Although the Ivy League schools spent many years denying they used any kind of formula, they in fact have been using a ranking formula since the 1950’s called the Academic Index, AI for short. Dr. Michele Hernandez, in her book A is for Admission, was the first to reveal this formula to the public.
Though it has traditionally been used for sports purposes (maintaining some kind of academic standard on the various athletic teams), every Ivy League school still calculates an AI for every student. Why? Because the average AI of the athletic teams cannot be more than one standard deviation away from the average AI of the entire class, but the only way to know that is to calculate an AI for every student. Naturally since the number was so easy to generate, many schools began to print the number right on the front of every student’s folder and used it to help them rank a student academically.
Please understand that the AI is just a statistical tool – it does not take into account a student’s essays, teacher recommendations, outside achievements or awards. It merely chronicles the objective side of the equation, namely high school rank in class and standardized test scores.
In short, the AI is a formula that combines:
the averages of student test scores (both SAT I’s and SAT II’s) and
high school rank in class (represented by an Ivy League invention, the converted rank score or CRS).
The AI is represented on a scale of 1-240, with 240 being the highest. The approximate average of Ivy applicants is around 200 while the average AI of accepted students is closer to the 211 range.
Every school has a different method of computing rank so figuring out your own CRS may be hard. The most accurate way (and the preferred method) is to have an exact weighted rank. If your school provides rank, use the first part of the CRS input field. Next the formula turns to decile rankings (top 10%, top 20%), but be aware that the formula only approximates the MIDPOINT of the range, so anyone who enters only “top 10%” effectively gets counted as exactly 5% in the class hierarchy. Finally, if neither rank nor decile is available, the formula will take into account a GPA, but often that inflates the CRS and the ranking appears higher.
Obviously admissions offices that use the AI use it along with all the subjective information and make informed decisions about how to understand the most complex part of the formula, the CRS.
Why then does the AI matter? Most importantly, it will help you gage your chances for admission since there is a very high correlation between high AI’s and high acceptance rates.
Thursday, August 4, 2011
Monday, August 1, 2011
Tuesday, February 1, 2011
About the SAT II Subject Tests
Information provided by www.kaptest.com
An Achievement Test by any other name... The SAT II is a set of more than 20 different tests focusing on specific disciplines such as English, History and Social Sciences, Mathematics, Physical Sciences, and Foreign Languages. Each Subject Test lasts one hour and consists entirely of multiple-choice questions, except for the Writing Test, which has a 20-minute essay section in addition to a 40-minute multiple-choice section.
How Does the SAT II Differ from SAT I?
SAT I is largely a test of verbal and math skills. True, you need to know some vocabulary and some formulas for the SAT I, but it's designed to measure how well you read and think rather than what you know. The SAT II is very different. It's designed to measure what you know about specific disciplines. Sure, critical reading and thinking skills play a part on these tests, but their main purpose is to determine exactly what you know about writing, math, history, chemistry, and so on.
How Do Colleges Use the SAT II?
Many people will tell you that the SATs (I and II alike) measure only your ability to perform on standardized exams--that they measure neither your reading and thinking skills nor your level of knowledge. Maybe they're right. But these people don't work for colleges. Those schools that require SATs feel that they're an important indicator of your ability to succeed in college. Specifically, they use your scores in one or both of two ways:
• To help them make admissions decisions
• To help them make placement decisions
Like the SAT I , the SAT II: Subject Tests provide schools with a standard measure of academic performance, which they use to compare you to applicants from different high schools and different educational backgrounds. This information helps them to decide whether you're ready to handle their curriculum.
SAT II scores may also be used to decide what course of study is appropriate for you once you've been admitted. A low score on the Writing Test, for example, may mean that you have to take a remedial English course. Conversely, a high score on the Math Level IIC Test may mean that you'll be exempted from an introductory math course.
What SAT II Subject Tests Should I Take?
The simple answer is: Take the ones that you'll do well on. High scores, after all, can only help your chances for admission. Unfortunately, many colleges demand that you take particular tests, usually the Writing Test and/or one of the Math Tests. Some schools will give you some choice in the matter, especially if they want you to take a total of three Subject Tests. So, before you register to take any tests, check with colleges to find out exactly which tests they require. Don't rely on high school guidance counselors or admissions handbooks for this information. They might not give you accurate details.
An Achievement Test by any other name... The SAT II is a set of more than 20 different tests focusing on specific disciplines such as English, History and Social Sciences, Mathematics, Physical Sciences, and Foreign Languages. Each Subject Test lasts one hour and consists entirely of multiple-choice questions, except for the Writing Test, which has a 20-minute essay section in addition to a 40-minute multiple-choice section.
How Does the SAT II Differ from SAT I?
SAT I is largely a test of verbal and math skills. True, you need to know some vocabulary and some formulas for the SAT I, but it's designed to measure how well you read and think rather than what you know. The SAT II is very different. It's designed to measure what you know about specific disciplines. Sure, critical reading and thinking skills play a part on these tests, but their main purpose is to determine exactly what you know about writing, math, history, chemistry, and so on.
How Do Colleges Use the SAT II?
Many people will tell you that the SATs (I and II alike) measure only your ability to perform on standardized exams--that they measure neither your reading and thinking skills nor your level of knowledge. Maybe they're right. But these people don't work for colleges. Those schools that require SATs feel that they're an important indicator of your ability to succeed in college. Specifically, they use your scores in one or both of two ways:
• To help them make admissions decisions
• To help them make placement decisions
Like the SAT I , the SAT II: Subject Tests provide schools with a standard measure of academic performance, which they use to compare you to applicants from different high schools and different educational backgrounds. This information helps them to decide whether you're ready to handle their curriculum.
SAT II scores may also be used to decide what course of study is appropriate for you once you've been admitted. A low score on the Writing Test, for example, may mean that you have to take a remedial English course. Conversely, a high score on the Math Level IIC Test may mean that you'll be exempted from an introductory math course.
What SAT II Subject Tests Should I Take?
The simple answer is: Take the ones that you'll do well on. High scores, after all, can only help your chances for admission. Unfortunately, many colleges demand that you take particular tests, usually the Writing Test and/or one of the Math Tests. Some schools will give you some choice in the matter, especially if they want you to take a total of three Subject Tests. So, before you register to take any tests, check with colleges to find out exactly which tests they require. Don't rely on high school guidance counselors or admissions handbooks for this information. They might not give you accurate details.
Sunday, February 7, 2010
LEVERAGING FINANCIAL AID
Peter Anderson, a freshman at Johns Hopkins University in Baltimore, may have made a costly mistake: He told the school that he planned to be a premed major.
The problem is, Johns Hopkins already has plenty of premed majors. It wanted more humanities majors. And so in an experiment last spring, it quietly offered fatter financial-aid grants to incoming humanities majors than to most of their premed counterparts. While Peter is getting $14,000 a year, he might have snared about $3,000 more if he planned to major in, say, art history.
"What you're telling the kid is, lie to get into college," says Peter's astonished mother, Joan Anderson, a New Kingstown, Pa., homemaker, after she is told of the practice by a reporter.
Johns Hopkins' bold experiment is being tried out at colleges all over the country. At these schools, grants no longer are based overwhelmingly on a student's demonstrated financial need, but also on his or her "price sensitivity" to college costs, calculated from dozens of factors that all add up to one thing: how anxious the student is to attend. The more eager the student -- and Hopkins is high on the list for premed majors like Peter -- the less aid they can expect to get. Although students and families awaiting word of college admissions this week aren't being told, these colleges are employing some of the same "yield management" techniques used to price and fill airline seats and hotel rooms.
The statistical models, which have become widespread only in the past few years, go by innocuous names like "financial aid leveraging." But they are quietly transforming the size and shape of student bodies in all sorts of ways, some of which are alarming educators.
A sampling:
-- The Johns Hopkins model -- which the school isn't currently using but may try again in the future -- suggested slashing aid to some prospects who came for on-campus interviews. The reason: Those students are statistically more likely to enroll, so need less aid to entice them. A school official now denies putting that part of the model into practice.
-- At Pittsburgh's Carnegie Mellon University and other schools, eager freshmen accepted through the early-admissions program can end up with less financial aid than comparable students who apply later. "If finances are a concern, you shouldn't be applying any place early decision," says William F. Elliott, vice president for enrollment management.
-- For the current school year, St. Bonaventure University in Bonaventure, N.Y., gave the poorest of its top-ranked prospects just over half the grants they needed -- but gave more-affluent prospects more than three times their need. The result: A more-affluent student body, since 75% of the wealthier students decided to enroll, while only one in 11 of the neediest did so.
