Undergrad Supply & Demand: Market dynamics going forward

Parents Forum
1

<p>In another thread, Carolyn posted a great article on the pros & cons of some of the smaller colleges increasing enrollment. ( <a href="http://insidehighered.com/news/2006/02/24/libarts%5B/url%5D"&gt;http://insidehighered.com/news/2006/02/24/libarts&lt;/a&gt;) </p>

<p>Got me thinking about the “bubble” of HS graduates seeking college hitting its peak in 2009, and how that might relate to admissions selectivity growth and enrollment growth post peak. Xiggi kicked in with some info on how demand for the hyper-selective will probably not change much as other factors are at play, and bluebayou noted that he’s heard that “spill-over” schools may adopt international recruiting to fill the dorms.</p>

<p>Certainly an interesting subject. So what do you think the future holds, & what are the factors that will influence future admissions & enrollment trends at undergraduate institutions?</p>

2

<p>I know that two of our state school have seen increased demand and have increased acceptances accordingly, although every year it still seems more difficult to be accepted.
My daughters college is very small, and is also becoming more popular so it is also becoming more difficult for admittance. A few years ago, more committed to applying than the school figured on, so they have had to tweak the % of acceptances in response since then</p>

3

<p>Keep in mind that there are already PLENTY of colleges that are having a bit of trouble filling their freshmen classes. Every year, the NACAC has a database for schools that didn't get the yield they expected. Last year, there were over 200 schools in the database still looking for bodies, and many of them were EXCELLENT schools.</p>

<p>I have also been looking for schools that have extended their deadlines --- and there are a few surprises there (U of Rochester for one) which leads me to believe that they are worried they aren't going to get the yield they want this year.</p>

<p>So, while some schools are definitely getting more applications, others aren't. And some schools are getting plenty of applications but not enough of those "will be attending" deposits when all is said and done.</p>

4

<p>I think the numbers of schools that some are applying to must really confuse things
Some students apply to just 5 or so, but then others apply to 10 or even 20 schools?
no wonder if schools like students to apply ED or EA</p>

5

<p>Agree with Xiggi that HYPSM & AWSP will continue to attract the "best and the brightest," but thier scores may not continue to be so lofty since a smaller app pool means less 2300's; assumes no recentering, or course. :D </p>

<p>There are two conflicting demographic issues: </p>

<p>1) the national bubble of 2009;
2) demographic shift among the states. </p>

<p>Some rust belt states have already seen a declining student pop for a few years now, causing such premier schools as UMich to look more to OOS kids. An article last year indicated that 'Bama was starting to throw money at OOS kids to improve their stats and applicant pool. </p>

<p>But, the larger impact, IMO, will be at schools in/next to states with declining populations. Since there are just less kids applying from these states, small LACs in particular, will have to spend a lot more money marketing to attract kids to "go away" to college (more than a 4-6 hour drive). </p>

<p>OTOH, the HS population in Calif and some other SW states will continue to increase for at least another generation, causing the state flagships to continue to increase in selectivity. Notwithstanding an increasing student population, a private school such as USC will also need to increase its marketing budget to continue to attract kids from OOS (which will be fewer in absolute numbers), lest they end up back with a 70+% Calif student population.</p>

<p>Just my $0.02.</p>

6

<p>The Inside Higher Ed article is conspicuous in avoiding a central issue in growth: the role of per student endowment.</p>

<p>At some of the top LACs, student revenues (net tuition, room, and board) only account for 40% of the operating budget. More than half of the annual budget comes from sources that do not increase with enrollment (endowment, annual gifts, etc.). Keep in mind that the very top LACs are only getting $25k to $30k per year in per student revenues, but are spending in the $60k to $70k per student range. </p>

<p>In a very real sense, these schools cannot "make it up on volume". Assuming that they actually hire the additional faculty to maintain student/faculty ratios, increasing enrollment dilutes the per student endowment figure and reduces per student spending. Yes, there are some economies of scale, but faculty and staff salaries and benefits are more than half of the budget at these schools. The only economies of scale in those areas must come from increased class sizes (i.e. reduced quality). The numbers are more sobering when you realize that incremental students usually require more financial aid discounting (either need or merit) and thus further erode per student average revenues.</p>

<p>Here is a discussion paper by Gordon Winston of the Williams Economics Department on the financial implications of growth:</p>

<p><a href="http://www.williams.edu/wpehe/DPs/DP-60.pdf%5B/url%5D"&gt;http://www.williams.edu/wpehe/DPs/DP-60.pdf&lt;/a&gt;&lt;/p>

