Attention Universities: Be Honest About Your Pricing and Everyone Wins
University endowments are down and their costs are up. The result: many universities are placing more of an emphasis on each applicant’s ability to pay (i.e., require little or no financial aid) in their admission decisions. Morton Schapiro, President of Williams College, isn’t mincing words on the benefits of paying full freight, (there has) “never been a better time to be a smart, rich kid. And at some schools, you don't have to be as smart as you did before. That's what happens in a recession." (Boston Globe, 2/24/09)
In other words, if you are rich (as determined by your financial aid form), universities are willing to overlook your kid’s occasional D and the fact that s/he did not start a homeless shelter or make strides in curing a medical disease during their spare time in exchange for cold hard cash. Just to be clear, this blog isn’t a judgment on whether this cash for admission tradeoff is fair – it is what it is. This pricing practice seems like a business reality necessary to fund and maintain deluxe ivory towers.
That said, here’s what I think is unfair: University administrators have taken it upon themselves to equate the value a family places on a desired education with their assets and income – “if they are rich, they’ll pay more.” Just because a family’s assets and income make them eligble for financial aid doesn’t necessarily mean they won’t pay full price. Some families who value education may be in a position (and willing) to borrow from Uncle Lou, take out loans, cut back on their expenses, etc.
If universities want to be fair, why not let applicants know how much their chances of admission increase by checking the “no financial aid required” box: 25%? 50%? 100%? In other words, how much below the average grade and SAT score can a kid be to gain acceptance if their family assents to pay full price? Universities make these tradeoffs daily, why not be open about it?
Acknowledging this reality could be as simple as publishing the average grades and SAT scores for “full pays” versus “financial aid receivers.” Based on these statistics, families can choose whether or not to apply for financial aid.
Interestingly, this pricing policy will also benefit universities. If higher caliber students reveal that they are willing to pay full price – more spots can be filled with smart students (who may have gotten in had they checked the financial aid box). In turn, this provides more funds to aid strongly qualified students who want to attend, but just don’t have the resources to. The upside: financial stability and a more qualified student body.
Everyone wins if universities are truthful about their current pricing policies. Just as it is for all products and services, offering pricing choices is both fair for consumers and profitable to organizations.