"This is an ugly, ugly business," says Walter C. Cathie, dean for enrollment management at Wabash College in Crawfordsville, Ind., who says he left a financial-aid post at Carnegie Mellon last year partly because of ethical concerns. Even two top Hopkins aid officials admitted at an industry gathering that the public-relations consequences if word leaked out could be "scarifying."
The schools argue that the new financial-aid engineering is necessary at a time when tuitions are high and many private schools don't have enough aid to go around. The complex computer modeling, they say, is designed to help them get the kind of students they want without giving away too much of their own money -- since aid grants are, after all, a form of price discounting.
About 60% of the nation's 1,500 private, four-year colleges now use statistical analysis "in some form" to dole out aid, estimates Steven T. Syverson, dean of admissions and financial aid at Lawrence University in Appleton, Wis. "Maximizing revenue is the buzzword of educational administrators these days," explains Jon Boeckenstedt, St. Bonaventure's dean of enrollment management. He concedes "there are some inequities certainly operating" at his school, but adds, "I would challenge anyone to come up with a system that's always fair and always equitable."
Ivy League colleges and others with big endowments have enough financial-aid funds to meet all their students' needs, and so generally don't rely on such Darwinian methods. Critics say other colleges shouldn't do so either. Financial-aid leveraging, they say, is discriminatory, and acts as a second tier of admissions. At its most insidious, critics say, it can eradicate "need-blind" admissions altogether. After all, what does it matter if the admissions process is need-blind, if a college doesn't give the neediest enough aid to enroll?
"I think it's terrible," says Hugh Chandler, chairman of the guidance department at Weston High School in Weston, Mass. He says colleges should base their aid decisions on "what makes sense for a kid, rather than how are we going to get the biggest bang for a buck." Enrollment management of this type violates the "good practice" guidelines of both the National Association of Student Financial Aid Administrators, or Nasfaa, and the National Association of College Admission Counselors, both groups say. But neither has enforcement power -- and Nasfaa says it is considering changing its code so the practice won't be considered unethical anymore.
Colleges, of course, have always offered their most attractive aid packages to their hottest prospects, such as athletes or especially gifted students. But the sophisticated computer analyses that so many schools use now didn't start until about 15 years ago, and didn't become widespread until 1992.
That year, Congress liberalized the federal formula for calculating financial need, making most families eligible for more aid. Unfortunately, the government didn't provide extra federal funds to pay for all that extra aid. Colleges were forced either to boost their own financial-aid budgets, or to offer aid more selectively. Many chose the latter path, out of necessity.
To achieve their ends, these schools still start by calculating a student's demonstrated "need" -- determined by family income, assets and debt. Instead of stopping there, though, some schools then factor in dozens of variables that affect a student's propensity to attend the college once he or she is accepted. The higher the propensity, the less financial aid the student may expect. Factors can include a student's home state, ethnic background and area of study, and who initiated the first contact with the school.
"Those who have the most interest in the school are going to be less price sensitive," explains Stephen H. Brooks, a Waltham, Mass., consultant who has performed statistical analyses for about two dozen schools, including Johns Hopkins, New York University, Rochester Institute of Technology, and Hobart and William Smith colleges.
The mathematical models are customized for each school. Drexel University in Philadelphia, for example, used a model that accurately predicted more business majors would enroll if it sweetened their offers, according to Donald G. Dickason, who recently retired as head of enrollment management. Certain other students were offered less-generous aid packages to make up the difference, he acknowledges, but he won't say which ones. His successor, Gary Hamme, didn't return calls to discuss whether the model is used now.
Creating the models is a delicate business, and a host of consultants have sprouted up to tackle the job. A brochure from the National Center for Enrollment Management in Littleton, Colo., promises an analysis that "links ability to pay with willingness to pay" and "packaging strategies that directly support your goals for both new and returning students." Thomas E. Williams, president, says his clients last year saw an average net tuition-revenue gain of $474,000 as a result of financial-aid leveraging.
A pamphlet from Dr. Brooks, the Waltham, Mass., consultant, questions whether colleges are "too generous, too stingy or just right" with their institutional grants. "Did you overspend to get students who would have matriculated with lesser aid? Did you underspend and lose students who would have come with more support?"
Dr. Brooks, whose models sometimes suggest less generosity to early-decision applicants, offers this advice to families: "If you go into the showroom and say you want to have that red Corvette, they're not going to cut the price much. I would say being a little cagey would be helpful."
Johns Hopkins turned to Dr. Brooks last year when it wanted to increase its humanities enrollment by 20% and reduce its overcrowded premed program. At an Nasfaa conference in San Antonio last summer, a Hopkins official explained how the school achieved its goal by using an econometric model, a mathematical analysis that tries to predict down to the dollar what it will cost to persuade a student to enroll.
The model suggested that Hopkins should offer $3,000 more to prospective humanities students with Scholastic Assessment Test scores over 1,200 and relatively low financial-aid needs; the extra money would increase enrollment probability by nine percentage points. One group of students, the model suggested, shouldn't get the extra cash: those who had had campus interviews, a step Hopkins itself "strongly" recommends. Campus interviewees already were about 9% more likely to enroll at Hopkins than other prospects, so the cash incentive wasn't necessary, concluded the analysis, which was based on two years of past enrollment data.
The model also suggested cutting by $1,000 the aid offers to most premed campus interviewees with SAT scores below 1300. Those students were already hooked, so "it wouldn't knock that many students out. But it would increase the net revenue from this group," explained Robert J. Massa, the school's dean of enrollment management.
"So let's look at the results," said Dr. Massa, as he displayed a bar chart on an overhead projector. "In fact, what we wanted to happen did happen." Humanities students increased "by exactly 20%" while the premed group dropped "by about 10" students, he said. He stressed, however, that the analysis was "just one tool," not "the sole path."
During the presentation, which was taped, Dr. Massa acknowledged that the model raised ethical questions. When an audience member asked, "How upfront are you with families about what you're doing?" Dr. Massa conceded the school hadn't told them about its formulas. He said colleges should come clean "as we become more and more sure of what we're doing . . . ." Yet he added, "They [parents and students] don't need to know the specifics of, `If you come for an interview you're not going to get financial aid,' for example."
Interviewed later, Dr. Massa emphasized that the model has only been used once so far, and that Hopkins didn't follow it exactly. He denied that Hopkins penalized students who had campus interviews. The school actually offered about $3,000 extra in grants to all prospective humanities majors except early-admission applicants, he said. And rather than cutting natural-science majors' aid outright, it gave most of them the college's least-attractive aid package, with about $1,500 less in grants and $1,500 more in loans than the best package.
Carnegie Mellon, considered a pioneer in statistical modeling, has taken the process further. Its enrollment vice president, Dr. Elliott, wrote a doctoral thesis 22 years ago on maximizing net tuition revenue. Eight administrators meet for several hours each week to tinker with formulas and review the latest spreadsheets that attempt to predict "yield" -- the percentage of accepted students in different groups that will actually enroll, if money is taken from one group and given to another. Without such work, Dr. Elliott says, "I'd have an institution full of engineers and computer scientists and I wouldn't have anybody in arts and design."
An internal "Awarding Strategy" for the university's popular computer-sciences school for the 1995-96 academic year suggested offering some top-ranked students almost five times their demonstrated need in cash grants if they qualified for $4,000 or less in aid. For similarly ranked students who required more than $20,000 in aid, the model suggested offering 75% in grants. Meanwhile, no grants were budgeted for the 142 students ranked at the bottom -- fully 60% of accepted students -- regardless of need.
Dr. Elliott declined to say how the award strategy was carried out, but Mr. Cathie, the former Carnegie Mellon financial-aid administrator, says he believes it followed the model's recommendations.
Carnegie Mellon also takes an aggressive approach toward its competition. After admitted students receive their financial-aid offers in the spring, they are invited to fax the school any better offers they receive from other colleges. Carnegie Mellon sets aside more than $250,000 in its budget for them in what is known internally as the "Reaction Program." For desirable students, the school generally meets competing offers.
Of course, early-admission candidates at Carnegie Mellon don't benefit from the program, since they agree to withdraw all other applications upon acceptance. Nor does the university disclose this fact to them in the application process. Early-admission applicants also sometimes receive less generous financial-aid offers because their packages are based on the previous year's statistical models; regular applicants might receive "hundreds" more, depending on what the new model suggests, Dr. Elliott says.
