 2022).

Marketing Budgets and Staffing Intensity:

The financial commitment to student recruitment extends beyond the per-student costs. Institutions are allocating considerable resources to their marketing operations:

• Universities spend an average of $800,970 annually on digital advertising alone, which represents approximately 3.6% of total institutional revenue (Search Influence, 2025)

• Private institutions operate with more intensive staffing models, enrolling about 73 new undergraduates per admissions staff member, versus 216 students per staffer at public universities (Ruffalo Noel Levitz, 2022)

A Crisis of Confidence: Despite these substantial investments, results often fall short of expectations. Surveys reveal that fewer than 40% of higher ed marketers are satisfied with their cost-per-inquiry performance, and only 47% are satisfied with overall campaign outcomes (Search Influence, 2025). This widespread dissatisfaction signals a clear need for greater efficiency in recruitment spending.

A Global Perspective: International Recruitment Costs & Pressures

The UK's Marketing "Arms Race"

The United Kingdom's higher education sector, particularly in England, has witnessed a surge in marketing expenditures as institutions compete in a market-driven system:

• Mid-ranked and lower-ranked universities have entered an expensive "arms race" for students following the introduction of £9,250 tuition fees and the lifting of enrollment caps (The Guardian, 2019)

• The University of Bedfordshire spent £1.08 million on marketing, which equated to roughly £432 per undergraduate enrolled (The Guardian, 2019)

• Anglia Ruskin University invested approximately £1.19 million on undergraduate marketing, including £515,000 on search engine advertising and £352,000 on social media (The Guardian, 2019)

By contrast, elite universities with established global reputations spend far less. The University of Cambridge reported £0 on paid advertising, relying instead on its brand reputation and traditional outreach activities (The Guardian, 2019).

The UK sector is also facing significant international recruitment challenges:

• Nearly 80% of UK universities failed to meet their international student recruitment targets for fall 2024 (The PIE News, 2025)

• International first-year enrollments dropped by 12.8% year-on-year in 2024, following another 6.7% decline the previous year (The PIE News, 2025)

• Recent policy changes, such as the ban on dependent family visas for taught master's students, contributed to a 14% drop in international student visa applications (The PIE News, 2025)

Canada's International Dependency Meets New Limits

Canada's higher education institutions have become highly reliant on international students, who now make up a substantial portion of their enrollment:

• The country hosts approximately 840,000 international students, comprising a remarkable 39% of all postsecondary enrollments (Inside Higher Ed, 2025)

• By comparison, international students represent only about 6% of U.S. college enrollments (Inside Higher Ed, 2025)

• Perhaps most strikingly, 100% of the growth in Canadian universities' operating budgets since 2010 has come from international student fee revenues, which have soared by an astonishing 554% (World Education News & Reviews, 2024)

However, this heavy reliance on international enrollment is now facing significant policy headwinds:

• In 2024, the Canadian government set a cap of roughly 360,000 study permits for postsecondary students, representing a 35% reduction from 2023 levels (Association of Governing Boards, 2024)

• Some provinces will see their international student intake quotas slashed by up to 50% under this new policy (Association of Governing Boards, 2024)

These restrictions fundamentally alter the recruitment landscape for Canadian institutions that have grown dependent on international student revenue.

Australia's Margin Squeeze from Agents and Discounts

Australian universities have developed a high-cost recruitment model for international students that is now threatening their financial sustainability:

• Agent commissions often reach 20-25% of first-year tuition (The PIE News, 2024)

• Many institutions also offer tuition "scholarships" or discounts of up to 25% (Times Higher Education, 2024)

• When combined, these acquisition costs can consume 40-50% of first-year tuition, leaving universities with as little as A$17,500 of a A$30,000 tuition fee in the first year (Times Higher Education, 2024)

As Nous Group's global head of higher education noted, when acquisition costs reach 50% of fees, universities are "probably only just breaking even" on that student, especially in high-cost programs like engineering or health sciences (Times Higher Education, 2024).

