The Early Decision Uptick: Colleges gain; Low-income students lose

By Bob Massa and Bill Conley

This past fall, we wrote about how Early Decision (ED) programs would play an increasingly important role in helping colleges meet their fall enrollment goals.  With the financial fallout of the pandemic making enrollment levels more difficult to achieve, we suggested that getting a larger group of enthusiastic students to commit early could pave the way to realizing institutional headcount and net revenue goals.

What we didn’t predict in our article was the dramatic increase in ED demand at the most selective schools and the flat or decreased ED volume at the next rungs below.  Combined with the disproportionate impact that COVID-19 has on low-income students and their attendance rates, this trend could make it more difficult for low and low-middle-income students to find their way to college.

Early Decision applications were way up at institutions such as Cornell (37%), UVA (36%), Dartmouth (29%), Hamilton (23%), Tufts (17%), BU (12%) and Johns Hopkins (11%).  This made it easier to increase ED enrollments as a percentage of the class while retaining a relatively low admission rate.

At schools that are not as highly selective as those in the sample cited above, our quick poll of a half dozen institutions showed no or just very modest increases and decreases in ED numbers.  So while we still believe that a move to increase ED enrollments is smart and strategic for most colleges, we are concerned that an ultra-competitive regular decision round could squeeze out under-represented students unless purposeful efforts are made to recruit and admit these students.

The Chronicle of Higher Education recently reviewed the latest data from the National Student Clearinghouse, demonstrating that fewer low-income high school graduates went directly on to college in 2020.  While the enrollment in college of high school graduates was down 27.1% this year, lower-income students were over-represented in this decline: 29.2% fewer low-income and 32.6% fewer students from high-poverty families went directly on to college this past fall.  Without targeted programs to address this decline, and with early programs siphoning off spaces before the regular admission round (for reasons that we understand during the pandemic and resulting financial crisis), the numbers of low-income students served by our institutions will continue to decline.

As reported in Inside Higher Ed, the Western Instate Commission for Higher Education (WICHE) released projections in December that were slightly better than earlier projections because of a reported increase in high school graduate rates.  While they still project a decline of high school graduates of slightly more than 10% (41,000) from 2025 to 2037, there will be 162,000 more Hispanic high school graduates in 2026 than in 2019. By 2036, that number moderates down to 73,000 more than in 2019 – still a large growth given the 10% overall decline in high school graduates.  Critical to know when connecting demographics to the cost of college, the average family incomes for Hispanics tend to be about half the incomes of whites and Asians.  And while the percentage of Asian high school graduates is expected to increase from 6% in 2019 to 8% in 2036, the percentage of white high school grads will fall from 51% to 43% in the same time period.  Net tuition revenue will be challenged.

Although not all jobs require a college degree, multiple studies continue to show that the “education premium” for college graduates ranges from $800,000 to $1.2 million more than high school graduates would earn during their lifetimes.  And, of course, this additional income not only benefits individuals and their families but also adds revenue to the tax rolls.  It is, therefore, in our nation’s long-term interests to help qualified students afford a college education.

Many colleges are struggling financially during the pandemic because of fewer students and less revenue, combined with the increased costs of online instruction support and pandemic-related campus expenditures. Given this sobering backdrop, the challenge for colleges is to recruit, admit, fund, and graduate an increased number of students from low-income backgrounds.  Colleges also need to pay their bills, fill their seats, and recoup their losses.  How can they afford to enroll a larger number of low-income students when there will be fewer “full-pay” or “majority-pay” students in the pipeline?

There are no easy answers. However, the Center for Enrollment Research, Policy and Practice (CERPP) at the University of Southern California’s Rossier School of Education is exploring alternatives on a grant from the Joyce Foundation. Working with enrollment leaders at public and private four-year institutions in the Midwest, as well as federal policy experts, CERPP is looking at options for a federal/institutional partnership that would measurably increase the number and percent of low- and low-middle income students who enter and complete higher education.  In exchange for meeting certain enrollment and retention/graduation benchmarks and under the condition of providing new matching funds, institutions would receive a block grant to provide additional financial assistance to low-income students, reducing or eliminating the “gap” between demonstrated financial need and aid awarded.  Funding would also be targeted to supplement institutional efforts to help students succeed academically.  With a new administration in Washington and lots of chatter about “free college,” it is a good time to consider how to best leverage federal funds to assure that low and low-middle-income students are not left out as they represent an increasing percentage of high school graduates.  It is in our economic interest as a nation to do so.

The CERPP effort is a heavy lift.  The American Talent Initiative (ATI), launched in December 2016, invited public and private institutions (327 in all) that graduate at least 70% of their students within six years to formally join ATI in an effort to increase by 50,000 the number of lower-income students enrolled in these colleges by 2025. To date, 128 colleges and universities are ATI members. Although member institutions do not receive financial support from ATI, they do benefit from ATI’s national campaign in support of increased access, setting aspirational enrollment goals, and accessing best practices, research, and knowledge.  As reported in February 2020, the eligible institutions had been on pace to reach the 2025 goal, but progress had leveled off: “The recent data indicating that progress from the first two years of ATI has not been replicated in year three raises the urgency of ATI’s mission and the need to overcome the challenges that may stand in the way.”

Binding Early Decision programs will continue to grow as colleges seek to meet their enrollment and net revenue goals.  Since NACAC was forced by the Department of Justice to remove any prohibition of Early Decision incentives from its Code of Ethics, colleges are now promoting ED through all sorts of special incentives. One institution in New England advertised that admitted ED students would be eligible to take four online classes for free during the spring and summer semesters– getting a jump start on their degree.  We will likely see more of this in the coming years.  However, increasing ED to efficiently meet enrollment goals will make regular decisions much more selective, with fewer places in the class available. And again, per Newton’s third law of motion for every action, there is an equal or opposite reaction; the flip side of this trend is that low-income students, lacking access to sophisticated college counseling and historically under-represented in early applicant pools, will have a more difficult time gaining admission and sufficient financial aid in the regular pool.

Enrollment leaders and college presidents must step up to the challenge, finding ways to attract and support lower-income students who will comprise a larger portion of our high school graduates.  Our economy and our national workforce needs requires our visionary leadership.