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How to Get a Big Break on the Cost of College: Just Ask: The pandemic has accelerated a yearslong shift in financial power toward families, away from schools

Summary:
By Josh Mitchell of The WSJ. Excerpts: "Many colleges customize tuition-and-aid offers to extract the maximum from each prospect without driving the student to a rival campus. An industry of enrollment-management consultants uses computer algorithms to advise administrators on each prospect’s “price sensitivity.”" (sounds like what economists call price elasticity of demand).Families, in turn, are turning to consultants who, using their own algorithms, specialize in coaching them on strategies to squeeze more money out of colleges. One such consultant, Massachusetts-based Shannon Vasconcelos, said she expects bargaining between many families and schools to go through summer: “This is a big, big year for asking for more money and receiving.”""The American Council on Education, a

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By Josh Mitchell of The WSJ. Excerpts:

"Many colleges customize tuition-and-aid offers to extract the maximum from each prospect without driving the student to a rival campus. An industry of enrollment-management consultants uses computer algorithms to advise administrators on each prospect’s “price sensitivity.”" (sounds like what economists call price elasticity of demand).

Families, in turn, are turning to consultants who, using their own algorithms, specialize in coaching them on strategies to squeeze more money out of colleges. One such consultant, Massachusetts-based Shannon Vasconcelos, said she expects bargaining between many families and schools to go through summer: “This is a big, big year for asking for more money and receiving.”"

"The American Council on Education, a university trade group, in April said it expected college enrollment to drop by up to 15% nationwide this fall."

"The pandemic is prolonging the haggling. About 400 colleges and universities moved their traditional May 1 deadlines to accept offers to June 1, and some have stretched them to Sept. 1. And under a consent decree with the Justice Department last year, colleges are no longer barred from recruiting students beyond May 1 who have put deposits on other schools: Schools can dangle bigger discounts in front of a student who has accepted a rival’s offer."

"Schools were already losing leverage. College and university enrollment was down 5% in the 2019-20 year from a peak of about 21 million in 2011"

"Since 2010, tuition inflation has slowed. One factor, according to a 2017 Wall Street Journal poll, is that students and their parents have become skeptical of the value of college.

Posted tuition numbers are increasingly meaningless. A college posts a high sticker price in order to offer varying discounts, in the form of aid, to applicants based on how price-sensitive they are.

The industry of enrollment-management consultants has helped colleges emulate for-profit companies. One consultant told attendees at an admissions-officers conference last year to be more like Starbucks and Amazon, improving customers’ experiences and maximizing net revenue and “yield,” the percentage of accepted students who enroll.

To tailor discounts, colleges tap personal data much as companies do"

"Colleges have particularly valuable data from the Free Application for Federal Student Aid, or Fafsa, which is submitted to apply for federal aid, and from apps, websites and information prospects provide."

"an enrollment-management consultant.used an algorithm weighing 253 characteristics—such as gender, race, parental income, addresses, frequency of contact with recruiters—among students admitted there the prior school year to determine what it should charge each new applicant."

"Prospects this spring couldn’t visit campuses, one factor suggesting a student truly wants to attend and thus is less price-sensitive. Some students are taking gap years because of the pandemic, and others are awaiting clarity about the economy and campus reopenings.

“It is a buyer’s market,” he said."

"Consultants like Todd Fothergill advise families on how to press colleges to maximize discounts. From home in Austin, Texas, he gathers data on schools—mainly the net tuition they charge families in different income groups—then plugs it into software that helps determine which schools a student will have the most leverage over. His firm, Strategies for College, typically charges about $6,000 to $7,000 to clients along with smaller fees for hourly advice."

"In the early 2000s, he noticed a shift: Many clients were suddenly getting much smaller discounts than similar applicants several years earlier. He saw no consistency in who paid what.

He discovered universities were using discounts more strategically, raising tuitions and then offering more-desirable applicants bigger discounts. Mr. Fothergill concluded a big reason people paid so much for college is they applied to “reach schools” for which they were barely qualified—giving the college leverage. A marginal student would get less aid, but “if you’re a highly valued student for that school they’re going to be more flexible.”"

He is "listing schools where the family will have maximum bargaining power and what they should expect to pay."

"He believes the pandemic will lead to more discounts."

"Ms. Vasconcelos of Massachusetts, a consultant with the firm Bright Horizons College Coach, said half of her clients in a typical spring won bigger discounts—an average of $3,000—after asking for money. Since the pandemic, “we have seen almost no schools saying no,” she said, and the discounts they are offering are bigger—often $5,000 and up."


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