<p>The three examples of growth he uses in the paper are Princeton, UChicago, and Middlebury.</p>

<p>Note that growth over time proportional to the growth of endowments above and beyond inflation is essentially revenue neutral. Thus, a steady growth in the student body of perhaps 1% a year is essentially a baseline for a well endowed college. The kinds of growth we are talking about are short-term bumps in enrollment above and beyond whatever baseline steady growth is supported by the endowment.</p>

<p>Gordon Winston along with Morty Schapiro (Williams President) are considered to be two of the leading experts on higher ed economics. Do they put their money behind their theory? Yes. They have written other papers detailing how Williams fell significantly behind its peers financially following a rapid increase in enrollment acccompanying coeducation in the 1970s. Those papers point out that Swarthmore's low-growth strategy was responsible for its outstanding financial position.</p>

<p>Since that spurt 30 years ago, Williams has not grown its enrollment at all and has no plans to do so going forward. They focus like a laser on the per student endowment numbers.</p>

<p>In my opinion, schools that go for a large enrollment spurt riding today's applications bulge put themselves at financial risk a decade from now when students (especially full-pay students) are not as easy to come by. Some schools (Oberlin is one) are actually planning to reduce their enrollment incrementally for just this reason.</p>

7

<p>This leads me to think that those who can pay "full freight" either thru outright cash on hand or thru PLUS loans should be attractive to admissions if they have the stats.
At S's highschool this seems to be holding true--at least last year. Of all the apps to WUSTL, the only ones admitted were full pay. Those with financial need were all waitlisted (and very bright)---granted it is WUSTL and their admissions are hard to figure out</p>

8

<p>
[quote]
This leads me to think that those who can pay "full freight" either thru outright cash on hand or thru PLUS loans should be attractive to admissions if they have the stats.

[/quote]
</p>

<p>Of course. Every college budget in the country is based on assumptions about enrolling a certain percentage of full-pay and nearly-full pay students. </p>

<p>Oberlin specifically states in their strategic plan that they would ideally like to reduce the size of the study body by lopping off a few financial aid students to reduce their average tuition "discount rate".</p>

<p>Most of the merit aid discount strategies are specifically designed to increase tuition revenue (use the same financial aid dollars to enroll four wealthy students paying 75% of sticker price rather than one poor student paying zero). As an added bonus, the boost in stats from the four merit discount customers' high SAT scores makes the college more "prestigious" and therefore more attractive to wealthy customers down the road.</p>

9

<p>Interesteddad's comment in another thread about the long-range market response in the 70's by some colleges forseeing the post-baby-boom reduction in college-going HS graduates got me thinking. I found some data for Boston College which at least spans the post-baby-boom low points. Although I know very little about BC, the data were available via their fact books. Thought it would be interesting to see how their application, acceptance history, & SATs (as a surrogate for academic quality) looked over the years relative to the HS graduate bubble.</p>

<p>First, from the National Center of Educational Statistics (<a href="http://nces.ed.gov/programs/digest/d04/tables/dt04_102.asp%5B/url%5D"&gt;http://nces.ed.gov/programs/digest/d04/tables/dt04_102.asp&lt;/a> ), here is the history of HS graduate population (in thousands)...note that this is just graduates; college-bound HS graduates likely increased during the 80's & 90's.</p>

