A new (and larger) Chetty study on elite college admissions is released today

Parents Forum
731

I think there’re at least several reasons:

  1. The schools in the Ivy League enjoy a tremendous boost in prestigue just for being in the “League”. Adopting a rule that works against another member in the “League” wouldn’t be received very well and likely detrimental to the cachet of the “League”.

  2. The schools can use EDs (instead of REA/SCEA) and their associated admission boost to help them attract some of those students. EDs aren’t seen as affronts and are more compatible with REA/SCEA. Also, those students who are admitted REA/SCEA are only likely to apply RD to other REA/SCEA schools.

  3. With less resource per student than some of its peers in the Ivy League, Cornell decided in favor of being need-blind while meeting “full” need over offering merit scholarships (WUSTL, for example, only became need-blind very recently after much criticism).

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732

This. As I posted upstream, the default among the eastern colleges is need-based aid and it’s very hard to go against the grain of 26 out of 39 prestigious institutions all of which to some extent are happy to cede the “pole position” to Harvard:
https://web.mit.edu/cofhe/

733

…while leaving it to MIT to host their website :rofl:

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734

And now, let’s move on from Harvard’s endowment please.

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735

I’ll speak up in favor of WUSTL over Harvard.

Our youngest ED’d to WUSTL (accepted and matriculating there in a few weeks).

We toured Harvard and MIT, last fall. Ultimately, she decided that WUSTL was her #1 choice, and even if she had RD’d and gotten into all 3, she preferred WUSTL. Maybe not the same as the Parchment preferences, because she didn’t actually apply to MIT or Harvard, but nonetheless. And yes, she had a very good shot, not sure how confident anyone unhooked can be, but very good.

Why WUSTL?

Well, we’re in St. Louis, and her big sis went to WUSTL and liked it. WUSTL has a very pretty campus, better weather than Cambridge. Distance is obviously a big factor. MIT did not impress us much (felt a bit industrial), and Harvard even less (Engineers segregated from main campus, almost a mile away. Harvard student tour guide seemed depressive and unhappy, and basically said as much.)

So yeah, not every kid who COULD go to Harvard (or MIT) chooses it, even over a non-Ivy+ like Wustl.

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736

Another plus for WUSTL: It has far better food than Harvard. Of all the colleges we toured, only Duke had better food than WUSTL.

Also a minor clarification. While Harvard’s new engineering complex is about a mile away from Harvard Yard, engineering students live in the same dorms as all other Harvard students.

ETA: Buses run constantly, so students don’t have to walk the entire distance.

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737

I had seen something around the time older D was hunting colleges saying Wustl had the best college food in the nation. Ironically, older D mostly complained about the food there. Part of the problem is that while the main dining hall (the DUC) has a lot of different stations making food, the tastier options have long lines.

FWIW, our vote for “best food” (among the handful we were able to try) was Michigan.

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738

Long walk to classes then, and still the physical separation matters, IMO. (We might have had better information, but were unable to tour the Engineering campus and/or it wasn’t on the standard tour that day - although we were running a tight schedule so perhaps it COULD have been possible).

Another objection to Harvard - the (main) campus felt a little bit like a zoo, with so many tourists milling about. Would have been strange I think to be a student there.

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739

Tourists tend to ask students to be in photos and videos. On the way to class.

740

That separation definitely mattered to my kid and was the reason Harvard was struck from his list.

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741

So here is a quick background in standard cartel logic.

When members of a cartel agree not to compete against each other in certain ways, this most obviously benefits the more dominant members of the cartel, because now they don’t have to worry as much about challenges for customers from the less dominant members of the cartel. So why would the less dominant members of the cartel agree to that?

One common reason is that the less dominant members of the cartel then also do not have to worry about competing for customers with the OTHER less dominant members of the cartel. And by not having to devote resources to such competition with the other members of the cartel, they may all collectively benefit.

But the losers when cartels do this sort of thing are typically the customers, meaning they have lost some of the benefits they would have received if the cartel members had been competing freely for them. In the language of modern competition law analysis, the collective benefit to the cartel members has been funded out of a reduction in what is called consumer surplus, the net benefit that consumers as a group receive when producers are competing without such restraints.

