How Colleges are Like the Airlines

September 6, 2020

When you hear the term "yield management," you probably think of airlines or hotels. Both sectors constantly look at their numbers to figure out what levers they can pull on a particular day to fill more seats or rooms.

You probably don’t think colleges are in the yield management business. But they are.

Last weekend, the Wall Street Journal ran an essay based on an excerpt from my forthcoming book, Who Gets In and Why: A Year Inside College Admissions. The essay focused on the “shaping” process, a moment near the very end of selecting a class when admissions offices put a finer line on the contours of their next class.

As today’s newsletter will explore, yield management plays a big role in who ultimately gets in and why.  

? Two virtual events this week:

On Tuesday at 8 p.m. ET, I’ll be joining in a conversation about college admissions in the Covid era, focused on essays, recommendations, the application, and test optional. Accompanying me in the discussion will be James Nondorf, dean of college admissions and financial aid at the University of Chicago, which went test optional three years ago, and Darryl Tiggle, director of college counseling at the Friends School of Baltimore and a former admissions officer at Tufts University.

• More details and register here.

On Thursday at 8:30 p.m. ET, I’ll be in conversation on Facebook Live with Road2College about the role of financial aid in admissions.

• More details and to get a Facebook reminder, click here.

⏱The newsletter word count: 1,600 words (a 6-minute read).

In college admissions, teenagers see an acceptance to their "dream college" or their "perfect fit" as the ultimate reward for the work they put into the college search. But for colleges, the act of sending out acceptance notices each spring isn’t how they ultimately judge their own success—enrollment is, the number of students who actually show up on campus.

• One early—and often accurate—measure of enrollment is yield.
• Yield is the percentage of students who say Yes to a college’s acceptance. In many ways, colleges use it as a mark of their popularity. The thinking in admissions goes that the higher the yield rate, the more popular the school. After all, students can apply to multiple schools, but they can only attend one (here's a somewhat dated, but nifty game about which colleges students choose when accepted to more than one).

By the numbers: Overall, the yield rate has dropped significantly in the last two decades at most four-year colleges, from 41 percent in 2001 to 26 percent in 2018, as application volume increased.

• But the overall yield number masks significant differences by type of institution based on selectivity. Simply put, the more selective a college, the more likely an accepted student is to say Yes.
• The median yield for “Ivy plus” universities (the Ivy League, Duke, MIT, Stanford and the University of Chicago) is 68%.
• Then there’s a big dropoff for everyone else: other elite privates and publics, 37%; highly selective private colleges, 22%; less selective private schools, 14%.
• Here’s a visualization of yield rates my colleague, Scott Smallwood, co-founder of Open Campus, put together.

Why it matters: Like airlines who oversell seats (well, at least in the pre-pandemic days), colleges know some students—or in reality, many students—won’t take them up on their acceptance offer. Despite sophisticated modeling, colleges might know how many students won’t say Yes, but they don’t always know exactly which students will turn them down.

• Schools are not choosing a class as much as they are sending out invitations to join a class.
• In the final weeks before those invitations are sent, selective colleges finalize the list in a process called “shaping.” Think of it as finalizing the invite list for a wedding. Guests are moved on and off the list based on whether you think they’ll show up or the groom’s family has too many invites compared to the bride’s.
• Admissions officers ask questions about their invite lists, too. Do we have enough students who can pay the bulk of the tuition bill? Too many women in the class? Too many students from the Southwest or Northeast? Enough humanities majors?

Between the lines: Demonstrated interest is one way colleges try to predict yield. The term is jargon for an important metric to colleges, basically the willingness of the applicant to actually enroll.

• About one in five schools say demonstrated interest is of "considerable importance" in their admissions decisions, according to an annual survey by the National Association for College Admission Counseling.
• That’s about the same weight they give to counselor recommendations and essays, and even more consideration than given to teacher recommendations, class rank, and extracurricular activities.
• Schools measure demonstrated interest in a variety of ways: How many of their emails did you open and how quickly? Do you follow them on social media? Did you show up when an admissions representative visited your high school? Have you taken a campus tour? Or they ask a supplemental question on the Common Application about why you want to attend the school.
• With so many of those measures off the table, at least temporarily because of the pandemic, determining demonstrated interest this admissions cycle is going to be difficult for many schools.  