<p>School year… | Total (thousands) </p>

<p>1869-70 ...... | 16<br>
1879-80 ...... | 24<br>
1889-90 ...... | 44<br>
1899-1900 ... | 95<br>
1909-10 ...... | 156<br>
1919-20 ...... | 311<br>
1929-30 ...... | 667<br>
1939-40 ...... | 1,221<br>
1947-48 ...... | 1,190<br>
1949-50 ...... | 1,200<br>
1951-52 ...... | 1,197<br>
1953-54 ...... | 1,276<br>
1955-56 ...... | 1,415<br>
1956-57 ...... | 1,434<br>
1957-58 ...... | 1,506<br>
1958-59 ...... | 1,627<br>
1959-60 ...... | 1,858<br>
1960-61 ...... | 1,964<br>
1961-62 ...... | 1,918<br>
1962-63 ...... | 1,943<br>
1963-64 ...... | 2,283<br>
1964-65 ...... | 2,658<br>
1965-66 ...... | 2,665<br>
1966-67 ...... | 2,672<br>
1967-68 ...... | 2,695<br>
1968-69 ...... | 2,822<br>
1969-70 ...... | 2,889<br>
1970-71 ...... | 2,938<br>
1971-72 ...... | 3,002<br>
1972-73 ...... | 3,035<br>
1973-74 ...... | 3,073<br>
1974-75 ...... | 3,133<br>
1975-76 ...... | 3,148<br>
1976-77 ...... | 3,152 HIGH POINT
1977-78 ...... | 3,127<br>
1978-79 ...... | 3,101<br>
1979-80 ...... | 3,043<br>
1980-81 ...... | 3,020<br>
1981-82 ...... | 2,995<br>
1982-83 ...... | 2,888<br>
1983-84 ...... | 2,767<br>
1984-85 ...... | 2,677<br>
1985-86 ...... | 2,643<br>
1986-87 ...... | 2,694<br>
1987-88 ...... | 2,773<br>
1988-89 ...... | 2,744<br>
1989-90 ...... | 2,589<br>
1990-91 ...... | 2,493 STARTING TO BOTTOM OUT
1991-92 ...... | 2,478<br>
1992-93 ...... | 2,480<br>
1993-94 ...... | 2,464 LOW POINT<br>
1994-95 ...... | 2,520<br>
1995-96 ...... | 2,518<br>
1996-97 ...... | 2,612 STARTING TO CLIMB<br>
1997-98 ...... | 2,704<br>
1998-99 ...... | 2,759<br>
1999-2000 .. | 2,833<br>
2000-01 ...... | 2,848<br>
2001-02 ...... | 2,921<br>
2002-03 ...... | 3,044<br>
2003-04 ...... | 3,062<br>
2004-05 ...... | 3,089</p>

<p>So the bottom hit in 1991 (college class of '95) and the latest cycle of upturn started in earnest around 1997 (college class of 2001). (Of course this ignores the increasing prevalence of HS graduates to attempt to matriculate to college.)</p>

<p>Next, I pulled the # of applications, acceptance rate, SAT scores (average of the 25% and 75% #'s), and endowment data from BC's factbooks. I normalized all to 100% at the start date: class of 1989 (or fall 1985) for all data except endowment, which I could only guesstimate back to 1992, or class of '96. The purpose of the normalization was merely to observe trends. Also note I did my own crude recentering of 1995 & prior SAT scores by assuming that 1995 & 1996 (classes of '99 & '00, the 2 years that crossed the re-centering) were the same average once recentered.</p>

<p>CLASS . HS GRADS .APP'S .. ACCP RATE …. SAT AVG … ENDOW
1989 …. 100% …….. 100% … 100% ……….. 100%<br>
1990 …. 99% ……… 93% …. 106% ……….. 101%<br>
1991 …. 101% …….. 96% …. 103% ……….. 101%<br>
1992 …. 104% …….. 96% …. 106% ……….. 101%<br>
1993 …. 102% …….. 84% …. 119% ……….. 102%<br>
1994 …. 97% ……… 77% …. 145% ……….. 101%<br>
1995 …. 93% ……… 71% …. 181% ……….. 101%<br>
1996 …. 93% ……… 76% …. 145% ……….. 102% ……. 100%
1997 …. 93% ……… 81% …. 152% ……….. 102% ……. 121%
1998 …. 92% ……… 96% …. 132% ……….. 102% ……. 142%
1999 …. 94% ……… 103% … 123% ……….. 103% ……. 153%
2000 …. 94% ……… 102% … 132% ……….. 103% ……. 180%
2001 …. 98% ……… 102% … 126% ……….. 103% ……. 203%
2002 …. 101% …….. 101% … 129% ……….. 104% ……. 234%
2003 …. 103% …….. 122% … 113% ……….. 104% ……. 261%
2004 …. 106% …….. 128% … 103% ……….. 105% ……. 301%
2005 …. 106% …….. 118% … 110% ……….. 106% ……. 298%
2006 …. 109% …….. 131% … 103% ……….. 107% ……. 302%
2007 …. 114% …….. 139% … 100% ……….. 107% ……. 289%
2008 …. 114% …….. 139% … 103% ……….. 107% ……. 347%</p>

