Mark DeFusco is Senior Research Associate at the Pullias Center for Higher Education--University of Southern California. We’re pleased to share his blog post, Why Does a Wedding Dress Cost $5,000? here on the Edmit blog. Check it out, then read our follow-up Q&A with DeFusco on why it’s important to approach the “where should I go to college?” question with a consumer-focused mindset.
It is that time of year when high school seniors around the country anxiously go to their mailbox, hoping for a great big package. They have probably already felt the searing sting that comes with the dreaded thin envelope that woefully announces disappointing news—“despite your impressive credentials, we had an especially talented pool of candidates to choose from this year and we regret to inform you that you will no longer be considered for admission.”
The joy and celebration that comes from the fat package! Parents beam with pride as they boast to friends and family that their prodigy was selected to “their first choice.” My friends have children at the age where I routinely get these calls. I don’t have the heart to tell them the truth.
Little does the unwary parent know but nearly everyone gets a “presidential scholarship.” Colleges and universities routinely utilize very sophisticated consulting firms like Noel Levitz who have complicated statistical algorithms to help colleges design the most attractive package and to reduce “melt” (those students admitted to a university but who never attend).
The purchase decision made by most parents is unlike almost all important decisions that they will ever make. I recall a recent visit to my alma mater with my children. I was invited to breakfast with the president. My fond memories of the campus were of a clean but certainly Spartan environment. It was more monastery than resort. Upon my return, I was surprised to find extraordinarily luxurious and modern amenities—everything from a completely wired and flat-screened common areas, to made-to-order chefs in the “cafeteria.” I politely asked our president “what the hell was he thinking?” He answered with a quick and clear retort. “Our research tells us that a visiting candidate makes his/her decision to attend our college in their first 10 minutes on campus.”
What parent allows their 18 year old to make a quarter of a million dollar decision in 10 minutes?
Merit aid used to be a way to attract the best and the brightest to a campus to improve the academic standing of a college and to build the reputation of the college in the community and with corporate recruiters. Now, Kevin Carey laments that “Too Much ‘Merit Aid’ Requires No Merit”. Merit aid is simply another way that colleges discount. Woe to the parent who fails to understand that next year, when the department of education allows for more loans, that their son or daughter will magically be out of luck with their presidential stipend. A recent article in The Chronicle of Higher Education describes a new college ranking system based on “revealed preferences.” Namely, this ranking system judges the desirability of a college based on the institutions that a student chose over the others that have accepted them. Perhaps, this is the beginning of making a market in the higher education industry.
Everything about the college admission process is intended to obfuscate the buying decision and make parents and their children feel privileged that they were lucky enough to be chosen. Parents do not typically “deal” when their children have a slew of acceptances and offers. They often do not ask if the package offered is for all four years or just next year. Colleges have loads of help (see Noel Levitz’ enrollment revenue management system). Who is there to help parents make this important decision? Who will explain to parents that statistics like acceptance rates and show rates are metrics colleges use to judge themselves and their administrators? Who can help parents use these metrics to their advantage to negotiate pricing this year and for years to come?
The reason that parents fail to act like a consumer when making a purchasing decision for higher education is the same reason a wedding dress costs $5,000.
What father wants to tell his daughter “no”?
The original version of this article was first published on 21st Century Scholar.
The following interview has been edited and condensed for clarity.
Edmit: To minimize drama and poor decision-making when it comes to choosing a school, how can families have honest conversations regarding how they’ll be paying for college?
DeFusco: This is among the testiest times for families. They are dealing with incredible unspoken personal feelings (both parents and students) and these times are fraught with intense emotion. For many parents, this is the first time that they have to deal with the emotionality ... that they will not see their loved child every day (for better and for worse). It is the first time that they have to envision the dinner table without the usual banter, and they wish to savor what few moments they have left.
For students, they have to deal with the strange irony of excitement and fear about new opportunities. While they dream, they haven't the foggiest notion about the transaction that is about to take place, and idealizing their parents, they believe that everything is possible.
Parents--making perhaps the second most-valuable financial decision (after their home)--have very few points of reference, and although [they may be] sophisticated in other parts of their economic portfolios, have relatively little data to comparison shop [for colleges]. It would be as if we bought a car without the data from Kelly Blue Book. Not wishing to appear worried and trying to hold on to the idealized image for one last moment, parents avoid important conversations, leaving such details to counselors and friends.
