The First Crack in the US College Cartel
New York Post
When it comes to the cost of college, we may have reached the tipping point.
According to a recent report in The New York Times, several colleges contacted applicants they hadn't heard from after the official May 1 deadline to accept an admissions offer to see if they wouldn't like to reconsider. Private schools, including Hampshire College in Massachusetts and Ursinus College in Pennsylvania, sent e-mails and texts to students after the point at which they were supposed to have put down a deposit.
According to the Times, "The messages all hinted at a particular question: Might a larger discount prompt you to come here after all?"
Colleges have been in the habit of negotiating for some time. They have acted a little bit like airlines where everyone seems to pay a slightly different price for the same product. Airlines don't ask for your tax returns before determining what you'll pay, but the system for determining who pays what is similarly oblique.
According to a recent study by the National Association of College and University Business Officers, "The estimated average institutional tuition discount rate for first-time, full-time freshmen at small institutions was 50.9 percent in 2016-17." That means colleges are getting less than half of the tuition they want based on their enrollment and price.
The higher education bubble may not have popped just yet, but according to Richard Vedder, who heads the Center for College Affordability and Productivity, "Net tuition fees adjusted for inflation are actually falling slightly." College is still very hard for many middle-class families to afford without incurring a mountain of debt, but at least the line is pointing in the right direction for the first time in decades.
For schools that are less selective, though, merely holding tuition steady has not been enough to get students in the door. Private schools have to get a certain number of "butts in seats" if they are going to survive, but enrollments are down once again this year.
They're having to take drastic measures. For instance, Northland College in Wisconsin just announced an across-the-board 7.5 percent pay cut for faculty and staff. Creighton University in Nebraska is cutting 60 non-faculty positions this fall.
So now some colleges are starting to look less like airlines and more like car dealerships. It's not just that everyone knows the sticker price is a farce. Everyone knows you have to dicker with the salesman.
Vedder says the fact that colleges called kids after the May 1 deadline is a sign that the "college cartel is starting to break down." Until recently, individual colleges couldn't continue to negotiate with students all summer long because of rules set by the National Association for College Admission Counseling.
Essentially the colleges have colluded with one another on the entire admissions process to ensure that they keep the upper hand. Now, however, some are willing to exploit a loophole: They simply assume applicants who don't notify them otherwise may still be interested in their schools.
As Steven Roy Goodman, a private college consultant in Washington, DC, explains, "the admissions process is designed to help universities. It's not designed to help students." But when institutions realize that these collective agreements are not working for them, they will start to opt out.
A NACAC representative determined that this particular outreach is kosher as long as there are no specific financial offers, and they are not directed toward students who have actually committed to another school.
But colleges may soon cross that line as well. "The free market may finally be coming to higher education," says Vedder. He's looking forward to a time when colleges have to do more advertising and even have "sales" on tuition.
Goodman, for his part, predicts that this trend will play out more over the summer as colleges accept kids from their waiting lists. He says students should use that opportunity to see if they can't squeeze a little more money out of schools.
"There's very little downside to asking," says Goodman. And there's plenty of upside.