The market for college admissions and financial aid

Paying for College
1

<p>This is just my opinion, I would very much like to know what you think about it. No offence is meant, I'm just thinking aloud. </p>

<p>The higher education industry is highly competitive, and positional advantages are eroding much more easily than they were 10 or 20 years ago. Schools (whether they game the rankings or otherwise) can move up and down the ladder of US news far more rapidly than in history. They face more competition from each other, from alternative education processes, and even from foreign schools. Higher education is a competitive market.</p>

<p>HYP and all the rest of them will have to behave like businesses, and act in the interests of their stakeholders. Those interests could be profit, prestige, or simply continued existence. They will act to maximize value in all their activities: pay staff only what is necessary to retain them, ask students to pay as much as they will. hire faculty at the lowest price for their value, accept students of the highest value for their price. Nobody will leave money lying on the table - the stakes are too high. </p>

<p>Money that is spent on financial aid is money that is not being invested in better faculty, better facilities, more marketing, etc actions to remain competitive. Therefore, financial aid is more likely to be granted when it maximizes value. Ceteris paribus, between two candidates with the same value (i.e. stats etc), the admission will go to the cheaper one. </p>

<p>This means that the amount of financial aid a candidate will receive is equal to the additional value that candidate has over the others - the premium. Candidates that need a full-ride, need to match or exceed that premium over the next best candidate who does not. Colleges will seek to invest in 'undervalued' students - people who need less aid than they're really worth. Colleges will offer as little aid as they think you're worth, or as little as they need to get you to accept. </p>

<p>I can only conclude that "need-blind" is not necessarily truly blind (that is, cost-neutral); it merely suggests that this college has a longer 'time horizon' with regard to investment in students and can afford to take riskier bets. i.e. they can afford to take a short-run loss in order to capture 'market share' (brilliant kids with no money) and stay long-run competitive. Or, more cynically, it is a calculated PR move. </p>

<p>Value, however, is terribly subjective (and perhaps a little random too) once we reach that particular range where our stats don't matter - when everyone is in the 90th percentile, has multiple leadership positions etc - and that is where it becomes difficult for the kids on CC. You can't maximize your options if you can't value your chances effectively. </p>

<p>Comments, anyone? Much appreciated.</p>

2

<p>budding economist, are we?</p>

3

<p>What about schools like Harvard that will provide tuition for those under 60k? Are you suggesting that colleges take a closer look at those they have guaranteed full tuition for? But they shouldn't the proportion of students under $60k at Harvard be extremely low?</p>

4

<p>I don't know what Harvard's practices really are, but I think it has a substantial positional advantage (endowment, brand, critical mass, virtuous cycle whatever) that insulates it somewhat from competitive concerns that would have a greater effect on the actions of colleges at the margin. This allows them to pursue costly measures in the short run, like investing in poor students, for long-term benefit - I believe that poor kids are generally more ambitious and driven than privileged ones (anecdotal, not documented), and are more likely to succeed when given the same opportunities. They are also more likely to be loyal alumni donors in the future. I think Harvard is banking on these investments paying off, and has managed its risk profile accordingly.</p>

5

<p>Yeah.</p>

<p>What you said. :)</p>

6

<p>The fact that Harvard and other top schools have a majority of students paying full sticker price is telling.</p>

7

<p>Z-</p>

<p>Telling what? That their matriculating students come from wealthy families, or that they think it is worth it?</p>

<p>Need blind admission may not ensure a balanced student body, as many admitted may decide they can't afford the cost.</p>

8

<p>That they get the same percentage of full paying students year after year tells me they have a plan.</p>

9

<p>Most college age kids go to schools where there is little aid and not that much competition to get in. The top tier schools and their fin aid policies represent only a small percentage of college students. College admissions is also cyclical, we are in a competitive upswing right now but that wasn't true 10 years ago. At 2nd tier colleges where tuition discounting abounds, they usually find a way to give everyone pretty much the same discount, pretty much leveling the field.</p>