We’ve sort of known this was coming: The Department of Justice has been looking at the NACAC CEPP (formerly the SPGP) for a while. But people were still surprised when, this week, NACAC announced that the DOJ had backed the organization into a corner, essentially telling them to eliminate some important, foundational provisions, or face a consent decree process to have the courts remove them, a process which NACAC was almost certain to lose.
I should say here that I’m not a lawyer. That sound you hear is all the lawyers in the world saying, “no kidding.” So don’t base your legal strategies on what you see here.
You can read NACAC’s communication to members here, if you’re interested.
Essentially, as I understand it, the DOJ says the three provisions that NACAC must remove are anti-competitive, in that they limit competition among colleges, who all agree to stop recruiting students at certain points and who cannot offer better deals to students under ED. The DOJ claims, and is probably right, that this restricts the ability of the student to be solicited with better offers from colleges who are willing to cut price or offer incentives for behavior. Imagine, he said, knowing how crass the comparison sounds, that the Airline Association of America banned its members from discounting last-minute airfares when they have empty seats to fill. (I know this is an imperfect analogy, by the way.)
Based on member responses I’ve read, a couple things are important to note here:
- First, the DOJ does not care, and probably should not care, that we claim to be doing this in the best interest of the student. They might say, in the first place, that this is immaterial, and the only issue is the anti-competitive behavior. They might also say that while we claim to be protecting students, we are also harming them by forcing them to pay higher prices.
- Second, if you’re wondering about ED, it was never legally binding in the first place. To the best of my knowledge, no college has ever sued an ED admit to enroll; no college has ever sued a deposited student to enroll at all. The only remedy is keeping the deposit, and, perhaps punitive measures against the high school’s ED apps in the future (this has long-been rumored to be the case, but I don’t know of a single instance of it in reality.)
- Finally, this removal of limits on competition will not suddenly “allow students to negotiate after May 1.” They already have that power, and many exercise it. The removal may make it more common, of course, but that bird has flown. I co-administer a Facebook group with about 16,000 members who work in admissions or are attached to it somehow. Each year, lots of counselors post questions about their students who suddenly change their mind, or who realize they cannot afford the school they thought they were going to attend. To find options, they have to start from scratch.
- May 1st, as I see it, will not go away, probably because it’s a consumer protection: Colleges cannot withdraw an offer prior to May 1, assuring students have a reasonable opportunity to consider their options.
You may have heard me say that I spent several years of my life having lunch almost every day with libertarian economists, mostly because they were fun conversationalists, even though I didn’t agree with most things they said or believed. Still, one thing stuck with me: the late Jeff Peterson once said, “You cannot harm someone by giving them an option.”
In other words, no matter how set a student might be on the college they’ve chosen, the simple act of offering them a better deal in June to change their mind can’t harm them. They’re free to turn it down or accept it. You don’t have to grab that last minute airfare, but it’s nice to have that option.
The prospect of continuing to recruit right up until the first day of class, of course, sends chills down the spines of people who are measured by new student numbers each year. Amid all your attempts to admit just the right number, and aid just the right amount, and do just the right mix of yield activities, there is one huge factor you can’t see and can’t control, and that is the actions of your competitors. That element just got even less predictable. It’s likely your deposit numbers on May 5 will be a less reliable indicator of where you will be in the fall, either because you can still go after students who are out there (even if they’ve deposited elsewhere, and even if you know it), or because your competitors will be trying to steal students away from your list of deposited students.
I do wonder, however, if part of the DOJ problem with SPGP/CEPP is that students and parents do not actively consent to it: They have no power over whether they are bound by these provisions or are not; supplier just impose them and they have to live with it. And I wonder if colleges could require students to participate or not (much the same way they waive or don’t waive confidentiality on letters of recommendation.) I’m sure one of NACAC’s lawyers thought of that. And I suppose there is a reason it wouldn’t work.
Anyway, some predictions about the future:
- College deposit amounts will soar to increase the cost of walking away from a commitment. If you can’t take it out on your competitors, you can make switching costs for consumers higher. For non-aided ED admits (and, really, is there any other kind?) colleges may require a full-year’s tuition as deposit.
- ED incentives will be in place by next fall, if not this one, mostly by colleges who are either not offering ED now, or who don’t do a lot of business in ED. The DOJ would be pleased, as it offers consumers better options and deals.
- Pressure will mount on high school counselors to keep track of post May 1 activity, in terms of sending transcripts and letters even while on vacation. Hope your SIS is mobile friendly, and you have service in Aruba, counselors.
- Someone will establish a deposit clearinghouse to notify colleges when one of their deposited students has sent another deposit(s) elsewhere. If so, it would be a solid jump start on the National College Application Clearinghouse idea I’ve had for a long time. The nice thing about the Clearinghouse (imho) is that both colleges and students consent to the rules before the game begins, unlike the SPGP/CEPP.
- More people on the admissions side, torn between the rituals they’ve become accustomed to and the new way of doing business, will leave the profession. And more consultants will be selling services directly to college presidents and boards of trustees to generate enrollment despite the reservations of the chief enrollment officer who still feels uncomfortable poaching from colleagues.
- In ten years, when new deans who have never known about the SPGP/CEPP start running their shops, they’ll wonder what all the current fuss was about.
- A whole new line of college admissions advisers will be created who are specialists in negotiating deals after May 1 at colleges that have seats to fill. Those with the greatest ability to pay will likely benefit the most, which means low-income, first-generation students who come from families with fewer resources will likely be stuck holding the bag.
- There will be general downward pressure on net costs for students who can pay, which will require some different thinking on the part of colleges, and which will be considered a victory for consumers by DOJ.
- Bonus anti-intuitive prediction that might come true: Low-income students who might be low net revenue providers to the college will get last-minute chances to enroll at bigger discounts than they otherwise might have seen. It’s much safer and easier for colleges to offer big discounts much closer to the start of the term, and if students are willing to wait, maybe–just maybe–this could be good for them.
In the words of Carly Simon, “I’m no prophet, lord I don’t know nature’s way.” In wondering whether we’re all hand-wringing needlessly over this, think back (if you’re old enough) to how “The Phone Company” used to operate. You rented your phones from them; they installed lines; pricing was one-size-fits all; you bought (expensive) long distance from them and only them; and people were genuinely terrified of them. They had all the power. Don’t believe me? Watch this:
When the phone company was deregulated people were terrified of what would happen, not to mention confused. But looking back, would be better off under the old system, where the only innovation in 30 years was push-button phones and long distance without an operator? I don’t think so.
And maybe that’s what we’ll say about this ten years from now. Tell me what you think in the comments below. (I know I always say that, and I know no one ever does, but this time I really want to know.)