Perhaps most concerning is the operational inefficiency in Australia's international recruitment:

• A shocking 50% of international student inquiries to Australian universities go unanswered (Times Higher Education, 2024)

• Slow response times not only cost enrollments but can double the in-house processing cost per application due to prolonged labor and lower yield rates (Times Higher Education, 2024)

Navigating the Storm: Key Headwinds Driving Up Acquisition Costs

To understand why student acquisition costs continue to rise, we must examine the major headwinds facing higher education marketers in 2025:

The Demographic "Enrollment Cliff"

One of the most significant challenges is the shrinking pool of traditional college-age students:

• U.S. higher education enrollment has already fallen by 15% (2.7 million students) from 2010 to 2021 (Georgetown University, 2024)

• Fall 2025 marks the beginning of the widely anticipated "demographic cliff," which will accelerate enrollment declines and likely hasten college closures (Georgetown University, 2024)

• By the mid-2030s, there may be approximately 15% fewer 18-year-olds in the U.S. than there are today (Georgetown University, 2024)

• In the first half of 2024 alone, more than one college per week announced plans to close in the U.S. (Georgetown University, 2024)

Intensifying Competition and Saturation

As the pool of potential students shrinks, competition among institutions has become increasingly fierce:

• Recruitment has evolved into a zero-sum game in many regions – one university's gain is another's loss when the overall number of students isn't growing

• In England, the removal of enrollment caps led universities to aggressively target students who historically would have attended less selective institutions (The Guardian, 2019)

• Marketing spend has escalated, with UK universities increasing their spending on marketing by nearly 22.4% in a single year following the introduction of higher tuition fees (Improving the Student Experience, 2012)

• Prospective students are bombarded with marketing messages, making it increasingly difficult and expensive to cut through the noise – contributing to why only 38% of marketers are satisfied with their cost-per-inquiry results (Search Influence, 2025)

The Expectation Economy: Meeting Gen Z's Demand for Instant Gratification

Today's prospective students, primarily Gen Z, have fundamentally different expectations for their college search process:

• They demand immediate, consumer-grade experiences when interacting with institutions

• Over 90% of graduate students start their search on Google and engage primarily through digital channels (Inside Higher Ed, 2024)

• Research indicates they are highly likely to enroll at the institution that responds to them first (Inside Higher Ed, 2024)

• Failure to meet these expectations directly lowers conversion rates and inflates the effective cost per acquisition

Economic and Perception Challenges

External economic factors and changing public perceptions about higher education value also contribute to rising acquisition costs:

• Growing skepticism about the ROI of a college degree, fueled by rising tuition and student debt, has made recruitment harder (Georgetown University, 2024)

• Universities must work harder—and spend more on marketing and financial aid—to persuade a more hesitant audience

• High tuition discount rates at many private colleges (often exceeding 50% off sticker price) reflect this challenge but further strain institutional finances

Rising Internal Recruitment Costs

The internal cost structure of recruitment operations continues to increase:

• Digital advertising costs have risen due to increased competition, with high-intent keywords for education often costing several dollars per click

• Staff salaries in admissions and marketing have increased, and turnover remains high following the "Great Resignation"

• Many institutions report they are "spending more to stand still" in terms of enrollment outcomes

The Path to Efficiency: Leveraging Technology as a Tailwind

Despite these headwinds, innovative technologies and strategies offer promising solutions to reduce student acquisition costs and improve recruitment efficiency:

AI and Automation: Your 24/7 Recruitment Team

Artificial intelligence and automation tools are transforming how institutions engage with prospective students:

• Georgia State University used an AI chatbot to achieve a 22% reduction in "summer melt" in the first semester, which later improved to 30% – translating into hundreds more students enrolling each year (EdTech Magazine, 2020)

• The University of Oklahoma's "SoonerBot" chatbot was credited with helping secure the largest freshman class in the school's history (EdTech Magazine, 2020)

• Approximately 40% of millennials already interact with chatbots on a daily basis, making them a familiar and comfortable communication channel for prospective students (EdTech Magazine, 2020)

