Nothing like making an elite endeavor even less accessible. 
Donât many colleges do that now through development slots? Each college sets their own âclearing priceâ for serious consideration. And more than 3 to 5 slots sold I suspect.
My suggestion was meant to be tongue in cheek, but youâre right, there is a kind of âmarketâ set valuation of many schools based on the donor clearing price to get the donor hook.
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The Auburn Columbia one was the only one I happened to catch. Columbia was VERY lucky at the end. I thought their questions in the last round were much easier than the ones Auburn got (but I guess fair and square since they get to pick their categories).And of course a couple easy answers that were missed by Auburn, leading up to that , like the Monaco question, didnât help. I was rooting for Auburn!
There are smart kids everywhere. However, these rankings are guilting parents and causing exceptional students to think less of themselves based on admissions.
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US News has a very strong incumbent advantage, at this point theyâve weathered the storm of other rankings that tried to offer some alternative. US News is used in moody debt ratings of a college, surprisingly, hereâs a quote on it
"If an Ivy said to US News, âyou guys are full of beans and weâre simply not going to participate in your stupidity any more,â many other colleges and universities would have the political and economic cover to stop participating, too. But this dean of admission explained that this fantasy would never come true. Why?
Because the Moodyâs bond rating of a college or university is tied to its ranking.
Thatâs right. A universityâs ability to borrow on the capital markets hinges on the universityâs rank in *US News."
And internationally, it has much better reputation than the states. Guidance counselors are told that they have to remind international students that US News is not an official ranking from the US government, but a private organization.
We can probably all agree that the less one knows about US colleges, the more s/he relies on rankings like USNWR, whatever our own view on rankings is.
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This quote makes it sound as if Moodyâs rates university debt based upon rankings. There is a relationship, but that isnât the case. The issue is that the rankings more or less reflect wealthâŠand wealth (net asset position, interest coverage ratios, stability of revenues and operating cash flows) are used to score debt to create a credit rating.
The extent to which a universityâs credit rating is affected by a change in their US News ranking depends entirely on how much impact that ranking change would have on their financial statements. And for the schools positioned to derive the most benefit from the rankings, ie, the âtopâ schools, that answer is approximately zero.
Would UChicagoâs rating plunge if they plummeted to #25 or dropped out of the rankings altogether? No for three reasons:
- Undergrad revenues are only a small portion of their operations.
- UChicago will have no problem getting a full class of highly qualified applicants willing to pay their asking price anyway. They have a brand too.
- Even if alumni donations declined, they can run things more or less as they are in perpetuity due to the endowment they have already accumulated over generations.
They are essentially ârankings proofâ.
And the vast majority of the schools in the top 30 or so LAC and university bins are in the same scenario. Others too. And public flagships/sports schools. Baylor doesnât get more money with a climb in the US News rankings. They get more money with a climb in the AP football poll.
You can make an argument that schools are being hurt by the rankings, but I think mostly they are being hurt by the amount of information available for people to misuse as they make their consumer decisions. 30 years ago, you could think about going from LAC X 20 miles from home not being able to compare that school to others like it as easily. And you could have felt very comfortable with that decision. Now we have rankings, gen college web sites, NECS Ipeds data, CDS, financial statements or schools I can find, message boards, etc. Suddenly, that school down the street that is known and comfortable and deemed good doesnât seem so great anymore. Itâs a big world out there.
Itâs kind of like if mass media and entertainment didnât exist and hardly anyone travelled anywhere. The most attractive man/woman in town looks like a movie star. Then you introduce movies, television, magazines, take trips to big city Z to the entire world and the fair queen seems much more ordinary.
And it all ties back to economics too. US News might make 50 million a year of revenue on this thing. Likely much less because the total revenues (per D&B) arenât much higher than that. If you offered the owner 5x revenue to buy the college rankings, theyâd take it in a heartbeat. A small collection of schools could buy this thing for $250mm tomorrow, kill it to remove the incumbency advantage and put what they wanted that is âbetterâ in its place. If it was so awful, it could be killed for pocket change.