Carnegie Mellon sometimes troubles Dr. Elliott "These are gut-wrenching decisions," he says -- but he feels there is little choice. "Obviously, I don't have enough money to be as generous as I might like to be," he says. "I could make it very fair -- and be out of business."
The problem is, Johns Hopkins already has plenty of premed majors. It wanted more humanities majors. And so in an experiment last spring, it quietly offered fatter financial-aid grants to incoming humanities majors than to most of their premed counterparts. While Peter is getting $14,000 a year, he might have snared about $3,000 more if he planned to major in, say, art history.
"What you're telling the kid is, lie to get into college," says Peter's astonished mother, Joan Anderson, a New Kingstown, Pa., homemaker, after she is told of the practice by a reporter.
Johns Hopkins' bold experiment is being tried out at colleges all over the country. At these schools, grants no longer are based overwhelmingly on a student's demonstrated financial need, but also on his or her "price sensitivity" to college costs, calculated from dozens of factors that all add up to one thing: how anxious the student is to attend. The more eager the student -- and Hopkins is high on the list for premed majors like Peter -- the less aid they can expect to get. Although students and families awaiting word of college admissions this week aren't being told, these colleges are employing some of the same "yield management" techniques used to price and fill airline seats and hotel rooms.
The statistical models, which have become widespread only in the past few years, go by innocuous names like "financial aid leveraging." But they are quietly transforming the size and shape of student bodies in all sorts of ways, some of which are alarming educators.
A sampling:
-- The Johns Hopkins model -- which the school isn't currently using but may try again in the future -- suggested slashing aid to some prospects who came for on-campus interviews. The reason: Those students are statistically more likely to enroll, so need less aid to entice them. A school official now denies putting that part of the model into practice.
-- At Pittsburgh's Carnegie Mellon University and other schools, eager freshmen accepted through the early-admissions program can end up with less financial aid than comparable students who apply later. "If finances are a concern, you shouldn't be applying any place early decision," says William F. Elliott, vice president for enrollment management.
-- For the current school year, St. Bonaventure University in Bonaventure, N.Y., gave the poorest of its top-ranked prospects just over half the grants they needed -- but gave more-affluent prospects more than three times their need. The result: A more-affluent student body, since 75% of the wealthier students decided to enroll, while only one in 11 of the neediest did so.
"This is an ugly, ugly business," says Walter C. Cathie, dean for enrollment management at Wabash College in Crawfordsville, Ind., who says he left a financial-aid post at Carnegie Mellon last year partly because of ethical concerns. Even two top Hopkins aid officials admitted at an industry gathering that the public-relations consequences if word leaked out could be "scarifying."
The schools argue that the new financial-aid engineering is necessary at a time when tuitions are high and many private schools don't have enough aid to go around. The complex computer modeling, they say, is designed to help them get the kind of students they want without giving away too much of their own money -- since aid grants are, after all, a form of price discounting.
About 60% of the nation's 1,500 private, four-year colleges now use statistical analysis "in some form" to dole out aid, estimates Steven T. Syverson, dean of admissions and financial aid at Lawrence University in Appleton, Wis. "Maximizing revenue is the buzzword of educational administrators these days," explains Jon Boeckenstedt, St. Bonaventure's dean of enrollment management. He concedes "there are some inequities certainly operating" at his school, but adds, "I would challenge anyone to come up with a system that's always fair and always equitable."
Ivy League colleges and others with big endowments have enough financial-aid funds to meet all their students' needs, and so generally don't rely on such Darwinian methods. Critics say other colleges shouldn't do so either. Financial-aid leveraging, they say, is discriminatory, and acts as a second tier of admissions. At its most insidious, critics say, it can eradicate "need-blind" admissions altogether. After all, what does it matter if the admissions process is need-blind, if a college doesn't give the neediest enough aid to enroll?
"I think it's terrible," says Hugh Chandler, chairman of the guidance department at Weston High School in Weston, Mass. He says colleges should base their aid decisions on "what makes sense for a kid, rather than how are we going to get the biggest bang for a buck." Enrollment management of this type violates the "good practice" guidelines of both the National Association of Student Financial Aid Administrators, or Nasfaa, and the National Association of College Admission Counselors, both groups say. But neither has enforcement power -- and Nasfaa says it is considering changing its code so the practice won't be considered unethical anymore.
Colleges, of course, have always offered their most attractive aid packages to their hottest prospects, such as athletes or especially gifted students. But the sophisticated computer analyses that so many schools use now didn't start until about 15 years ago, and didn't become widespread until 1992.
That year, Congress liberalized the federal formula for calculating financial need, making most families eligible for more aid. Unfortunately, the government didn't provide extra federal funds to pay for all that extra aid. Colleges were forced either to boost their own financial-aid budgets, or to offer aid more selectively. Many chose the latter path, out of necessity.
To achieve their ends, these schools still start by calculating a student's demonstrated "need" -- determined by family income, assets and debt. Instead of stopping there, though, some schools then factor in dozens of variables that affect a student's propensity to attend the college once he or she is accepted. The higher the propensity, the less financial aid the student may expect. Factors can include a student's home state, ethnic background and area of study, and who initiated the first contact with the school.
"Those who have the most interest in the school are going to be less price sensitive," explains Stephen H. Brooks, a Waltham, Mass., consultant who has performed statistical analyses for about two dozen schools, including Johns Hopkins, New York University, Rochester Institute of Technology, and Hobart and William Smith colleges.
The mathematical models are customized for each school. Drexel University in Philadelphia, for example, used a model that accurately predicted more business majors would enroll if it sweetened their offers, according to Donald G. Dickason, who recently retired as head of enrollment management. Certain other students were offered less-generous aid packages to make up the difference, he acknowledges, but he won't say which ones. His successor, Gary Hamme, didn't return calls to discuss whether the model is used now.
Creating the models is a delicate business, and a host of consultants have sprouted up to tackle the job. A brochure from the National Center for Enrollment Management in Littleton, Colo., promises an analysis that "links ability to pay with willingness to pay" and "packaging strategies that directly support your goals for both new and returning students." Thomas E. Williams, president, says his clients last year saw an average net tuition-revenue gain of $474,000 as a result of financial-aid leveraging.
A pamphlet from Dr. Brooks, the Waltham, Mass., consultant, questions whether colleges are "too generous, too stingy or just right" with their institutional grants. "Did you overspend to get students who would have matriculated with lesser aid? Did you underspend and lose students who would have come with more support?"
Dr. Brooks, whose models sometimes suggest less generosity to early-decision applicants, offers this advice to families: "If you go into the showroom and say you want to have that red Corvette, they're not going to cut the price much. I would say being a little cagey would be helpful."
Johns Hopkins turned to Dr. Brooks last year when it wanted to increase its humanities enrollment by 20% and reduce its overcrowded premed program. At an Nasfaa conference in San Antonio last summer, a Hopkins official explained how the school achieved its goal by using an econometric model, a mathematical analysis that tries to predict down to the dollar what it will cost to persuade a student to enroll.
The model suggested that Hopkins should offer $3,000 more to prospective humanities students with Scholastic Assessment Test scores over 1,200 and relatively low financial-aid needs; the extra money would increase enrollment probability by nine percentage points. One group of students, the model suggested, shouldn't get the extra cash: those who had had campus interviews, a step Hopkins itself "strongly" recommends. Campus interviewees already were about 9% more likely to enroll at Hopkins than other prospects, so the cash incentive wasn't necessary, concluded the analysis, which was based on two years of past enrollment data.
The model also suggested cutting by $1,000 the aid offers to most premed campus interviewees with SAT scores below 1300. Those students were already hooked, so "it wouldn't knock that many students out. But it would increase the net revenue from this group," explained Robert J. Massa, the school's dean of enrollment management.
"So let's look at the results," said Dr. Massa, as he displayed a bar chart on an overhead projector. "In fact, what we wanted to happen did happen." Humanities students increased "by exactly 20%" while the premed group dropped "by about 10" students, he said. He stressed, however, that the analysis was "just one tool," not "the sole path."
During the presentation, which was taped, Dr. Massa acknowledged that the model raised ethical questions. When an audience member asked, "How upfront are you with families about what you're doing?" Dr. Massa conceded the school hadn't told them about its formulas. He said colleges should come clean "as we become more and more sure of what we're doing . . . ." Yet he added, "They [parents and students] don't need to know the specifics of, `If you come for an interview you're not going to get financial aid,' for example."
