Bring in the quants: the cold calculus of college admissions

  
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Last time we picked on elite universities but left open whether their business model was significantly different from or worse than other private schools. Continuing to pull from Paul Tough’s The Years that Matter Most, in this episode we do a deep dive into Trinity’s admissions process through the eyes of its enrollment manager, Angel Pérez.

Tough and Pérez shed light on the difficult math behind admissions. Who deserves a scholarship, and why? How do you ensure you hit your revenue goals? How do you know which 20% of students will accept their offer, and protect yourself against the 80% who won’t? How do you maintain favorable vanity metrics like low acceptance rates?

Ultimately, econometric modeling instructs Trinity to say no to many exceptional lower-income kids. And to say yes – and even offer financial aid – to less exceptional, higher-income kids. But this situation seems less grim than the one at Ivy League schools. Trinity needs to generate revenue from tuition, and therefore relies on people who can pay tuition. In contrast, Harvard needs to generate revenue from charitable giving, and therefore relies on the ultra-wealthy.

Are elite universities unsustainable or unstoppable?

  
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Summary

I thought that elite universities like Harvard made their money from high tuitions. I was wrong! Harvard and other top schools actually lose money on students – they spend $150,000 per student a year on core academics alone.

The business model of elite universities actually binds them to wealthy students more than simply being expensive would. I’m not sure whether this pattern is a positive feedback loop, spiraling out of control and into absurdity, or whether it’s concerning but fixable.

I’m also not sure whether a focus on elite universities is a distraction, because their students represent less than 1% of college-goers, or necessary, because those students are disproportionately wealthy and powerful.

Inputs

Now I want to…

  • learn more about the business models at elite vs non-elite universities

  • figure out whether elite universities could admit significantly poorer students without breaking their business model

  • decide whether focusing on elite universities is constructive or a distraction

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