OK, so hypothetically, why might the less dominant members of a college cartel agree to not compete in giving out merit scholarships, if merit scholarships might help them challenge the more dominant members of the cartel when it came to certain prospective students? Well, conceivably they might do that so they would not have to worry about competing against each other in that way.

And typically the losers in such a situation would be the prospective students who would have received merit scholarship offers, if not for this anti-competitive agreement.

Is this what is going on with the Ivy League and merit scholarships? I don’t know, but the data we looked at is consistent with such a theory.

742

So just to continue with a little bit more standard competition law analysis:

One of the standard defenses to an accusation of anti-competitive cartel behavior is that the similar actions in question were not the result of an agreement, they were the result instead of something called conscious parallelism. As the name implies, conscious parallelism involves competing companies observing each other and adopting similar practices, but without any agreement to do so.

Determining whether parallel behavior was the result of an agreement or just conscious parallelism can be extremely difficult, not least because competitors typically have very powerful incentives to try to hide agreements (like, they may be illegal, and are usually at least very bad for PR). One approach, though, is to see if there are identifiable cases of where it appears individual competitors are acting against their unilateral interests. Another is to look for opportunities for collusion, such as regular meetings of competitors (even if they are nominally for other purposes). And so on.

OK, so in that context, you note that many competing private colleges do not offer merit scholarships. However, some do. So, it is not a universal norm, and therefore it at least cannot be assumed that offering merit scholarships is necessarily always against a college’s unilateral self-interest.

And then as I noted above, although some of these private colleges offer merit scholarships and some don’t, none of the Ivy League do. At least at first blush, this seems like a pretty odd fact. Like, you were suggesting the frequency is .333–which we should actually adjust by taking out the Ivy League since they are the subject of this analysis and therefore should not be part of the “control” group. And that would make it .42 in the control group.

If there were independent chances of any given Ivy League college offering merit scholarships at a .333 frequency, then the odds that none of them would is about 4%. At .42, it drops to about 1.3%. Hmmm.

What this suggests is that something about being in the Ivy League specifically is making it much less likely that a private college will offer merit scholarships. Indeed, this evidence is at least consistent with the odds of such a college doing so being a flat zero.

Now, this is not an absolute proof that the Ivy League is operating as a cartel and has adopted this as one of the cartel’s rules. Nonetheless, that is one possible explanation for why over 40% of the non-Ivy colleges in your sample offer merit scholarships, and yet none of the Ivies do.

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743

A bunch of elite privates have been sued for just discussing criteria for need-based financial aid. Any discussion, let alone actions, on merit scholarships would surely be in violation of antitrust laws. These colleges are smart enough not to take such obvious risks. I think they’re all acting in their self-interest (including their interest in the Ivy League, if they are in that League).

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744

The history of no merit aid at the Ivies and some Ivy+ schools is a long one, starting with the overlap group in the 1950s where a bunch of schools agreed to share and set common financial aid policies. These schools wanted to avoid bidding wars for students. They also believe all the students admitted are meritorious, and it would take time and resources to decide who receives merit (and based on what factors). Getting accepted to these schools was the merit award.

Fast forward to 1990, the DOJ sued the Ivy League and MIT for collusion in FA. The Ivy League settled that case, which included the agreement they could not as a group decide to offer merit or not. MIT didn’t settle and ultimately prevailed.

In 1994, the Ivy League advocated to some senators to have congress create Section 568 (in the 1994 Improving Schools Act) to let the Ivies only offer need based aid and have a ‘consensus methodology’ for FA. This was called the 568 President’s Group, it even had its own website, which is now down. Congress renewed it several times until they let it expire in 2022 because an antitrust lawsuit (plaintiffs are Ivy alumni) had been filed challenging that these (17) schools were colluding and in fact weren’t need blind for all. (Mwfan: duh. Most of these schools had always been need aware for internationals and tend to be need aware wrt recruited athletes, transfers, and donor kids. Waitlists are also need aware but that exception was carved out in section 568).

This lawsuit continues today, by the end of the 568 group, Harvard and Princeton were the only Ivies not in it. UChicago has settled in that lawsuit, not sure the status of the rest.