Interviewed later, Dr. Massa emphasized that the model has only been used once so far, and that Hopkins didn't follow it exactly. He denied that Hopkins penalized students who had campus interviews. The school actually offered about $3,000 extra in grants to all prospective humanities majors except early-admission applicants, he said. And rather than cutting natural-science majors' aid outright, it gave most of them the college's least-attractive aid package, with about $1,500 less in grants and $1,500 more in loans than the best package.
Carnegie Mellon, considered a pioneer in statistical modeling, has taken the process further. Its enrollment vice president, Dr. Elliott, wrote a doctoral thesis 22 years ago on maximizing net tuition revenue. Eight administrators meet for several hours each week to tinker with formulas and review the latest spreadsheets that attempt to predict "yield" -- the percentage of accepted students in different groups that will actually enroll, if money is taken from one group and given to another. Without such work, Dr. Elliott says, "I'd have an institution full of engineers and computer scientists and I wouldn't have anybody in arts and design."
An internal "Awarding Strategy" for the university's popular computer-sciences school for the 1995-96 academic year suggested offering some top-ranked students almost five times their demonstrated need in cash grants if they qualified for $4,000 or less in aid. For similarly ranked students who required more than $20,000 in aid, the model suggested offering 75% in grants. Meanwhile, no grants were budgeted for the 142 students ranked at the bottom -- fully 60% of accepted students -- regardless of need.
Dr. Elliott declined to say how the award strategy was carried out, but Mr. Cathie, the former Carnegie Mellon financial-aid administrator, says he believes it followed the model's recommendations.
Carnegie Mellon also takes an aggressive approach toward its competition. After admitted students receive their financial-aid offers in the spring, they are invited to fax the school any better offers they receive from other colleges. Carnegie Mellon sets aside more than $250,000 in its budget for them in what is known internally as the "Reaction Program." For desirable students, the school generally meets competing offers.
Of course, early-admission candidates at Carnegie Mellon don't benefit from the program, since they agree to withdraw all other applications upon acceptance. Nor does the university disclose this fact to them in the application process. Early-admission applicants also sometimes receive less generous financial-aid offers because their packages are based on the previous year's statistical models; regular applicants might receive "hundreds" more, depending on what the new model suggests, Dr. Elliott says.
Carnegie Mellon sometimes troubles Dr. Elliott "These are gut-wrenching decisions," he says -- but he feels there is little choice. "Obviously, I don't have enough money to be as generous as I might like to be," he says. "I could make it very fair -- and be out of business."
Peter Anderson, a freshman at Johns Hopkins University in Baltimore, may have made a costly mistake: He told the school that he planned to be a premed major.
The problem is, Johns Hopkins already has plenty of premed majors. It wanted more humanities majors. And so in an experiment last spring, it quietly offered fatter financial-aid grants to incoming humanities majors than to most of their premed counterparts. While Peter is getting $14,000 a year, he might have snared about $3,000 more if he planned to major in, say, art history.
"What you're telling the kid is, lie to get into college," says Peter's astonished mother, Joan Anderson, a New Kingstown, Pa., homemaker, after she is told of the practice by a reporter.
Johns Hopkins's bold experiment is being tried out at colleges all over the country. At these schools, grants no longer are based overwhelmingly on a student's demonstrated financial need, but also on his or her "price sensitivity" to college costs, calculated from dozens of factors that all add up to one thing: how anxious the student is to attend. The more eager the student -- and Hopkins is high on the list for premed majors like Peter -- the less aid they can expect to get. Although students and families awaiting word of college admissions this week aren't being told, these colleges are employing some of the same "yield management" techniques used to price and fill airline seats and hotel rooms.
The statistical models, which have become widespread only in the past few years, go by innocuous names like "financial aid leveraging." But they are quietly transforming the size and shape of student bodies in all sorts of ways, some of which are alarming educators.
A sampling:
-- The Johns Hopkins model -- which the school isn't currently using but may try again in the future -- suggested slashing aid to some prospects who came for oncampus interviews. The reason: Those students are statistically more likely to enroll, so need less aid to entice them. A school official now denies putting that part of the model into practice.
-- At Pittsburgh's Carnegie Mellon University and other schools, eager freshmen accepted through the early-admissions program can end up with less financial aid than comparable students who apply later. "If finances are a concern, you shouldn't be applying any place early decision," says William F. Elliott, vice president for enrollment management.
-- For the current school year, St. Bonaventure University in Bonaventure, N.Y., gave the poorest of its top-ranked prospects just over half the grants they needed -- but gave more-affluent prospects more than three times their need. The result: A more-affluent student body, since 75% of the wealthier students decided to enroll, while only one in 11 of the neediest did so.
"This is an ugly, ugly business," says Walter C. Cathie, dean for enrollment management at Wabash College in Crawfordsville, Ind., who says he left a financial-aid post at Carnegie Mellon last year partly because of ethical concerns. Even two top Hopkins aid officials admitted at an industry gathering that the public-relations consequences if word leaked out could be "scarifying."
The schools argue that the new financial-aid engineering is necessary at a time when tuitions are high and many private schools don't have enough aid to go around. The complex computer modeling, they say, is designed to help them get the kind of students they want without giving away too much of their own money -- since aid grants are, after all, a form of price discounting.
About 60% of the nation's 1,500 private, four-year colleges now use statistical analysis "in some form" to dole out aid, estimates Steven T. Syverson, dean of admissions and financial aid at Lawrence University in Appleton, Wis. "Maximizing revenue is the buzzword of educational administrators these days," explains Jon Boeckenstedt, St. Bonaventure's dean of enrollment management. He concedes "there are some inequities certainly operating" at his school, but adds, "I would challenge anyone to come up with a system that's always fair and always equitable."
Ivy League colleges and others with big endowments have enough financial-aid funds to meet all their students' needs, and so generally don't rely on such Darwinian methods. Critics say other colleges shouldn't do so either. Financial-aid leveraging, they say, is discriminatory, and acts as a second tier of admissions. At its most insidious, critics say, it can eradicate "need-blind" admissions altogether. After all, what does it matter if the admissions process is need-blind, if a college doesn't give the neediest enough aid to enroll?
"I think it's terrible," says Hugh Chandler, chairman of the guidance department at Weston High School in Weston, Mass. He says colleges should base their aid decisions on "what makes sense for a kid, rather than how are we going to get the biggest bang for a buck." Enrollment management of this type violates the "good practice" guidelines of both the National Association of Student Financial Aid Administrators, or Nasfaa, and the National Association of College Admission Counselors, both groups say. But neither has enforcement power -- and Nasfaa says it is considering changing its code so the practice won't be considered unethical anymore.
Colleges, of course, have always offered their most attractive aid packages to their hottest prospects, such as athletes or especially gifted students. But the sophisticated computer analyses that so many schools use now didn't start until about 15 years ago, and didn't become widespread until 1992.
That year, Congress liberalized the federal formula for calculating financial need, making most families eligible for more aid. Unfortunately, the government didn't provide extra federal funds to pay for all that extra aid. Colleges were forced either to boost their own financial-aid budgets, or to offer aid more selectively. Many chose the latter path, out of necessity.
To achieve their ends, these schools still start by calculating a student's demonstrated "need" -- determined by family income, assets and debt. Instead of stopping there, though, some schools then factor in dozens of variables that affect a student's propensity to attend the college once he or she is accepted. The higher the propensity, the less financial aid the student may expect. Factors can include a student's home state, ethnic background and area of study, and who initiated the first contact with the school.
"Those who have the most interest in the school are going to be less price sensitive," explains Stephen H. Brooks, a Waltham, Mass., consultant who has performed statistical analyses for about two dozen schools, including Johns Hopkins, New York University, Rochester Institute of Technology, and Hobart and William Smith colleges.
The mathematical models are customized for each school. Drexel University in Philadelphia, for example, used a model that accurately predicted more business majors would enroll if it sweetened their offers, according to Donald G. Dickason, who recently retired as head of enrollment management. Certain other students were offered less-generous aid packages to make up the difference, he acknowledges, but he won't say which ones. His successor, Gary Hamme, didn't return calls to discuss whether the model is used now.
Creating the models is a delicate business, and a host of consultants have sprouted up to tackle the job. A brochure from the National Center for Enrollment Management in Littleton, Colo., promises an analysis that "links ability to pay with willingness to pay" and "packaging strategies that directly support your goals for both new and returning students." Thomas E. Williams, president, says his clients last year saw an average net tuition-revenue gain of $474,000 as a result of financial-aid leveraging.
