A Future with a Different CEPP/SPGP


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.)

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11 thoughts on “A Future with a Different CEPP/SPGP

  1. Jon, as always some thought-provoking commentary. Don’t know if it’s resignation about the no option but to acquiesce or if I agree that in 10 years we will all look back wondering why it was such a big deal. But, I am discouraged to think that low income students will be disadvantaged further. And, I am discouraged to think that gamesmanship may become more prevalent. Mostly though I am discouraged to think that students and families will be even more confused about when to commit to where.

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  2. I, too, appreciate your analysis. Wealthy families will benefit, having the opportunity to leave deposits (or risk losing deposits) in multiple places. The benefits of ED will become stronger, which again will be to the advantage of those with no need AND to those will high need where the college commits to meeting full need. The families of middle income will be very much at a disadvantage, not having sufficient resources to apply ED, and they will be the ones needing the most strategizing to decide how to navigate the best options.

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  3. I am one of those public school counselors who is dreading a flurry of urgent emails while recovering from AP testing, prom, and graduation duties. Kids are going to be contacting me all summer to help them decide about an awesome offer that arrived in their inbox. Most of my kids are first gen, and I feel like I can’t just send the automatic reply that I’ll be back in mid-August. It looks like I’ll be putting in many “volunteer” hours over my future summers.

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  4. You remind us there has been little cost attached to the commitments students were asked to make upon acceptance, and those deposits were mostly not due until August. If, as you suggest, the cost of holding a space at college will rise (and you are very likely correct) we are going to see many far more cautious buyers in this new world of transactional college selection.
    I don’t expect the April window that is prevalent now to survive for long. It seems there will be great pressure on many colleges to accept, package, and recruit much earlier in the cycle.
    Boundaries between admissions and financial aid will fall at colleges feeling this pressure most profoundly. How many colleges can remain need blind?
    The more indistinct colleges are from one another, the more they will experience price competition.
    And you know as well as anyone, Jon, that historical data about enrollment is going to be of far less utility and real time metrics will rise. Therefore, privacy will be pressured.
    It’s weird that this change is arriving without parallels within NCAA athletic recruiting rules. Colleges can poach students, but coaches cannot poach student athletes?
    But I had no idea what would happen to telephones when Ma Bell was shattered, so I’m likely missing the entire picture here. Thanks for your blog.

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    1. Need blind is gone anyway. College Board is sending essentially financial info to admissions offices, and colleges are using it. Yale was in the pilot of the Environmental Context Dashboard and they stated they used it heavily in admissions decisions.

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  5. I especially resonate with one point you made:

    September 28th is coming. I predict September 29th will result in A LOT of job applications being submitted. To be very candid, I have worked in an environment with executive leadership that couldn’t care less about the CEPP and acted as such. However, these actions occurred while we were able to stay under the radar in our own dirt, but also remain protected from others doing the same thing to us. In an area with SEVERAL flagship universities within a reasonable distance to us, this is going to devastate us. As a seasoned admissions guy, all I can say is that universities better beef up local recruitment, and get ready for the ride.

    And P.S., if a school has the power to be manipulative with financial aid packages post May 1, community colleges need to kiss the “we’re the more affordable option” conversation goodbye. If a student can go to a 4 year at 2 year costs, they’re going.

    -Uncle Admit…

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  6. So what’s taking the Clearinghouse so long to get up and running? 😉 I would think with the existing frameworks like Common App, Coalition App, Naviance, etc., that much of the data and structure is already in place – just need to coordinate with them all. That’s only half-kidding on my part – it is a great idea and seems that its time is fast approaching.
    Also, this whole thing sounds like a problem that we had that we didn’t know we had…. or at least, most of us, with the exception of the small group of colleges who approached the DOJ. Now that there will be a solution (?) to the problem, how much different might everything be? Will all those colleges who never recruited after May 1 suddenly start doing so? I don’t think so. But it will be interesting to try to do a survey in a few years to see if there was any uptick in this type of recruiting.

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  7. I’ll preface my comments by saying I’ve never worked in college admissions, I’ve just studied it for the past few years and help families understand it so they can better figure out how to pay for college. My background is business, not academics, so I’m not surprised by the DOJ actions, especially for a product (a college education) that has become a family’s most expensive purchase. If colleges start behaving like other businesses in their efforts to attract and retain customers, you’ll see more legal fine print related to student acceptances, higher deposit amounts to lock in families, more incentives to promote early decision/acceptances, and possibly longer term commitments by colleges to incentives designed to retain students (their customers). Think of the marketing wars among mobile carriers and credit card companies – balance transfer offers, introductory interest rates and offers, contract payoffs, and seasonal sales, sometimes offered to meet quarterly numbers. The college customer will need to be more savvy to navigate all this, but for those that can they may end up with better “deals”. Thanks for your explanation and predictions too!

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  8. Thanks for a great analysis of the economic impact. People are always lamenting the cost of college, far outpacing almost every other product or service. I find this cost issue especially affects my middle and upper middle class families. They are shocked by their high, almost laughable EFC’s. They have been so conscious and careful with their finances. Then suddenly they are finding that college costs for their 2-4 kids could cost as much as $250,000 per kid at the colleges their kids “deserve” but at which they will get no merit aid. And of course, no financial aid. The only true way to reduce the constant upward trend of college prices is to introduce more competition, more consumer choice, and greater transparency so that colleges work towards what we call in business the “value proposition “. The DOJ recognizes this. In addition, I hope the increased transparency of the discounting model will change the pricing model. There are parts of these changes I don’t like but ultimately the colleges have to reign in cost and these free-market principles and the return of some power to the consumer will help. Thanks again for your insight.

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  9. How did this get on the DOJ’s radar in the first place? Can’t be just accidental. If a group lobbied or complained to the DOJ, the motivations of that group should be made clear. An earlier post here mentioned a group but I wasn’t clear if they were instigators or not.

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