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Crocodile Tears

September 3rd, 2013 by dfarish

On Sunday 25 August, The Boston Globe ran a front-page story entitled “Colleges back off need-blind admissions.” The article describes how colleges such as Wesleyan, Williams, MIT, Cornell and the University of Virginia are reducing their commitment to meet the financial needs of the students they admit – but the story pays particular attention to Tufts University, located in the Boston suburbs.

The timing of this story is interesting, coming as it did at the end of a week where newspapers across the country were reporting on President Obama’s commitment to increase both the affordability and the practicality of a college education in America. How is it that these private schools seem to be going in exactly the opposite direction?

Yet the tone of the article was generally sympathetic to these colleges and universities. Consider these two quotes from the story:

“At Tufts, students’ needs have grown so much that the average grant for incoming students is – at $36,000 – roughly $10,000 more than it was in 2007 and 2008…”

“Yet it is hard to find anyone in the higher education field who blames these schools for cutting back.”

Well, perhaps I’m hard to find, living as I do some 40 miles away from Boston, but count me among those who “blame these schools for cutting back.”

I addressed this topic in my blog some months ago (“Down the Up Staircase,” March 25, 2013), but this new Globe article, and its timing, prompts me to look at the facts once again.

Consider: The Globe reports that grants at Tufts have grown by $10,000 over the past five or six years. Interestingly (and not noted in the article), so has the sticker price at Tufts. For the 2007-08 school year, tuition, fees, room and board at Tufts was $46,860. For the 2012-13 school year, the price was $56,546 – an increase of $9,686! So one way of looking at this is to say that the primary driver behind the increase in grants was the university’s own decision to increase its prices.

Let’s try this analysis a different way. According to data published in US News, for the 2007-08 school year, 38 percent of the entering class at Tufts qualified for aid, and the average aid awarded was $27,064, leaving the student a bill of $19,796. For the 2012-13 school year, 40 percent of the entering class qualified for aid, with an average award of $33,517, leaving the student a bill of $23,029 – some $3,233 (16 percent) more than in 2007-08.

A few years ago, Tufts had a capital campaign focused in part on raising money to permit need-blind admissions. Tufts raised the money, but had need-blind admissions for only two years. Now the new president wants to raise $25 million for endowed scholarships. I’m not sure if this is higher education’s equivalent of “Back to the Future,” or “Groundhog Day,” but history does seem to be repeating itself.

Tufts has lots of company. Not so long ago, college presidents wondered about the psychological impact on society when some college first dared to charge more than $50,000 for tuition, fees, room and board. Well, a college did, and nothing happened. No screams of anguish, no demonstrations in the streets, and, more importantly, no drop in applications. For the 2012-13 academic year, 149 colleges and universities charged more than $50,000 – and one had crossed the $60,000 line.

Interestingly, of the 149 extravagantly priced colleges, ALL had raised their prices for 2012-13 relative to 2011-12 – with one exception. Only Mount Holyoke had frozen prices – although at $53,596 it is still a very expensive institution.

As of June 2012 there were 45 private colleges and universities in the U.S. with endowments larger than $1 billion. With the exception of Rockefeller University, which offers only graduate education, ALL of these billion dollar colleges and universities ARE ALSO on the $50,000+ price list!

So what’s going on? Why are the richest colleges also the most expensive? Why do they raise their prices every year? Why are so many of them pulling back their financial assistance when, by any normal standard, they are incredibly wealthy?

There are several answers, all pulling in the same direction, but the fundamental answer is that the number one concern of these colleges and universities is maintaining, and, if possible, improving their rankings. Of far greater importance than using their endowments to become more affordable, by offering larger financial aid packages, or even – perish the thought! – reducing their prices, is not losing reputational ground to their competitors.

They fear that a lower price will be interpreted as a lower quality education. After all, the American consumer has been trained almost from birth to believe that “you get what you pay for” – and if you are paying less, you must be getting less.

And then there is the cachet of being exclusive because of being expensive. If too many people could afford a particular college, it would lose its allure to the very rich. Oh, the horror! That would never do!

Consequently, we will not see very many of these colleges and universities embracing President Obama’s call for greater affordability any time soon. They are too busy catering to the 1 percent. Affordability is for colleges that have neither the hope nor the desire of ever being exclusive – and that’s why leadership in the area of cost containment and increased affordability will come not from the top, but from the second-tier colleges, where price sensitivity has become a real issue, especially since the economic collapse of 2008.

So when you see wealthy colleges wringing their hands and weeping over their “inability” (read: “unwillingness”) to be need-blind, just remember it’s not genuine despair you are seeing; it’s crocodile tears.