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Isn't this year's graduating class the biggest ever with smaller classes behind?
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<p>Correct. </p>
<p>The shrinking pool of high school graduates is both regional (midwest, northeast, and mid atlantic shrinking) and ethnic (white strinking, Latino/a growing). So, different colleges will feel different levels of impact. </p>
<p>The colleges that have relied on high tuition paying white customers from the northeast, mid atlantic, and midwest will feel the most pressure. Those who have a national recruiting base and who have done the decades of work to offer a product with some appeal to affluent minority applicants will tend to be better off.</p>
<p>The push for diversity hasn't been purely altruistic. Colleges have been pondering the implications of changing demographics for a long time. For example, if a college has no appeal to Latino/a and Asian American students, it is going to find enrollment increasingly difficult over the next few decades.</p>
<p>^^ I'd venture to guess the effects of the current downturn will be felt for a minimum of 5 years even if a strong economic recovery were to begin in mid- to late-2009. That's true for a couple of reasons. First, most colleges calculate their endowment payout on the basis of a 3-year moving average of endowment assets, so even if their endowments were to recover to pre-downturn levels by sometime next year, the payouts from endowment will be down for at least the next 3 years. More likely, endowments that shrank by 25% to 30% (according to spotty preliminary reports) will take some time to recover. Imagine a college with a $500 million pre-downturn (2007) endowment, and the endowment goes down 30% in 2008, leaving only $350 million today. But now that $350 million needs to grow by 43% to get back up to the pre-downturn level. That won't happen in a year, probably not in two, possibly not in three. At the very earliest it will be sometime in 2011 before the endowment recovers to its 2007 pre-downturn high, and possibly later. Spread that out over the subsequent three years in which the payout will be affected, and we're looking at 2013, 2014, or later before the school is up to the same level of endowment payout---in nominal dollars, even setting aside the effects of any inflation---that it had in 2007.</p>
<p>The same thing is likely true of family assets. In markets that have seen 20%, 30%, or 40% losses in home values, housing prices would need to rise by 25%, 43%, or 67%, respectively, to reach their pre-downturn levels and recover the owners' (perceived) equity losses. Same for any other class of investments. Bottom line, even if our incomes remain steady or even improve a little, most of us are just going to be significantly less wealthy for the next 3 to 5 years, even assuming a relatively robust and relatively early economic recovery. So interesteddad is right; today's conditions are the "new normal" at least for the next 3 to 5 years, possibly longer.</p>
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It was clear that CF picked Lafayette as a generic example.
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<p>the problem is that lafayette isnt a particularly good example, as the school ended 2007 with an endowment of nearly $300,000 per student, accepted 40+% of its classes via early decision even prior to the downturn and had an acceptance rate around 36% last year. </p>
<p>with ed holding up this year, that means the school is going to need to find 350 or so students through the regular decision process. the half of that group offered need-based financial aid should prove relatively easy to enroll, as the net cost for many of these students will be comparable to or even less than penn state or rutgers. so even with a decrease in applications we are talking about a school needing to find 180 full pay students out of a reduced regular decision applicant pool of perhaps 5300. </p>
<p>i dont anticipate that doing so will prove a problem even with schools the next rung up in the admissions hierarchy 'poaching' a few more applicants than usual and yields on the whole being down. </p>
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<p>all that said, when acceptance rates start to climb things DO start getting dicey for privates. a school already accepting a majority of applicants is going to have a much more difficult time accounting for the 'poaching' of full pays as not many qualified full pays had been rejected in the past. i do expect either a noticeable decline in enrolled student quality or tuition revenue issues at schools in this range. and when you get to schools already accepting 70-80% of applicants, there are going to be real problems approaching, let alone meeting, tuition revenue targets. these are the schools that are going to be in major trouble, especially if the 2010-2011 mortgage bubble is allowed to pop.</p>
<p>the comment about college pricing being liking the airlines filling seats is very good, all of these colleges must have price models on how to maximize their cash intake....and remember, it was Senator Grassley of Iowa that forced HYP to free up more aid, HYP realize they need to keep this aid up during the downturn, if not, they will get hammered by Congress again and lose the tax free status of their obscene endowments.</p>
<p>It is really hard to say what a specific college faces without looking at their year end financials. For example, Wesleyan has a healthy per student endowment, but has endowment spending of 7.4%, 6.4%, and 6.1% for the last three years. While headed in the right direction, all of those were well above the school's endowment spending policy and that's during boom years when the endowment was growing like wildfire. If Wesleyan spent this year's endowment spending without reduction for the next three years, they could find themselves spending up to 9% of endowment annually. Spending has to be cut, cut deep, and cut fast.</p>
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the comment about college pricing being liking the airlines filling seats is very good, all of these colleges must have price models on how to maximize their cash intake...