A pamphlet from Dr. Brooks, the Waltham, Mass., consultant, questions whether colleges are "too generous, too stingy or just right" with their institutional grants. "Did you overspend to get students who would have matriculated with lesser aid? Did you underspend and lose students who would have come with more support?"
Dr. Brooks, whose models sometimes suggest less generosity to early-decision applicants, offers this advice to families: "If you go into the showroom and say you want to have that red Corvette, they're not going to cut the price much. I would say being a little cagey would be helpful."
Johns Hopkins turned to Dr. Brooks last year when it wanted to increase its humanities enrollment by 20% and reduce its overcrowded premed program. At an Nasfaa conference in San Antonio last summer, a Hopkins official explained how the school achieved its goal by using an econometric model, a mathematical analysis that tries to predict down to the dollar what it will cost to persuade a student to enroll.
The model suggested that Hopkins should offer $3,000 more to prospective humanities students with Scholastic Assessment Test scores over 1,200 and relatively low financial-aid needs; the extra money would increase enrollment probability by nine percentage points. One group of students, the model suggested, shouldn't get the extra cash: those who had had campus interviews, a step Hopkins itself "strongly" recommends. Campus interviewees already were about 9% more likely to enroll at Hopkins than other prospects, so the cash incentive wasn't necessary, concluded the analysis, which was based on two years of past enrollment data.
The model also suggested cutting by $1,000 the aid offers to most premed campus interviewees with SAT scores below 1300. Those students were already hooked, so "it wouldn't knock that many students out. But it would increase the net revenue from this group," explained Robert J. Massa, the school's dean of enrollment management.
"So let's look at the results," said Dr. Massa, as he displayed a bar chart on an overhead projector. "In fact, what we wanted to happen did happen." Humanities students increased "by exactly 20%" while the premed group dropped "by about 10" students, he said. He stressed, however, that the analysis was "just one tool," not "the sole path."
During the presentation, which was taped, Dr. Massa acknowledged that the model raised ethical questions. When an audience member asked, "How upfront are you with families about what you're doing?" Dr. Massa conceded the school hadn't told them about its formulas. He said colleges should come clean "as we become more and more sure of what we're doing . . . ." Yet he added, "They [parents and students] don't need to know the specifics of, `If you come for an interview you're not going to get financial aid,' for example."
Interviewed later, Dr. Massa emphasized that the model has only been used once so far, and that Hopkins didn't follow it exactly. He denied that Hopkins penalized students who had campus interviews. The school actually offered about $3,000 extra in grants to all prospective humanities majors except early-admission applicants, he said. And rather than cutting natural-science majors' aid outright, it gave most of them the college's least-attractive aid package, with about $1,500 less in grants and $1,500 more in loans than the best package.
Carnegie Mellon, considered a pioneer in statistical modeling, has taken the process further. Its enrollment vice president, Dr. Elliott, wrote a doctoral thesis 22 years ago on maximizing net tuition revenue. Eight administrators meet for several hours each week to tinker with formulas and review the latest spreadsheets that attempt to predict "yield" -- the percentage of accepted students in different groups that will actually enroll, if money is taken from one group and given to another. Without such work, Dr. Elliott says, "I'd have an institution full of engineers and computer scientists and I wouldn't have anybody in arts and design."
An internal "Awarding Strategy" for the university's popular computer-sciences school for the 1995-96 academic year suggested offering some top-ranked students almost five times their demonstrated need in cash grants if they qualified for $4,000 or less in aid. For similarly ranked students who required more than $20,000 in aid, the model suggested offering 75% in grants. Meanwhile, no grants were budgeted for the 142 students ranked at the bottom -- fully 60% of accepted students -- regardless of need.
Dr. Elliott declined to say how the award strategy was carried out, but Mr. Cathie, the former Carnegie Mellon financial-aid administrator, says he believes it followed the model's recommendations.
Carnegie Mellon also takes an aggressive approach toward its competition. After admitted students receive their financial-aid offers in the spring, they are invited to fax the school any better offers they receive from other colleges. Carnegie Mellon sets aside more than $250,000 in its budget for them in what is known internally as the "Reaction Program." For desirable students, the school generally meets competing offers.
Of course, early-admission candidates at Carnegie Mellon don't benefit from the program, since they agree to withdraw all other applications upon acceptance. Nor does the university disclose this fact to them in the application process. Early-admission applicants also sometimes receive less generous financial-aid offers because their packages are based on the previous year's statistical models; regular applicants might receive "hundreds" more, depending on what the new model suggests, Dr. Elliott says.
Carnegie Meltem sometimes troubles Dr. Elliott "These are gut-wrenching decisions," he says -- but he feels there is little choice. "Obviously, I don't have enough money to be as generous as I might like to be," he says. "I could make it very fair -- and be out of business."
The problem is, Johns Hopkins already has plenty of premed majors. It wanted more humanities majors. And so in an experiment last spring, it quietly offered fatter financial-aid grants to incoming humanities majors than to most of their premed counterparts. While Peter is getting $14,000 a year, he might have snared about $3,000 more if he planned to major in, say, art history.
"What you're telling the kid is, lie to get into college," says Peter's astonished mother, Joan Anderson, a New Kingstown, Pa., homemaker, after she is told of the practice by a reporter.
Johns Hopkins's bold experiment is being tried out at colleges all over the country. At these schools, grants no longer are based overwhelmingly on a student's demonstrated financial need, but also on his or her "price sensitivity" to college costs, calculated from dozens of factors that all add up to one thing: how anxious the student is to attend. The more eager the student -- and Hopkins is high on the list for premed majors like Peter -- the less aid they can expect to get. Although students and families awaiting word of college admissions this week aren't being told, these colleges are employing some of the same "yield management" techniques used to price and fill airline seats and hotel rooms.
The statistical models, which have become widespread only in the past few years, go by innocuous names like "financial aid leveraging." But they are quietly transforming the size and shape of student bodies in all sorts of ways, some of which are alarming educators.
A sampling:
-- The Johns Hopkins model -- which the school isn't currently using but may try again in the future -- suggested slashing aid to some prospects who came for oncampus interviews. The reason: Those students are statistically more likely to enroll, so need less aid to entice them. A school official now denies putting that part of the model into practice.
-- At Pittsburgh's Carnegie Mellon University and other schools, eager freshmen accepted through the early-admissions program can end up with less financial aid than comparable students who apply later. "If finances are a concern, you shouldn't be applying any place early decision," says William F. Elliott, vice president for enrollment management.
-- For the current school year, St. Bonaventure University in Bonaventure, N.Y., gave the poorest of its top-ranked prospects just over half the grants they needed -- but gave more-affluent prospects more than three times their need. The result: A more-affluent student body, since 75% of the wealthier students decided to enroll, while only one in 11 of the neediest did so.
"This is an ugly, ugly business," says Walter C. Cathie, dean for enrollment management at Wabash College in Crawfordsville, Ind., who says he left a financial-aid post at Carnegie Mellon last year partly because of ethical concerns. Even two top Hopkins aid officials admitted at an industry gathering that the public-relations consequences if word leaked out could be "scarifying."
The schools argue that the new financial-aid engineering is necessary at a time when tuitions are high and many private schools don't have enough aid to go around. The complex computer modeling, they say, is designed to help them get the kind of students they want without giving away too much of their own money -- since aid grants are, after all, a form of price discounting.
About 60% of the nation's 1,500 private, four-year colleges now use statistical analysis "in some form" to dole out aid, estimates Steven T. Syverson, dean of admissions and financial aid at Lawrence University in Appleton, Wis. "Maximizing revenue is the buzzword of educational administrators these days," explains Jon Boeckenstedt, St. Bonaventure's dean of enrollment management. He concedes "there are some inequities certainly operating" at his school, but adds, "I would challenge anyone to come up with a system that's always fair and always equitable."
Ivy League colleges and others with big endowments have enough financial-aid funds to meet all their students' needs, and so generally don't rely on such Darwinian methods. Critics say other colleges shouldn't do so either. Financial-aid leveraging, they say, is discriminatory, and acts as a second tier of admissions. At its most insidious, critics say, it can eradicate "need-blind" admissions altogether. After all, what does it matter if the admissions process is need-blind, if a college doesn't give the neediest enough aid to enroll?
"I think it's terrible," says Hugh Chandler, chairman of the guidance department at Weston High School in Weston, Mass. He says colleges should base their aid decisions on "what makes sense for a kid, rather than how are we going to get the biggest bang for a buck." Enrollment management of this type violates the "good practice" guidelines of both the National Association of Student Financial Aid Administrators, or Nasfaa, and the National Association of College Admission Counselors, both groups say. But neither has enforcement power -- and Nasfaa says it is considering changing its code so the practice won't be considered unethical anymore.