Ironically (on this thread at least) the lawsuit that may have legs which could require the Ivies to offer merit aid, in the form of athletic scholarships, is one brought by some athletes who say not offering scholarships for D1 athletes is price-fixing.

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745

I think the lesson here is that the more you confine your analysis to eight colleges that play football with each other, the more you’re apt to see a “cartel” under every Harvard mattress. As @Mwfan1921 points out in his response, there are confounding geographic and historical factors that explain why highly selective, private colleges located roughly along the I-95 corridor (or whatever its equivalent was in 1955) have tended to stay in lock-step with each other in terms of tuition, financial aid, athletic recruiting, and faculty hiring.

746

I’d suggest a different conclusion from that (partial) summary of the Ivy League’s run-ins with the DOJ’s Antitrust Division and private antitrust plaintiffs. But in any event, I think I have explained my original comment in response to marlowe1’s request for such an explanation, and trying to further litigate the issue is going well outside the topic of this thread.

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747

As always, @NiceUnparticularMan , that’s a rational and highly explanatory account of the phenomenon. And @Mwfan1921 , thanks for that account of the litigation history and status.

This practice of not offering merit scholarships may take a few bucks out of the pockets of a few stellar candidates - I suppose they’re the ones claiming to have been injured in the law suit - but it’s hard for me to be terribly sympathetic to their plight. They have already benefitted along with all their fellow students to the extent that the needs-based scholarship regimes of these schools permitted and as applied democratically across the board. And of course they have benefitted doubly in having been accepted into one of a handful of elite schools. That in itself would have a tremendous present value expressed in monetary terms. Are they disadvantaged because they can’t get the other schools in a bidding war for them? I suppose so, but I would award each of them a peppercorn in damages and shed not a tear. I would wonder also whether these superstar candidates wouldn’t generally come from wealthier demographics and stand in no need of a financial boost at this stage of their young lives; most will have had it much earlier and will have it again in their adult lives.

I also have to ask myself what kind of kid thinks so little of a school as to turf it for a few thousand bucks thrown their way by another school. I can’t believe that many kids or their parents actually do this - that is, unless they truly feel there’s no difference between the schools in question or the merit money is really significant and the need, not otherwise satisfied by the needs-based FA, also significant. Perhaps in a few rare cases these things come together. But as a general policy this rewarding of prima donnas is bad. The kids will discover this some day in their philosophy courses.

748

I didn’t realize you were litigating an issue. I thought you were asking a question.

749

I gotta disagree with you on this.

As much as the Ivies would like to say that all admitted students are equally meritorious, nobody actually believes that’s true. Now, I am not saying those colleges need to change their policy. As far as I can tell, their policies are legal, and applicants can take it or leave it.

On the other hand, given that admitted students do have widely differing levels of desirability as far as colleges are concerned, there is nothing wrong at all with the strongest students wanting to monetize their desirability.

Vanderbilt is still picking off students that would be headed to a HYPSM by offering free tuition to 200+ of its strongest applicants. Duke does even better, but only for a handful of students. We are talking values of between $200k to $300k for a full pay family. I would question a family’s financial planning if it hadn’t at least considered those options.

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750

Given the results of the study in question wrt the 1% and .1% being relatively overrepresented at these schools, I’m reminded of a Modest Proposal (actually two) I’ve long pondered about these places. And yes, in the Jonathan Swiftian framework of Modest Proposals:

  1. Raise tuition at the most highly rejective schools to $250,000/year. Some (maybe even many) families which are already full pay could pay this. Certainly they can pay more than $80-90k. Any amount they cannot pay up to $250k/year is just an accounting adjustment right? IOW all this incremental tuition $ is pure gravy for schools.
  1. Auction off 1% of seats in each class to the highest bidders (with an SAT score above some threshold). I am convinced that there are scads of families around the world who could and would pay 7-8 figures/year for their kids to attend HYPSM or the like. It’s already essentially transactional. Let’s make it explicit.

If you told me that Harvard could generate an additional $100 million/year - or more - in this manner, I would believe it. Use 100% of these funds, in particular #2, strictly for FA. In terms of Harvard’s total operating budget that’s a drop in the bucket, but, it’s a +/- 20% bump to FA as compared to what’s thrown off by the endowment for same.

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