But they donât. Because they need something to complain about and they know that the problem isnât the rankings. Itâs information overload in a digital economy and consumers not understanding how to treat/consider that information and the spin attached to it. People like âshinyâ and âbetterâ. And it is often better. But is it âbetter enoughâ to pay 80k vs 20-40k?
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People also like the career opportunities that come with a degree from an elite university.
Definitely. Things like MD/JD/MBA placement are relatively easy to trackâat least for the feedersâas is graduation rate and avg salary for nearly all schools.
Problem though: are outcomes better because the school is better or are outcomes better because a school has assembled a collection of students who would hit the same/nearly the same outcome at a less prestigious/selective university?
Thatâs the information problem. How do you interpret outcome-based value?
You could even compare prestigious universities. School A salary x years out is 150,000. School B 125,000. But what if the delta was entirely due 1) to cost of living differences between where school A alumni work vs school B and 2) to differences in major/course of study distribution?
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Moodys actually uses rankings in a sub-factor called âMarket Reputationâ, which is one of the four sub-factors that contributes to âMarket Positionâ, which itself is one of the five factors that determines the rating. âOperating Performaceâ and âBalance Sheet and Capital Investmentâ are the two other (separate) factors that incorporate the financial performances/statements of the schools, but theyâre completely separate from the rankings.
Companies are able to recruit in a more efficient manner if top students attend university together.
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Published rankings (generically) are mentioned as part of a sub factor for Factor 1âŠalong with 9 other things. Taking a look at the Moodyâs score card:
Factor 1 Market Position (35%)
Revenue (10%)
Net tuition per student (10%)
Gifts per student (5%)
Primary matriculation (5%)
Selectivity (5%)
They donât even apply a weighting to rankings within their scoring rubric, so the rankings language is more a less lip service that they, âconsider everythingâ.
90% of the weighted quantitative factors (Factors 1 to 3) are financial metrics. Only matriculation percentage and selectivity are not.
Itâs also important to note that the rate differences between investment grade institutional debt is pretty small. AAA down to A3 doesnât result in huge differences in interest rates on debt. WashU is at an Aa1 and SMU at an Aa3. Two steps apart in the top of of the 10 grade investment grade section. WashU might be able to borrow at 15-20bps (0.15-0.2%) lower wrt to rates. Thatâs not a ranking thingâalthough there is a disparity thereâthatâs down to financials.
Also: Moodyâs isnât the only game in town. Universities arenât held hostage by Moodyâs and lenders ultimately do what they want to do.
I find the argument from administrators that the Ivies canât tell US News to pound sand because it will destroy an institutionâs credit rating and ability to borrow to be 100% disingenuous. This ranking is basically run out of an office park suite at this point. If schools wanted it gone, they could kill it easy.
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Absolutely. After much college recruiting, Iâve found that variability of student recruiting is lower and student sophistication is higher at better ranked institutions. Can I find a top student at a school ranked 150 or below? Sure, but I need have strong relationships with faculty and staff to get feedback about the gems. If you have a top-tier position, youâll just go to the top universities and not even post the job at lower ranked schools.
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This is definitely true. The question however is always how much of that salary delta is differences related to:
-student caliber
-career choice/major
-geographic location choice
-educational experience/teaching quality
-recruiting pipeline
-family social capital to get jr a job/internship at the right firm.
When you can control for factors 1-3 and you eliminate the folks with factor 6 clout, I do think 4 and 5 have value, but outside of the top firms in a few âgatekeeping professionsâ these are secondaryâŠprovided youâre coming from a school with some rep.
We donât have enough detail for applicants to make those distinctions however, so weâre left with âaverage ChemE starting
salary by schoolâ with enough graduates to aggregate that data. Thatâs as detailed as we can get.