Colleges, of course, have always offered their most attractive aid packages to their hottest prospects, such as athletes or especially gifted students. But the sophisticated computer analyses that so many schools use now didn't start until about 15 years ago, and didn't become widespread until 1992.
That year, Congress liberalized the federal formula for calculating financial need, making most families eligible for more aid. Unfortunately, the government didn't provide extra federal funds to pay for all that extra aid. Colleges were forced either to boost their own financial-aid budgets, or to offer aid more selectively. Many chose the latter path, out of necessity.
To achieve their ends, these schools still start by calculating a student's demonstrated "need" -- determined by family income, assets and debt. Instead of stopping there, though, some schools then factor in dozens of variables that affect a student's propensity to attend the college once he or she is accepted. The higher the propensity, the less financial aid the student may expect. Factors can include a student's home state, ethnic background and area of study, and who initiated the first contact with the school.
"Those who have the most interest in the school are going to be less price sensitive," explains Stephen H. Brooks, a Waltham, Mass., consultant who has performed statistical analyses for about two dozen schools, including Johns Hopkins, New York University, Rochester Institute of Technology, and Hobart and William Smith colleges.
The mathematical models are customized for each school. Drexel University in Philadelphia, for example, used a model that accurately predicted more business majors would enroll if it sweetened their offers, according to Donald G. Dickason, who recently retired as head of enrollment management. Certain other students were offered less-generous aid packages to make up the difference, he acknowledges, but he won't say which ones. His successor, Gary Hamme, didn't return calls to discuss whether the model is used now.
Creating the models is a delicate business, and a host of consultants have sprouted up to tackle the job. A brochure from the National Center for Enrollment Management in Littleton, Colo., promises an analysis that "links ability to pay with willingness to pay" and "packaging strategies that directly support your goals for both new and returning students." Thomas E. Williams, president, says his clients last year saw an average net tuition-revenue gain of $474,000 as a result of financial-aid leveraging.
A pamphlet from Dr. Brooks, the Waltham, Mass., consultant, questions whether colleges are "too generous, too stingy or just right" with their institutional grants. "Did you overspend to get students who would have matriculated with lesser aid? Did you underspend and lose students who would have come with more support?"
Dr. Brooks, whose models sometimes suggest less generosity to early-decision applicants, offers this advice to families: "If you go into the showroom and say you want to have that red Corvette, they're not going to cut the price much. I would say being a little cagey would be helpful."
Johns Hopkins turned to Dr. Brooks last year when it wanted to increase its humanities enrollment by 20% and reduce its overcrowded premed program. At an Nasfaa conference in San Antonio last summer, a Hopkins official explained how the school achieved its goal by using an econometric model, a mathematical analysis that tries to predict down to the dollar what it will cost to persuade a student to enroll.
The model suggested that Hopkins should offer $3,000 more to prospective humanities students with Scholastic Assessment Test scores over 1,200 and relatively low financial-aid needs; the extra money would increase enrollment probability by nine percentage points. One group of students, the model suggested, shouldn't get the extra cash: those who had had campus interviews, a step Hopkins itself "strongly" recommends. Campus interviewees already were about 9% more likely to enroll at Hopkins than other prospects, so the cash incentive wasn't necessary, concluded the analysis, which was based on two years of past enrollment data.
The model also suggested cutting by $1,000 the aid offers to most premed campus interviewees with SAT scores below 1300. Those students were already hooked, so "it wouldn't knock that many students out. But it would increase the net revenue from this group," explained Robert J. Massa, the school's dean of enrollment management.
"So let's look at the results," said Dr. Massa, as he displayed a bar chart on an overhead projector. "In fact, what we wanted to happen did happen." Humanities students increased "by exactly 20%" while the premed group dropped "by about 10" students, he said. He stressed, however, that the analysis was "just one tool," not "the sole path."
During the presentation, which was taped, Dr. Massa acknowledged that the model raised ethical questions. When an audience member asked, "How upfront are you with families about what you're doing?" Dr. Massa conceded the school hadn't told them about its formulas. He said colleges should come clean "as we become more and more sure of what we're doing . . . ." Yet he added, "They [parents and students] don't need to know the specifics of, `If you come for an interview you're not going to get financial aid,' for example."
Interviewed later, Dr. Massa emphasized that the model has only been used once so far, and that Hopkins didn't follow it exactly. He denied that Hopkins penalized students who had campus interviews. The school actually offered about $3,000 extra in grants to all prospective humanities majors except early-admission applicants, he said. And rather than cutting natural-science majors' aid outright, it gave most of them the college's least-attractive aid package, with about $1,500 less in grants and $1,500 more in loans than the best package.
Carnegie Mellon, considered a pioneer in statistical modeling, has taken the process further. Its enrollment vice president, Dr. Elliott, wrote a doctoral thesis 22 years ago on maximizing net tuition revenue. Eight administrators meet for several hours each week to tinker with formulas and review the latest spreadsheets that attempt to predict "yield" -- the percentage of accepted students in different groups that will actually enroll, if money is taken from one group and given to another. Without such work, Dr. Elliott says, "I'd have an institution full of engineers and computer scientists and I wouldn't have anybody in arts and design."
An internal "Awarding Strategy" for the university's popular computer-sciences school for the 1995-96 academic year suggested offering some top-ranked students almost five times their demonstrated need in cash grants if they qualified for $4,000 or less in aid. For similarly ranked students who required more than $20,000 in aid, the model suggested offering 75% in grants. Meanwhile, no grants were budgeted for the 142 students ranked at the bottom -- fully 60% of accepted students -- regardless of need.
Dr. Elliott declined to say how the award strategy was carried out, but Mr. Cathie, the former Carnegie Mellon financial-aid administrator, says he believes it followed the model's recommendations.
Carnegie Mellon also takes an aggressive approach toward its competition. After admitted students receive their financial-aid offers in the spring, they are invited to fax the school any better offers they receive from other colleges. Carnegie Mellon sets aside more than $250,000 in its budget for them in what is known internally as the "Reaction Program." For desirable students, the school generally meets competing offers.
Of course, early-admission candidates at Carnegie Mellon don't benefit from the program, since they agree to withdraw all other applications upon acceptance. Nor does the university disclose this fact to them in the application process. Early-admission applicants also sometimes receive less generous financial-aid offers because their packages are based on the previous year's statistical models; regular applicants might receive "hundreds" more, depending on what the new model suggests, Dr. Elliott says.
Carnegie Meltem sometimes troubles Dr. Elliott "These are gut-wrenching decisions," he says -- but he feels there is little choice. "Obviously, I don't have enough money to be as generous as I might like to be," he says. "I could make it very fair -- and be out of business."
College Tuition and Price Discrimination
To listen to the public statements of university officials, you would think that colleges offer scholarships and reduced tuition to needy students because of their idealistic views about equality of opportunity. While for some university administrators this may be a consideration, we must also realize that colleges have strong incentives to price-discriminate, much as airlines and hotels do. Notice that a college scholarship can be thought of as a selective price reduction, given to some customers but not to others. A college would like to charge high prices to students who are eager to come and lower prices to those who are not likely to come unless they get a price break.
A story in the Wall Street Journal of April 1, 1996 is headlined "Colleges Manipulate Financial-Aid Offers, Shortchanging Many". The subhead is "Early admittees and others are eager so schools figure they'll pay more".
The story begins by describing the experience of an applicant to Johns Hopkins, who told the admissions people that he planned to be a pre-med major. According to the story, he got a smaller scholarship than he would have received if he had said he planned to major in the liberal arts. The story reports that the school used a formula for administering financial aid that gave less aid to "students that are statistically more likely to enroll, so that less aid is needed to entice them." The story compares these techniques to the "yield management" techniques used to price and fill airline seats and hotel rooms.
The story reports that at Carnegie-Mellon and other schools, "eager freshmen accepted through the early-admissions program than comparable students who apply later." An admissions department bureaucrat at Carnegie-Mellon is quoted as saying "If finances are a concern, you shouldn't be applying any place early decision". (I know his quotation doesn't quite parse, but it is probably an acceptable expression in the dialect of English (known as deanish) that is spoken by university administrators.)
According to the story, about 60% of the nation's 1500 private four-year colleges use statistical analysis "in some form" to dole out aid. An admissions bureaucrat at another school, whose job title is "Dean of Enrollment Management" says "Maximizing revenue is the buzzword of educational administrators these days."
