May 1st was National College Decision Day

This past Monday, May 1^st, was National College Decision Day, a significant day for high school seniors across the country!  It is the deadline day for seniors to decide which college or university they will attend in the fall of 2023.

For many students, College Decision Day can be a day of celebration!  For others, it can be a day of disappointment, as they receive letters of rejection and/or letters of waitlist notifications.  Either way, this date is the culmination of great student and parental planning, or the lack of planning, which has yielded their “Decision Day” results!

Aside from buying a home, a four-year college degree could be the largest expenditure that a family will make in their lifetimes.  Looking back to my own college planning experience, I was fortunate that my parents did plenty of research (not easy as the internet was in its infancy) and spent money they didn’t have to get me an S.A.T. tutor and drive me to visit many schools such as Lehigh University in Bethlehem, Pa., which I decided to attend.  These decisions have a profound impact on the rest of your life as I have two of my best friends in the world from my four years at Lehigh.

During this time, there were no college coaches, so my parents had to fend for themselves as college guidance counselors were mostly teachers handling college admissions part-time in addition to teaching multiple classes.  My parents stumbled upon “The Common Application” which was the most efficient way for us to apply to numerous schools. 

Mistakes with the first student can have a major ripple effect for younger siblings and for parents financially.  Over the years, I have seen many situations, due to poor planning, where parents felt they had to borrow from their own retirement to fund their children’s education!

Fast forward to the current Covid-19 era and wow has the game changed! And it has gotten much dirtier!  The reason I say this is because the colleges have stacked the deck in their favor as they take advantage of the emotional attachment parents have to their children!

When planning with my clients, it is ALWAYS a good exercise to explain to them what the insurance company’s point of view is.  For example, take group health insurance for a business owner with 10 employees.  There are 2 employees that are nudging the business owner to offer a group health insurance option for them.  The insurance company believes that these 2 employees will be “buying a claim,” meaning they have pre-existing health issues and will hit the insurance company with a claim the first month.  This is why health insurers have “participation rules,” meaning they require at least 50% of the 10 eligible employees (in this case 5 of the 10) must enroll in the plan from day one.  The insurance company is thinking that the extra 3 employees are healthy and will help defray early claims costs. 

It works the same with colleges, so we need to examine their point of view.  To dig deeper into this, I interviewed Hans Hanson, owner of www.MycollegeLogic.com.  I first asked Hans how the game has changed over the last 20-25 years, and wow, his answers were eye-opening!  He said that the “BIG BUSINESS of college admissions has transitioned into a profitable business unit WITHIN the colleges.” 

These are the reasons why:

1. Application Inflation: Application inflation results from the admissions strategies of colleges trying to boost their selectivity!  In 2021. Applications increased by 1.6 million over 2020 (at an average cost of $75 each) without an increase in the number of applicants.  This results in lower acceptance rates and the perception of higher selectivity and value.  For example, school A usually receives 20,000 applications for 10,000 spots, a 50% acceptance rate.  Now they receive 40,000 applications for the same 10,000 freshman spots so their acceptance rate just dropped to 25%.  This works well for colleges and adds to student and parental stress!
2. The Surge in Deferrals:  Hans says “deferral” is the new hot word in today’s world of college admissions and describes the college’s sales and marketing intentions.  With thousands of extra applications to review, this has created the advent of “the 10-second denial!”  Admission counselors have 4 button options to push; Accept, Deny, Defer, or Waitlist.  Deny is the fastest option; however, the deferral puts the student back into the pool and gives colleges more time to see if there is a better student option who perhaps, can pay the full sticker price!
3. Admission Counselor Evaluation: Counselors are ranked by their “yield rate.”  The college yield rate reflects the percentage of students accepted who enroll.  For example, Ivy League schools have a yield rate between 65%-70%.  This is where ED, or early decision comes in.  This was created so admission counselors can be confident that most ED-accepted students will enroll.  Colleges believe any other option than early decision means the student has a preferred destination somewhere else.  If a counselor’s yield rate is 75%, they get promoted.  If under 50%, they get fired!

Speaking with Hans, our past strategies would NOT work today.  Hans preaches choosing 6 or 7 schools and digging deeper instead of the distractions of applying to and completing specific essays for 12-15 schools as we did. 

You might be asking yourself what does this all mean.  My take is that we are in the era of specialization!  There are now “science camps” and “art and theatre camps” which are cottage industries serving a public with high demand.  The same is true with college admissions.  There are parallels between college planning and dating.  In order to “tip the scale” in your favor and have colleges chase/pursue your student instead of the other way around, it is essential to consider hiring a college admission coach by 10^th grade at the latest!  For more information or an introduction to Hans, feel free to email me at Rob@InsuranceDoctor.us.