• AI-driven solutions like Havana take this a step further by enabling automated communications across multiple channels – calling, texting, and emailing students to qualify leads and answer questions at scale

The "Speed-to-Lead" Imperative: Winning the First-Responder Advantage

The speed of response to inquiries has emerged as a critical factor in conversion rates:

• Businesses are 7 times more likely to qualify a lead if they follow up within an hour of initial contact (Ellison Ellery, 2023)

• After just 5 minutes of delay, the odds of successfully connecting with a lead drop by 80% (Ellison Ellery, 2023)

• A remarkable 78% of consumers choose to buy (or enroll) with the first organization that responds to them (Ellison Ellery, 2023)

AI platforms like Havana solve this challenge by automating instant, persistent follow-up via call, text, and email at any time of day, ensuring the institution is always the first to respond. This directly lowers acquisition costs by converting more of the leads you've already paid for.

Reactivating Your Goldmine: Nurturing Dormant Leads for High-ROI Enrollments

One of the most cost-effective strategies is maximizing the value of leads already in your database:

• Institutions spend between $30 to $150 to acquire a single inquiry – a sunk cost if the lead goes cold (Havana, 2025)

• For example, one ed-tech firm used AI to re-engage stopped-out students, helping over 8,000 former students re-enroll across 30 universities and recouping $25 million in tuition revenue (EdTech Magazine, 2020)

• As one admissions director lamented, "We're expected to magically increase enrollment while dealing with a shrinking applicant pool" – making lead reactivation an essential strategy (Havana, 2025)

• AI solutions like Havana can systematically work through thousands of old leads, using personalized text, email, and call campaigns to identify those ready to re-engage, turning a "silent goldmine" into new enrollments (Havana, 2025)

Precision and Personalization at Scale

Data analytics and personalization capabilities allow for smarter resource allocation and more effective communications:

• Taylor University used predictive analytics to become more efficient with recruiting expenses and staff time, resulting in two of their largest incoming classes ever (EdTech Magazine, 2020)

• The Vice President for Enrollment Management at Taylor noted that predictive analytics helped "improve our business processes, making us more efficient with our recruiting expenses and personnel time" (EdTech Magazine, 2020)

• Multi-channel outreach, particularly SMS, has proven highly effective – with text messages achieving a ~98% open rate compared to much lower rates for email (Havana, 2025)

• AI can personalize this outreach at scale, ensuring the right message reaches the right student on the right channel at the right time

Efficiency Tools for Admissions Processing

On the operations side, universities are adopting tools that streamline application processing and other administrative tasks:

• Robotic process automation (RPA) and optical character recognition (OCR) can dramatically accelerate the handling of transcripts, test scores, and applicant data entry (EdTech Magazine, 2020)

• Virtual event platforms for open houses and tours extend reach to more prospects without the travel costs of physical events

• These efficiency gains allow the same staff to handle more applicants, directly improving the cost per enrolled student

Conclusion: Bending the Cost Curve in 2025 and Beyond

The data is clear: student acquisition costs have reached unprecedented levels, with institutions spending thousands of dollars per enrolled student. Private colleges, in particular, face an acute challenge, spending nearly six times more per student than their public counterparts (Ruffalo Noel Levitz, 2022). These costs are driven by fierce headwinds, including the demographic cliff (Georgetown University, 2024), intense competition, and changing student expectations.

The old playbook of simply spending more is yielding diminishing returns, as evidenced by widespread marketer dissatisfaction with their recruitment outcomes (Search Influence, 2025). The future of sustainable enrollment growth lies not in bigger budgets, but in smarter, technology-enabled strategy.