The story reports that at Carnegie-Mellon, after students receive their financial aid offers in the spring, they are invited to fax the school any better offers that they receive from other colleges. Carnegie sets aside more than $250,000 for them in what is known as the "Reaction Program" which generally meets competing offers for desirable students. Students who choose early admission don't qualify for the Reaction Program, since they must agree to withdraw all other applications on acceptance of early admission.
http://zia.hss.cmu.edu/miller/eep/news/tuition.html
A story in the Wall Street Journal of April 1, 1996 is headlined "Colleges Manipulate Financial-Aid Offers, Shortchanging Many". The subhead is "Early admittees and others are eager so schools figure they'll pay more".
The story begins by describing the experience of an applicant to Johns Hopkins, who told the admissions people that he planned to be a pre-med major. According to the story, he got a smaller scholarship than he would have received if he had said he planned to major in the liberal arts. The story reports that the school used a formula for administering financial aid that gave less aid to "students that are statistically more likely to enroll, so that less aid is needed to entice them." The story compares these techniques to the "yield management" techniques used to price and fill airline seats and hotel rooms.
The story reports that at Carnegie-Mellon and other schools, "eager freshmen accepted through the early-admissions program than comparable students who apply later." An admissions department bureaucrat at Carnegie-Mellon is quoted as saying "If finances are a concern, you shouldn't be applying any place early decision". (I know his quotation doesn't quite parse, but it is probably an acceptable expression in the dialect of English (known as deanish) that is spoken by university administrators.)
According to the story, about 60% of the nation's 1500 private four-year colleges use statistical analysis "in some form" to dole out aid. An admissions bureaucrat at another school, whose job title is "Dean of Enrollment Management" says "Maximizing revenue is the buzzword of educational administrators these days."
The story reports that at Carnegie-Mellon, after students receive their financial aid offers in the spring, they are invited to fax the school any better offers that they receive from other colleges. Carnegie sets aside more than $250,000 for them in what is known as the "Reaction Program" which generally meets competing offers for desirable students. Students who choose early admission don't qualify for the Reaction Program, since they must agree to withdraw all other applications on acceptance of early admission.
http://zia.hss.cmu.edu/miller/eep/news/tuition.html
As college costs rise, loans become harder to get
By David Cho
Washington Post Staff Writer
Monday, December 28, 2009
When Daniel Ottalini entered the University of Maryland in 2004, his family had an array of choices to cover the cost -- cheap student loans, a second mortgage at low rates, credit cards with high limits and their own soaring investments.
By the time his younger brother, Russell, started at the University of Pittsburgh this fall, the financial crisis had left the family with fewer options. Russell has had to juggle several jobs in school, and the money he could borrow came with a much higher interest rate that could climb even further over time.
The upheaval in financial markets did not just eliminate generous lending for home buyers; it also ended an era of easy credit for students and their families facing the soaring cost of a college degree.
To pay for higher education, most Americans had come to rely on a range of financial products born of the Wall Street boom. Nearly all of these shrank or disappeared in the storm that engulfed the stock and debt markets.
Lenders have raised rates and tightened standards, dramatically limiting the availability of home-equity loans and private student loans. College savings accounts, known as 529 plans, had acute losses in the downturn. And a new law, set to take effect Feb. 22, will bar students younger than 21 from getting credit cards on their own.
Loans offered with federal backing were the lone form of student debt to expand, but only because the government stepped in last year to prevent this business from collapsing under the pressure of the credit crunch. Still, the most common type of federally backed loan has a limit of $5,500 a year, not enough to pay for most four-year programs.
Even as the financing options have narrowed for families, college expenses are rising faster than ever as schools suffer from endowment losses and cuts in state funding because of the financial crisis and the recession that followed.
Last month, California's public universities announced that tuition fees would rise by 32 percent, sparking student demonstrations across the state. University of Virginia officials said a 15 percent cut in state funding for higher education will also force them to significantly raise tuition.
Some educators are concerned that the new price tags will discourage poor students from applying and will price out middle-class families that make too much to obtain financial aid, but not enough to easily afford college.
"It's not only the credit model that has changed; the basic financial model of higher education has also become challenged," said Anthony Marx, president of Amherst College in Massachusetts. "We were already concerned that middle-class students were getting squeezed by racking up debt that could constrain their career choices after they graduate. All of that comes under more strain in these new circumstances."
Other educators worry that students will be forced to compromise on their education.
Russell Ottalini said he choose the University of Pittsburgh because he judged that it would be best for his Japanese-language studies. He relied on his parents to borrow money for his education. But he acknowledged that economic times are tough and said he is willing to transfer to a cheaper school if one parent gets laid off, even if it means attending a lesser program.
"My dad told me I should go to college where I wanted to go," said Russell, 19, whose family lives in Silver Spring. "But not only do my parents have to co-sign for most of my loans, they have to watch one of their sons take on immense amount of debt."
* * *
While public universities had little to do with causing the financial crisis, they are suffering its consequences.
To help close a record $60 billion gap in the state budget triggered by the real estate downturn, for instance, California announced $800 million in cuts to the University of California system of 10 schools. In the past two years, a fifth of the system's state funding has vanished. An additional $1.3 billion in reductions is expected next year.
In response, the system's board of regents announced in November the 32 percent increase in tuition, taking effect next year.
After the decision was made, armed police in riot gear had to protect officials from protesters. Students took over classroom buildings at Berkeley, Los Angeles and Santa Cruz, barricading themselves inside. Dozens of students have been arrested. Then, earlier this month, about 70 students and activists surrounded the home of Berkeley's chancellor while he and his family were sleeping, smashing light fixtures and windows and throwing torches at the house.
In Virginia, meanwhile, state funding for four-year colleges has decreased 15 percent. That has meant $19 million less this year at the University of Virginia, which has a total annual budget of more than $1.2 billion. Larger reductions are expected by university officials for the 2010-11 school year.
Exacerbating the deficit are losses in the school's endowment, which declined from $5.1 billion on June 30, 2008, to $3.9 billion six months later as its investments in the market tumbled. The endowment has since recovered by more than $300 million, but officials are lowering their projections of what the fund will return over the next few years.
Administrators say the University of Virginia remains committed to offering financial aid to anyone who needs it, and so far they have avoided layoffs by eliminating vacant positions. But school officials said they have been forced to raise the price of admission significantly. No figure has been set yet for the coming school year.
Tuition costs at U-Va. had already been growing rapidly. A decade ago, the price, excluding room and board, was just over $4,000 for in-state students and nearly $17,000 for out-of-state students per year. Now it's nearly $10,000 and $32,000, respectively.
* * *
Even before the financial crisis intensified the upward pressure on college costs, the price of a degree was soaring. Since 1980, the average cost of tuition and room and board has grown by a staggering 121 percent while median household income has risen a mere 18 percent, according to federal data. But the credit boom earlier this decade provided some relief for families.
Wall Street financiers packaged student loans into securities and sold them off to investors, who could trade them just like stocks. That, in turn, provided more money for lending, helping to make student loans cheaper and more available. Even people with poor credit histories could easily get a loan.
But during the last academic year, private student loan volume fell by half as financial firms became wary of lending to students, who generally do not have long credit histories. Officials from Sallie Mae, the industry leader in student lending, said they expect another significant decline this year.
Nor have families been able to keep borrowing against the value of their homes, which seemed for years to appreciate with no end in sight. Second mortgages have been shrinking along with real estate values. Money made available by banks to homeowners through home-equity lines of credit has fallen by 25 percent, to $538 billion, since the end of 2007, according to federal data.
About a decade ago, financial planners began to tout the benefits of 529 plans, which invest families' savings in the stock and bond markets with the aim of keeping pace with the growth in college expenses. Even before the crisis, these plans couldn't keep up. Then, in 2008, the average 529 plan lost 20 percent of its value.
And no longer can students count on the credit cards once available so freely, often by salespeople who lined campus walkways, offering free T-shirts and coffee mugs with their plastic. Many students used the cards to pay for books, meals and more.
Lawmakers passed a bill in May that dramatically curtails the issuance of credit cards to anyone younger than 21. Most consumer groups support the measure, saying credit card lenders have been taking advantage of naive youths, charging them hidden fees and exorbitant rates. Currently, about 84 percent of college students have credit cards, carrying balances of more than $3,000 on average, according to a study by Sallie Mae.
But some students said the law will cut off a critical source of credit for everyday expenses.