<p>You can see that BC's applications mirrored the downturn in HS graduates, and hit a low for the class of '95 (fall 1991), the beginning of the bottom-out period for the population in general. In response to the downturn, BC's acceptance rate had been climbing prior to the class of '95, & hit an all-time high for that class. (Looks like they over-admitted in that worst year because 1st-year enrollment spiked as well, ~ 10% above there fairly steady enrollment of 2200 to 2300 students for the freshman class.) Interestingly, the SAT average held fairly steady during that time period. BC must have responded somehow to increase enrollments after that bad year, because they pulled out of the low point faster than the HS population. Also, during that pull-out period, SAT scores started a slow climb. With the population of HS graduates 14% greater for the class of 2008 vs 1989, BC has seen a growth of 39% in applications and 7% in SAT scores, and their acceptance rate is back to its class of 1989 rate. Although the endowment history in incomplete, the other big change here is in BC's endowment, which rose most greatly (as a percent) during their bottom-of-the-cycle pull out period. I can only suppose, as interesteddad has previously mentioned, that BC has used their upturn in endowment to attract new talent, both in numbers and in academic quality, perhaps through creative scholarships. I find it most interesting that their SAT scores not only did not recede during the down-turn, but rose significantly post-down turn.</p>

10

<p>fyi....interesting, although general, article about Williams' look at their admissions demographics in 2020:
<a href="http://www.williamsrecord.com/wr/?section=news&view=article&id=7601%5B/url%5D"&gt;http://www.williamsrecord.com/wr/?section=news&view=article&id=7601&lt;/a&gt;&lt;/p>

11

<p>I am curious as to whether your data can be broken down by gender. I just finished reading that male applicants to Brown actually declined which mirrors a trend found among many LACs and (I"m trying to find data on this) possibly the top twenty outside of the Ivies.</p>

12

<p>
[quote]
Some rust belt states have already seen a declining student pop for a few years now, causing such premier schools as UMich to look more to OOS kids.

[/quote]
</p>

<p>It is not lack of depth in the resident pool that would cause UMichigan to look to more OOS kids. The pool is still there. If anything, it would be the declining state economy & declining state support. This makes nonresident students more attractive for the dollars they can bring, especially since public universities feels less and less beholden to the will of the state when appropriations are slashed.</p>

<p>For all that, though, I don't think Michigan HAS significantly looked to nonresidents. The resident-nonresident ratio has stayed roughly the same over the last decades. It's crept up a bit, but this doesn't indicate that Umich has aggressively changed its mix.</p>

13

<p>Market forces tell you when there is too much demand chasing too little supply, what usually happens is that prices increase relatively quickly. This is indeed precisely what has happened - only more: as price increases, so does demand. Veblen had a stronger understanding of the marketing of prestige goods than the laissez faire capitalist theorists. Now, theoretically, there comes a tipping point where this would no longer be the case, but I fully expect that, for "prestige institutions", it is the point at which price is close to cost (likely around $65k/year in current dollars). I think we will see that 10-20 years down the road.</p>

<p>Williams' failure to grow endowment per student at the rate of some other schools is reflective of who they accepted to grow the student body, i.e. women. In case anyone hasn't noticed, women generally speaking are less likely to be included among the super wealthy. (And looking at achievements of female students at my alma mater over the past 35 years, I am somewhat less than overwhelmed.)</p>

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<p>musictoad....fyi, we had a thread going a while back on the gender imbalance issue:
<a href="http://talk.collegeconfidential.com/showthread.php?t=112824%5B/url%5D"&gt;http://talk.collegeconfidential.com/showthread.php?t=112824&lt;/a&gt;&lt;/p>

<p>didn't do any great analyses on gender trends by college over time, but that could be done via multiple-year CDS datasets. BC's factbooks only give gender data on enrolled freshmen, so can't slice & dice BC trends to include apply-admit fields. If I get a chance over the next couple of days, I'll see if I can come up with gender trends for a couple of colleges w/ a good history of CDS' (e.g., Williams) for all apply-admit-enroll fields.</p>

15

<p>PapaChicken,</p>

<p>Thanks for starting another interesting thread. I know that you want to normalize for one variable, the supply and demand of students, but there are a few other trends that come into play that make it a bit more of a linear programming model. Here are 2 other demographics or trends to put into the equation:</p>

<ul>
<li>The increase in the % of high school graduates going on to college</li>
<li>The impact of technology on how schools will deliver coursework</li>
</ul>

<p>A few comments on what I see. I suspect that the impact of technology is just now starting to be felt by the schools. The University of Pheonix has a very large presence already. It is inexpensive, classes only, and uses technology to deliver a number of the classes. There are many schools experimenting in the use of technology to deliver classes, i.e. Harvard Extension and Stanford's EPGY and their summer math programs. I suspect that these efforts will expand over time to extend the "brand" of the school's.</p>