My advice--Start early. Begin broaching the subject early. Most parents wait until after Labor Day (to enjoy their last summer together) and then the heat is on with testing and FAFSAs and [campus] visits and the dreaded personal essays (and occasional references). Plan a family schedule so that you understand all the deadlines and make personal deadlines weeks earlier so you can avoid the nagging and anxiety that is sure to come.
Edmit: How can families successfully negotiate for a better financial aid award?
DeFusco: Many times, not having options limits the negotiations. When your student has their mind made up, it appears the end of the world when you begin to consider other options. I can't tell you how many times that friends call me to celebrate that their scion got into their first- choice [college] that I silently lament that they will be overcharged. The more attached you are to the option, the less likely you will be to negotiate.
Still, if your heart is set on the first choice, there are still options. Take all your acceptances and offer letter[s] and set a time to speak with financial aid at your first choice. (Make certain that you don't tell them that it is your first choice.) Explain that while your student would be honored to attend, that you have other children to worry and save for, and that the difference in [financial] aid awards will be important in your final choice. Make certain that you get the date for final decisions, and push them back as far as possible (for when schools start to worry about the composition of their entering classes). Finally, make certain that you ask that any grant of institutional aid is awarded for all four (or five) years of your child's attendance. Many schools who find aid for entering freshmen, surprisingly lose aid the second and third years when students are able to borrow more from Title IV limits.
The more information you have, the better prepared you are to negotiate. This holds for homes and stereo equipment as well as for college. If you have multiple "sales" to the same college, negotiate in tandem. Once the college offers your children [admission], then their employees get judged by how well they "close". (Melt rates are very serious for admissions staff.)
Having multiple acceptable options often helps as well. Counselors tell students to apply to 10 to 15 schools. Make a grid: acceptable schools versus pricing. Consider, like you would a car, if the difference in features (or rankings) are worth the pricing differences. Hopefully one day, when we build buying pools, we might be able to open the Gordian riddle and give purchasing power to consumers of higher education. Until then, simply realizing that you have purchasing power gives you an edge. Remember, you have cash, they have a seat--a seat that looks relatively similar at other reasonably situated institutions.
One final note--just because you had the experience of your life at your college and met some of your closest friends there, realize that it is 20 years later and may not be the same.
Edmit: Regarding the final lines of your wedding dress blog post--when should parents definitively say “no”?
DeFusco: This is a personal question. For my princepesa [sic], it will be very difficult to say no. On the other hand, consider the loan amounts your child will be faced with upon graduation. Many graduates are forgoing buying their own home or building their own families because of the burdens of their college loans (which are not dischargeable by bankruptcy or even death). The weight of these burdens should spur the protective instinct.
It is not easy. Disappointment is often met with "end of the world" tears of disappointment, but rest assured that there are multiple college experiences that will be both gratifying and roughly equivalent.
One more thing. I can't tell you how many times college decisions are predicated on access to boyfriends and girlfriends, and it would be wise to not mention [to students] that most of these [relationships] will not continue the next four years, even if you attend the same schools.
Edmit: How can a family determine the value of a particular school?
DeFusco: This is difficult because unlike most things we purchase, we will not be able to judge the value of the product for years to come. Will it make a difference to who will recruit at your child's school if the school is top 15 or top 50? Will they meet a different kind of friend if they go to a state school versus a prestigious selective school? Will they see real professors or spend their first two years with graduate students?
Again, make a grid of features as you would when purchasing other important items. Make certain that you discuss these with your children before you take your [campus] visit, and find time to speak with someone other than the tour guides that you are assigned. Speak to faculty about where their students are getting their first jobs (knowing full well that your child may change their mind several times before they get to that point). Check the campus crime statistics available on the US Department of Education College Navigator to give you some ease of mind about safety. Avoid schools with violations in their Greek life, and if the school revolves around sports, be extra careful on pricing. Often, we pay premiums for features that have nothing to do with final outcomes.
Finally, know your child. A blow to fragile young egos can never be overestimated, but don't let that stop you from doing your proper diligence.
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