After Shauna Stuart, a senior at the University of Maryland, was denied student housing, she had to drive to campus and counted on her credit card to pay for gas and other costs of maintaining her car. She also used the card to buy food and cover unexpected expenses. One semester, when money was especially tight, Stuart bought her books with the card.
"It would be really difficult to not have it," she said.
Financial planners say parents will now have to carry more of the financial weight for their children. Students on their own can obtain federally backed Stafford loans, but they have limits of about $5,500 a year. The other major type of federally backed student loan, known as Parent PLUS, has no limit. But it requires Mom and Dad to co-sign, making them ultimately responsible for repayment, and the interest rates for these loans have nearly doubled in the past five years.
"If you are the average family and you've got two car payments and a mortgage, sadly, you are probably living paycheck to paycheck these days," said Gary Carpenter, executive director of the National College Advocacy Group. "And you've got a big problem -- how are you going to afford a state institution at $20,000 a year, not to mention a private one for than $40,000?"
Some educators worry that college programs will sacrifice quality to contain costs or become limited to those who can afford it.
"The big macro question is: Will we have to sacrifice the quality of education, or the access, based on talent rather than the ability to pay?" said Marx, the Amherst president. "Either of those make America less competitive for the next generation."
Washington Post Staff Writer
Monday, December 28, 2009
When Daniel Ottalini entered the University of Maryland in 2004, his family had an array of choices to cover the cost -- cheap student loans, a second mortgage at low rates, credit cards with high limits and their own soaring investments.
By the time his younger brother, Russell, started at the University of Pittsburgh this fall, the financial crisis had left the family with fewer options. Russell has had to juggle several jobs in school, and the money he could borrow came with a much higher interest rate that could climb even further over time.
The upheaval in financial markets did not just eliminate generous lending for home buyers; it also ended an era of easy credit for students and their families facing the soaring cost of a college degree.
To pay for higher education, most Americans had come to rely on a range of financial products born of the Wall Street boom. Nearly all of these shrank or disappeared in the storm that engulfed the stock and debt markets.
Lenders have raised rates and tightened standards, dramatically limiting the availability of home-equity loans and private student loans. College savings accounts, known as 529 plans, had acute losses in the downturn. And a new law, set to take effect Feb. 22, will bar students younger than 21 from getting credit cards on their own.
Loans offered with federal backing were the lone form of student debt to expand, but only because the government stepped in last year to prevent this business from collapsing under the pressure of the credit crunch. Still, the most common type of federally backed loan has a limit of $5,500 a year, not enough to pay for most four-year programs.
Even as the financing options have narrowed for families, college expenses are rising faster than ever as schools suffer from endowment losses and cuts in state funding because of the financial crisis and the recession that followed.
Last month, California's public universities announced that tuition fees would rise by 32 percent, sparking student demonstrations across the state. University of Virginia officials said a 15 percent cut in state funding for higher education will also force them to significantly raise tuition.
Some educators are concerned that the new price tags will discourage poor students from applying and will price out middle-class families that make too much to obtain financial aid, but not enough to easily afford college.
"It's not only the credit model that has changed; the basic financial model of higher education has also become challenged," said Anthony Marx, president of Amherst College in Massachusetts. "We were already concerned that middle-class students were getting squeezed by racking up debt that could constrain their career choices after they graduate. All of that comes under more strain in these new circumstances."
Other educators worry that students will be forced to compromise on their education.
Russell Ottalini said he choose the University of Pittsburgh because he judged that it would be best for his Japanese-language studies. He relied on his parents to borrow money for his education. But he acknowledged that economic times are tough and said he is willing to transfer to a cheaper school if one parent gets laid off, even if it means attending a lesser program.
"My dad told me I should go to college where I wanted to go," said Russell, 19, whose family lives in Silver Spring. "But not only do my parents have to co-sign for most of my loans, they have to watch one of their sons take on immense amount of debt."
* * *
While public universities had little to do with causing the financial crisis, they are suffering its consequences.
To help close a record $60 billion gap in the state budget triggered by the real estate downturn, for instance, California announced $800 million in cuts to the University of California system of 10 schools. In the past two years, a fifth of the system's state funding has vanished. An additional $1.3 billion in reductions is expected next year.
In response, the system's board of regents announced in November the 32 percent increase in tuition, taking effect next year.
After the decision was made, armed police in riot gear had to protect officials from protesters. Students took over classroom buildings at Berkeley, Los Angeles and Santa Cruz, barricading themselves inside. Dozens of students have been arrested. Then, earlier this month, about 70 students and activists surrounded the home of Berkeley's chancellor while he and his family were sleeping, smashing light fixtures and windows and throwing torches at the house.
In Virginia, meanwhile, state funding for four-year colleges has decreased 15 percent. That has meant $19 million less this year at the University of Virginia, which has a total annual budget of more than $1.2 billion. Larger reductions are expected by university officials for the 2010-11 school year.
Exacerbating the deficit are losses in the school's endowment, which declined from $5.1 billion on June 30, 2008, to $3.9 billion six months later as its investments in the market tumbled. The endowment has since recovered by more than $300 million, but officials are lowering their projections of what the fund will return over the next few years.
Administrators say the University of Virginia remains committed to offering financial aid to anyone who needs it, and so far they have avoided layoffs by eliminating vacant positions. But school officials said they have been forced to raise the price of admission significantly. No figure has been set yet for the coming school year.
Tuition costs at U-Va. had already been growing rapidly. A decade ago, the price, excluding room and board, was just over $4,000 for in-state students and nearly $17,000 for out-of-state students per year. Now it's nearly $10,000 and $32,000, respectively.
* * *
Even before the financial crisis intensified the upward pressure on college costs, the price of a degree was soaring. Since 1980, the average cost of tuition and room and board has grown by a staggering 121 percent while median household income has risen a mere 18 percent, according to federal data. But the credit boom earlier this decade provided some relief for families.
Wall Street financiers packaged student loans into securities and sold them off to investors, who could trade them just like stocks. That, in turn, provided more money for lending, helping to make student loans cheaper and more available. Even people with poor credit histories could easily get a loan.
But during the last academic year, private student loan volume fell by half as financial firms became wary of lending to students, who generally do not have long credit histories. Officials from Sallie Mae, the industry leader in student lending, said they expect another significant decline this year.
Nor have families been able to keep borrowing against the value of their homes, which seemed for years to appreciate with no end in sight. Second mortgages have been shrinking along with real estate values. Money made available by banks to homeowners through home-equity lines of credit has fallen by 25 percent, to $538 billion, since the end of 2007, according to federal data.
About a decade ago, financial planners began to tout the benefits of 529 plans, which invest families' savings in the stock and bond markets with the aim of keeping pace with the growth in college expenses. Even before the crisis, these plans couldn't keep up. Then, in 2008, the average 529 plan lost 20 percent of its value.
And no longer can students count on the credit cards once available so freely, often by salespeople who lined campus walkways, offering free T-shirts and coffee mugs with their plastic. Many students used the cards to pay for books, meals and more.
Lawmakers passed a bill in May that dramatically curtails the issuance of credit cards to anyone younger than 21. Most consumer groups support the measure, saying credit card lenders have been taking advantage of naive youths, charging them hidden fees and exorbitant rates. Currently, about 84 percent of college students have credit cards, carrying balances of more than $3,000 on average, according to a study by Sallie Mae.
But some students said the law will cut off a critical source of credit for everyday expenses.
After Shauna Stuart, a senior at the University of Maryland, was denied student housing, she had to drive to campus and counted on her credit card to pay for gas and other costs of maintaining her car. She also used the card to buy food and cover unexpected expenses. One semester, when money was especially tight, Stuart bought her books with the card.
"It would be really difficult to not have it," she said.
Financial planners say parents will now have to carry more of the financial weight for their children. Students on their own can obtain federally backed Stafford loans, but they have limits of about $5,500 a year. The other major type of federally backed student loan, known as Parent PLUS, has no limit. But it requires Mom and Dad to co-sign, making them ultimately responsible for repayment, and the interest rates for these loans have nearly doubled in the past five years.
"If you are the average family and you've got two car payments and a mortgage, sadly, you are probably living paycheck to paycheck these days," said Gary Carpenter, executive director of the National College Advocacy Group. "And you've got a big problem -- how are you going to afford a state institution at $20,000 a year, not to mention a private one for than $40,000?"
Some educators worry that college programs will sacrifice quality to contain costs or become limited to those who can afford it.
"The big macro question is: Will we have to sacrifice the quality of education, or the access, based on talent rather than the ability to pay?" said Marx, the Amherst president. "Either of those make America less competitive for the next generation."
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