<p>The question in looking at the demographics is what will the schools do in response to them. Using the same example as PapaChicken, let's continue to look at Boston College. It is located in the northeast which has a declining high school population. That could signal a reduction in the number of applications they receive unless they go national. Over the last 20 years BC has been actively recruiting students from schools in CA that has an increasing high school population. </p>

<p>Additionally, BC just shifted their athletic affiliation from the BigEast to the ACC. The BigEast is primarily schools from a part of the country where the high school population is decreasing. The ACC, which is primarily in the south, has a growing high school student population. As such, it is good for BC to get exposure in the south. </p>

<p>The impact is that BC should get more applications. This year, with the overall student population still rising, BC increased the number of applications they received to over 26,000. A greater than 12% increase. A much faster growth rate than the number of graduating high schools students nationwide.</p>

<p>Similarly Northeastern University has changed their athletic affiliation to the Colonial League with a more exposure in the south than America East. I would anticipate Northeastern to have a similar results to BCs.</p>

<p>What does this mean for the "Ivy League"? Most of the posters here may disagree with me but I do not think the Ivys will continue their growth. They are primarily northeastern schools where there is a shrinking high school population. Their most southern school is UPenn which is still in the Northeast. Yes the Ivy's are national in stature so that affords them some protection but they still draw a significant amount of their students from a region with a shrinking population.</p>

<p>At the end of the day it will be interesting to watch.</p>

16

<p>"What does this mean for the "Ivy League"? Most of the posters here may disagree with me but I do not think the Ivys will continue their growth."</p>

<p>It's not clear that they are growing now. Yes, there are more applications, but it doesn't meant there are more discrete applicants (other than foreign applicants.) The "all-Ivy" admit rate for discrete applicants (taking out the total hail-Marys and the internationals without a ghost of a chance) is upward of 40%. It might have increased or decreased recently, but other than survey information suggesting that Ivy applicants are applying to a larger number of schools, I don't see evidence of a trend.</p>

17

<p>Musictoad—couldn’t find anything on gender distribution for applying or admitted undergrads, but did find this data on enrollment:
<a href="http://www.brown.edu/Administration/Institutional_Research/annrep/2005%20PDF/TABLE3.pdf%5B/url%5D"&gt;http://www.brown.edu/Administration/Institutional_Research/annrep/2005%20PDF/TABLE3.pdf&lt;/a&gt;&lt;/p>

<p>Here’s the female % of enrollment by school year</p>

<p>Year underg grad medic
93 - 94 51% 42% 43%
94 - 95 52% 44% 51%
95 - 96 52% 44% 50%
96 - 97 54% 44% 53%
97 - 98 53% 42% 55%
98 - 99 54% 43% 53%
99 - 00 53% 43% 55%
00 - 01 53% 44% 58%
01 - 02 54% 46% 54%
02 - 03 54% 47% 57%
03 - 04 55% 47% 58%
04 - 05 54% 47% 57%</p>

<p>As you can see, there's been a plateau in female undergrad enrollment since '96 or so, with a slow climb in graduate school enrollment, and a sharp rise early for medicine, followed by an apparent plateau hitting about '00. Of course, it is entirely conceivable that male applications are down, & Brown has responded with higher admit male rates, but I don't have the data to assess that.</p>

<p>I am in the midst of pulling together apply-admit-enroll gender trends for a number of other institutions, that should help elucidate the decline in male numbers theory....more soon. First blush.....male applications don't seem down for the handful of schools I've looked at thus far, but there are definitely discrete patterns of gender distributions amongst institutions.</p>

18

<p>Another interesting thought regarding the cost of college and endowments to fund the "real costs" relates to the amount of loan debt students are accumulating. I know many recent graduates who cannot afford to contribute to the dear alma mater, at least at traditional levels of giving, because much of their disposable income is going to pay back debt. This is a downward spiral, as endowments drop, the need for student borrowing increases as "full need funding" ability decreases.
This may not effect the top elite, but LAC's could be hurt.</p>

19

<p>I was wondering what Mini would think of this: when the baby boomlet is over in 2009 and there are additional spaces in selective universities, provided the stock market and economy are doing well (understand the implications), would these colleges do the right thing and educate more low-income students? Or is that highly unlikely...</p>

20

<p>Well, I don't see any evidence that there would be more places. (And I see no evidence that things are tighter now - as opposed to the same number of applicants simply sending in more applications.) If anything, I expect the opposite would happen, as colleges seek to enhance the prestige of their institutions further in a declining market by increasing prices, and looking for more full-pay customers. (That's what some institutions did in the late 80s/early 90s.)</p>