Toaster Ovens, Porcelain Fixtures, and Students, Oh My!

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Student Aid Perspectives is an occasional, longer-format series designed to offer thought-provoking articles on current student aid topics written by expert authors. The opinions offered and statements made do not imply endorsement by NASFAA or the authors' employers and do not guarantee the accuracy of information presented.


By Forrest Stuart, Ph.D.Forrest Stuart

"MIT's function is to teach, to discover and to build. It is to leave to the next generation a better and more knowledgeable world. Yet, in the eyes of the Antitrust Division, such an institution is indistinguishable from a manufacturer of toaster ovens or porcelain fixtures."

These were the words of Massachusetts Institute of Technology's (MIT) lead attorney, Thane D. Scott, at the end of the 10-day 1992 trial over the federal government's price-fixing claims in the so-called "Overlap Group" of Ivy League schools and MIT. The schools argued that the purpose of their meetings was to discuss need-analysis policies that the schools would agree to use in order "to preserve a need-blind admissions system and avoid the potentially costly results of a bidding system for relatively affluent students who did not need assistance in order to attend college." The courts sided with the federal government, and this forever changed the way schools could collaborate over need-analysis policies and the structure of aid packages.

Many of us in financial aid remember a similar shakeup in the student loan industry around 2007, when some of our colleagues were found to have personal financial interests in promoting certain private lenders to students and parents. This resulted in significant changes in schools' constructing preferred lender lists and accepting promotional gifts from lenders. It also hastened the end of the Federal Family Education Loan Program (FFELP).

The latest action to rattle higher education was the vote of the National Association of College Admission Counseling (NACAC) membership on September 28, 2019, to rescind four statements of its Code of Ethics and Professional Practices (CEPP) in an effort to avoid the U.S. Department of Justice (DOJ) delivering a dictum. The DOJ argued that those four statements restricted "free trade" and did not allow colleges to compete freely for students and to offer the best "price."

Public policy experts, biologists, and social scientists refer to any extraordinary and sudden shift in policies as punctuated equilibrium, a term first defined by policy experts Frank Baumgartner and Brian Jones, who stated, "policies tend to be stable for a long time, but that this stability can sometimes be interrupted by rapid and substantial policy change." This is exactly what happened at NACAC's annual meeting last month.

The four paragraphs removed from NACAC's CEPP include:

  • "Colleges must not offer incentives exclusive to students applying or admitted under an early decision application plan. Examples of incentives include the promise of special housing, enhanced financial aid packages, and special scholarships for early decision admits. Colleges may, however, disclose how admission rates for early decision differ from those for other admission plans."
  • "College choices should be informed, well-considered, and free from coercion. Students require a reasonable amount of time to identify their college choices; complete applications for admission, financial aid, and scholarships; and decide which offer of admission to accept. Once students have committed themselves to a college, other colleges must respect that choice and cease recruiting them."
  • "Colleges will not knowingly recruit or offer enrollment incentives to students who are already enrolled, registered, have declared their intent, or submitted contractual deposits to other institutions. May 1 is the point at which commitments to enroll become final, and colleges must respect that. The recognized exceptions are when students are admitted from a wait list, students initiate inquiries themselves, or cooperation is sought by institutions that provide transfer programs."
  • "Colleges must not solicit transfer applications from a previous year's applicant or prospect pool unless the students have themselves initiated a transfer inquiry or the college has verified prior to contacting the students that they are either enrolled at a college that allows transfer recruitment from other colleges or are not currently enrolled in a college."

To see how removing the first paragraph from NACAC's code changes the landscape, one can look to examples like the Early Decision application incentives found recently on a university's website:

  • Worried about having a hall bathroom? Select the perfect dorm in your new home! [We are] ranked #1 for best dorm rooms in America by Niche.com. And Early Decision applicants receive first priority for housing.
  • Worried about where you'll park your car, or if you'll even be able to find an available space? Relax! Not only [do we] allow you to have a car as a freshman, but as an Early Decision applicant, you will receive a personal parking space JUST FOR YOU – for your entire freshman year!
  • Skip the long lines and move in early! Thank mom and dad and make all of your lives easier by getting access to early move in - a day earlier than other students.
  • Don't want 7:50 a.m. classes? Get your preferred class schedule! Early Decision students have first priority in selecting their fall class schedule.

