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The Folly of Early Action

February 11th, 2013 by dfarish

Some years ago, a few of the most prestigious colleges and universities adopted a new model for admitting students. Rather than facing a delay of several months after making application before hearing the university’s decision, a prospective student could choose to apply for “early decision.” The very best applicants would learn much earlier in the admissions cycle that they had been accepted – but the catch was that they then had to commit to attend the university that had accepted them. No longer could they wait and compare offers from other institutions. “Early decision” cut both ways: in return for an early answer, the student was obliged to make an irreversible commitment.

Eventually, most of the colleges using early decision decided it was too onerous for the students, and instead adopted a policy of “early action” – a process by which the campus makes a decision whether or not to accept a given student, without obliging the student to make a binding decision at that time. Rather, the student can compare other offers over the coming months, and decide as late as May 1 which of several offers of admission from different schools he or she wishes to accept.

At Roger Williams University, we have offered early action for the past several years, and each year a growing fraction of our applicants chooses this option.

But as attractive as early action may seem from the students’ perspective, it plays havoc with the awarding of financial aid. In addition to wanting to know if they have been accepted, students understandably also want to know about their aid package. However, early action decisions are made in December and January; information about the level of financial need of the students is not available until late February or early March, when the federal government processes the FAFSA (Free Application for Federal Student Aid) forms.

The consequence is that campuses, in order to meet the desire of students to know right away how much aid they will be offered, are forced to rely on what they can assess early in the admissions cycle – and what they can assess is merit, but not need. As a consequence, by the time the FAFSA data ultimately become available, most of the financial aid has already been awarded for merit, leaving insufficient dollars to meet need.

The point is this – the widespread use of early action across higher education has contributed significantly to the decided shift, in recent years, from need-based awards to merit awards.

Is that a problem? It depends where you sit. Prospective students and their parents have come to expect that doing well in high school will lead to a scholarship of significant size. Other prospective students and their parents assume that, if they have demonstrated need, most or all of that need will be met.

Unfortunately, very few campuses have the capacity to meet both sets of expectations: there just aren’t enough available dollars. As I have pointed out in earlier blog posts, the insufficiency of aid dollars has led campuses to increase their sticker prices, in order to generate more money that can be used for aid. Ironically, higher sticker prices raise the expectations of prospective students and their parents that their aid packages will also be larger. (Indeed, for students submitting FAFSA forms, a higher sticker price for tuition will invariably result in a finding of greater need.)

The only source of the additional dollars for financial aid created by increases in tuition are students who receive neither merit aid nor need-based aid – and nationally only 13 percent of the students fall into this category. Thus, as a practical matter, increasing the sticker price in order to generate more aid dollars is not only an ineffective strategy, but it also causes consternation, and even anger, as sticker prices rise at rates well in excess of inflation.

What’s the solution? Well, an important first step would be for colleges and universities to agree on a common date on which financial aid offers would be sent to accepted students – and to have this date late enough in the spring (say, April 1) that campuses would have relevant FAFSA data that they could factor into their calculation. Such an arrangement would not preclude making merit awards, but it would permit a full assessment of need before any aid awards were made.

Is such a thing possible? Absolutely. Campuses have already agreed to use May 1 as the date by which students must accept or reject offers of admission. There is no intrinsic reason why a similar strategy could not be undertaken for the announcement of aid awards – and students would still have a full month to compare campus offers before making a decision.

And then maybe, just maybe, other campuses would find it possible to do as Roger Williams University is doing, and stop at least some of the pricing madness that pervades higher education by freezing tuition.

One can but hope.