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<p>Some of them are also REALLY sophisticated in their modelling. It is believed that Emory offers smaller discounts to students who have made repeated contacts expressing interest in the school and bigger discounts to those who have not expresssed such strong interest. Why? They want to price the product to exactly the level it will take to put THAT customer in a seat. A strongly interested Emory customer will pay more. A less strongly interested customer needs a bigger inducement.</p>
<p>interesteddad, good comment, everyone needs to realize that these schools "value price" and there is price signaling among the top twenty schools,, every company or in this case, university will charge what they can get away with, but also I think the USNWR rankings drove up pricing, I wish someone would do a correlation with the top ten rankings and pricing....being an Notre Dame graduate (>25 years ago), ND overbuilt and gold plated the university and now needs to pay for this infrastructure....</p>
<p>Ericatbucknell makes sense, and it seems I didn't pick a particularly good example.</p>
<p>But what he says makes me realize that in this short time frame before the application deadline, a savvy full-pay student might want to look around for another reach or two. What would have looked impossible last year or even earlier in the fall could be quite possible this year. Colleges that took a large percentage of their freshman class ED- how desperate are they? Will they jump at a full-pay? How about colleges that took a smaller percentage, or that don't offer ED? How desperate are they to get some full-pay students to fill the coffers?</p>
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It is believed that Emory offers smaller discounts to students who have made repeated contacts expressing interest in the school and bigger discounts to those who have not expresssed such strong interest. Why? They want to price the product to exactly the level it will take to put THAT customer in a seat.
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<p>My son was admitted to a small private school 3 years ago. It was a safety for him. He was very interested in the school and he participated in their online chats (several), visited twice (one time he attended two classes and shadowed a student), and interviewed. He was accepted. He was not only not offered any merit aid (this school was offering 25% of their students merit aid), but he was also not offered a dime in grant money. Financial need was met with only loans. This was the only school that offered my son a Perkins Loan in addition to the subsidized Staffords. This school offered him the worst financial package. It is my belief that many more schools than Emory (don't know anything about how Emory discounts cost) offer smaller discounts, or no discounts to students who "might be in love" with their school. Why? As Idad points out, small or no discount might fill the seat. Oh, my son did not fill the seat at that school btw! Also, my younger son will not apply to the school who offered S #1 such a lousy package.</p>
<p>I'm curious to see if these trends will also follow schools who adhere to a "need blind" admissions policy, which can also many times be smaller, more expensive LAC's.</p>
<p>No claims that this list is 100% comprehensive or accurate, but these appear to be the need-blind LACs for US students:</p>
<p>Amherst College
Bowdoin College
Claremont McKenna College
Davidson College
Grinnell College
Haverford College
Middlebury College
Pomona College
Swarthmore College
Vassar College
Wellesley College
Wesleyan University
Williams College</p>
<p>I finally heard an answer from a college on how it is that a need-blind school could just happen to have the same percentage of full fare customers year after year. </p>
<p>Swarthmore's President, Financial Aid Director, Dean of Admissions, and Dean of Students have been holding a series of fireside chat Q& A sessions on financial aid with interestered students this fall.</p>
<p>In the most recent one, a well-informed student asked the question about a constant percentage of full-pay students. President Al Bloom looked at him and said, "I think that would be a marvelous topic for your senior thesis!"</p>
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<p>Maybe they should drop their friggin prices then....>></p>
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<p>What I expect will happen is they will raise their sticker prices, and then calibrate the financial aid so that the rich pay more and the 'less rich' pay less than they were paying before.</p>