Another institution's website states that it "now offers an additional $8,000 scholarship to Early Decision admission applicants. The scholarship will be split evenly over four years ($2,000 per year) and is exclusively offered to Early Decision admission applicants."

Of the many fears of a "Wild West" of admission practices resulting from the DOJ-forced vote in NACAC, the strongest seems to be how colleges and universities will create inducements to poach students who have committed to other colleges and/or are in attendance at another institution. Worse, the move toward this type of activity may come from presidents and boards of trustees, despite what admission professionals deem ethical and in the best interest of students.

Given that approximately 3,600 higher education institutions participate in the enrollment reporting services of the National Student Clearinghouse (NSC), the ability to contact students who enrolled elsewhere is relatively easy. "Hey, Student, are you REALLY happy with your college choice? Are they fulfilling all of their promises of a four-year paradise? No? Well, we still want you as one of us! And, we have scholarships set aside for students like YOU. Here is a link to reactivate your admission application. Don't delay … come home!"

Farfetched? As "ESPN College Game Day" commentator Lee Corso says, "Not so fast!"

Would it be out of the realm of possibility to incentivize students to transfer to my college for their sophomore year or even go after first-year students who deposited at another school prior to May 1?

What opportunities (err, challenges) does this present to financial aid administrators, who no doubt will be called upon to "step up" and "be a team player" when the admissions office comes calling with requests to fast track new/revised financial aid packages well into the summer? Even well-resourced schools that have high demand may experience poaching by less-selective schools offering better "bargains."

As the new admission recruiting year is well underway, I suggest we ask the following questions within the context of the revised NACAC CEPP:

  • Are our assumptions about melt valid? We've accommodated for melt in the past, but will summer melt trends change in this new environment?
  • Do we change the way we award our campus-based or institutional funds to accommodate these late recruits?
  • How do we plan for changes in yield?
  • Do we reserve money for post-May 1 melt?
  • How will the pressures of post-May 1 "poaching" affect our offices?
  • How can we advance a balanced conversation where our institutions do not panic and make bad decisions, yet adapt with measured strategies?

As leaders at our institutions, let's not sit on the sidelines and rely on others to tell us what to do. Let's sit at the table and interact, engage, and be strategic.

Be prepared! Toaster ovens, porcelain fixtures, and students, oh my!

***

Forrest Stuart is the assistant vice president for financial aid at Lafayette College in Easton, Pennsylvania. Forrest has 30 years of higher education administration experience and has served in leadership positions in state, regional, and national professional associations. He holds a Ph.D. in educational leadership from Clemson University, concentrating in higher education, a master's degree in higher education administration from the University of Alabama, and a bachelor's degree in Human Resources Management from Birmingham-Southern College.

 

Publication Date: 11/14/2019


Frank R | 11/14/2019 1:35:29 PM

I'm retired from the profession now, but after reading Forrest's article, more happily so, it is sad to say. Frequently, when talking with (old) colleagues, we are always referring to the good ol' days in the financial aid profession and always expressing our sadness for the new professionals and the pressures and expectations on them. There have been improvements in consumer information and the programs and delivery systems to be sure, but over-regulation seems abundant to me. I lived through the MIT decision, and it was, as Forrest points out, I think, the beginning of the "downfall". The work of the Overlap Group, and quite frankly, among many of the rest of us, was NOT price-fixing; rather it was the application of the old adage of "two heads is better than one." I recall how often when reviewing FAF's and tax returns, we would confer with each other as to a better understanding of family financial circumstances; it was an irreplaceable education. For me, it was surely a sad day when the court decision forbade us for continuing to do so. If anyone thinks the NACAC changes are going to make the work of FAO's easier or more fun, you best think again.

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