The tailwinds of AI-driven automation, a "speed-to-lead" philosophy, and systematic lead reactivation offer a clear path to reducing student acquisition costs while improving enrollment outcomes. The data shows that:

1. Responding quickly matters – 78% of prospects choose the institution that responds first (Ellison Ellery, 2023)

2. Every lead is valuable – with costs of $30-150 per inquiry, reactivating dormant leads delivers high ROI (Havana, 2025)

3. AI tools reduce melt – Georgia State's 22-30% reduction in summer melt through AI chatbots translates to hundreds of additional enrollments (EdTech Magazine, 2020)

4. Predictive analytics improve efficiency – institutions like Taylor University achieved record classes while becoming more efficient with resources (EdTech Magazine, 2020)

5. Re-engaging former students works – one AI platform helped recoup $25 million in tuition by re-enrolling 8,000 stopped-out students (EdTech Magazine, 2020)

The ROI on these technologies can be substantial. For example, one analysis estimated that an AI implementation in higher education could deliver a return of over 4,000% (40x) in terms of tuition gained versus cost spent industry report, 2023.

For university leaders and marketers facing intense pressure to meet enrollment goals with constrained budgets, the message is clear: embrace innovation. By adopting AI and automation, institutions can ensure every lead is maximized, staff time is optimized, and enrollment goals are met more efficiently.

At Havana, we are committed to helping our university partners thrive in this challenging landscape. By leveraging the power of AI to call, text, and email students, qualify them, answer their questions, and schedule follow-up appointments, we help institutions reduce their acquisition costs while improving enrollment outcomes. Our platform reactivates leads already in your database and ensures inquiries are followed up quickly, addressing two of the most critical factors in cost-effective student recruitment.

The data shows that institutions that innovate in their recruitment approach will be the ones that succeed in the years ahead. As the demographic cliff looms and competition intensifies, the ability to bend the cost curve through technology and strategy will be the difference between institutions that thrive and those that struggle to survive.

Frequently Asked Questions

What is Student Acquisition Cost (SAC) and why is it important?

Student Acquisition Cost (SAC) is the total marketing and admissions expenditure a university invests to enroll one new student. It is a critical Key Performance Indicator (KPI) because it measures the efficiency of a university's recruitment efforts. With rising competition and demographic challenges, understanding and controlling SAC is essential for financial sustainability and meeting enrollment targets.

How much does it cost to recruit a student in 2025?

The cost to recruit a student in 2025 varies significantly, with an average of $2,849 for professional and online programs in the U.S. Costs differ by institution type and program level. For instance, four-year private institutions in the U.S. spend around $2,795 per undergraduate, while public institutions spend about $494. Graduate student acquisition can be even higher, averaging $3,804.

Why are student recruitment costs rising so dramatically?

Student recruitment costs are rising due to a combination of shrinking student pools, intense competition, and higher student expectations. Key factors include the "demographic cliff" (fewer traditional college-age students), a "zero-sum game" where universities compete for the same applicants, and the Gen Z demand for instant, personalized communication. These headwinds force institutions to spend more to achieve the same enrollment results.

How can universities reduce their Student Acquisition Cost?

Universities can reduce their Student Acquisition Cost by leveraging technology like AI and automation to improve efficiency and conversion rates. Key strategies include implementing a "speed-to-lead" approach to respond to inquiries instantly, reactivating dormant leads already in the database, and using predictive analytics to personalize outreach. These tactics help convert more existing leads, which is more cost-effective than generating new ones.

What role does AI play in modern student recruitment?

AI plays a crucial role by automating communication and personalizing engagement with prospective students at scale, 24/7. AI-powered tools like chatbots and communication platforms can instantly call, text, and email inquiries, answer common questions, qualify leads, and schedule appointments. This not only improves the student experience but also frees up admissions staff to focus on high-value interactions, reduces "summer melt," and lowers overall acquisition costs.

Why is speed-to-lead so critical in higher education?

Speed-to-lead is critical because research shows that the first institution to respond to a prospective student's inquiry is overwhelmingly the one they are most likely to enroll with. The odds of connecting with a lead drop by 80% after just five minutes. With 78% of prospective students choosing the first responder, instant follow-up is no longer a luxury but a necessity for maximizing conversion rates and achieving a better return on marketing investment.

This report was produced by Havana (tryhavana.com), an AI platform that calls, texts, and emails students, qualifies them, answers questions, and schedules follow-up appointments. Schools use Havana to reduce their cost of acquisition by reactivating leads in their database and ensuring enquiries are followed up quickly.