Of note: Demonstrated interest is one method for controlling the yield number; so too is early admissions. Here’s a passage from the book to explain:   

Before the Common App and filing applications online really took off, applicant pools were still relatively modest compared to today’s numbers. Say a college received 12,000 applications a year and needed an incoming class with 2,000 students. A yield rate around the typical 33 percent would require the school to send out acceptances to 6,000 students. That gave the college an acceptance rate of 50 percent, which at the time was okay.

Adding early decision could quickly improve both yield and selectivity in the eyes of the public. That’s because schools blend their rates from all their admissions cycles. So say a school received the same number of overall applications, but accepted and automatically enrolled 500 out of 1,000 applicants in ED and the remaining 1,500 through the regular decision.

Now yield suddenly increases because one-fourth of the class promised to come if they were enrolled, and selectivity climbs as well because the remaining 11,000 applicants—remember, the same applicants that were there without ED—are now fighting for fewer spots. That’s one way some schools, including Penn, Vanderbilt, and Northwestern, steadily moved up the college rankings beginning in the late 1990s

The big picture: Just as yield management in the airline and hotel business is reliant on historical data, so too is predicting yield in admissions.

• But how students and families will approach the college search in a pandemic is a big unknown this year. Past performance won’t be an indicator of future results. Many colleges will be flying blind.
• So expect them to press harder on early admissions to shore up their class and search for other ways to measure demonstrated interest.

Read more: A sample from Chapter 4, exclusive for subscribers of this newsletter, about how one university used early admissions to improve its yield rate.

Who Gets In and Why comes out in just nine days. If you pre-order the book now, you’ll also get these bonus goodies.

Will Covid-19 Change College Forever?

All of our crystal balls are a bit cloudy right now, so it’s tough to predict what will happen next week, let alone next year. But with higher ed among the major industries being disrupted by the pandemic, everyone seems to be wondering what’s next for colleges and universities.

Recently, I joined Kara Miller, host of Innovation Hub from WGBH and PRX, to talk about the future of higher ed. Among the issues we discussed:

• Covid discounts: How did colleges calculate discounts on tuition that some are offering for being online this fall? In many cases, the number—5% or 10%, on average—was determined by what they could afford, not the value of the on-campus experience. Indeed, if you ask most students and families what percentage of their tuition goes to what happens outside the classroom, my bet is that their answer probably would be north of 40% or 50%.
• Town-Gown: Higher education is an industry. We tend not to think of colleges as workplaces. But they are—and in many places, they are the largest employer. Take Rochester, NY, as an example. It used to be a company town for iconic brands such as Kodak and Xerox. Now, its largest employer is the University of Rochester, which employs more than 28,000 people—nearly double the number of the #2 employer in town.
• Financial sustainability: One new question prospective students and their parents seem to be asking these days about the colleges they’re considering is whether the campus will be in business in a few years, or at the very least, be able to make key investments. For consumers, there are several new data sources to help answer this question from the Edmit College Financial Health Analysis to the College Stress Test.
• New models: Will some colleges go out of business in the coming years? Probably, but many more will likely shift their mission and strategy. One outcome of the pandemic might be greater differentiation in higher ed, with institutions developing low-residency models, three-year degrees, or a focus on short-term programs for lifelong learners. As a result, you also might see greater differentiation in price points.

Listen to the full episode here.

SUPPLEMENTS

Not only were the students dismissed, but the university has refused to refund their tuition payments.

The August 29 test was canceled for nearly 200,000 students. Advice for what to do if it happens again this month.

Better Consumers, Better Information

After the year I spent inside college admissions, I’m often asked what we can do to improve the system.

One thing that’s needed is access to better information. Yes, we have more information about admissions than ever before, but in many ways we’re overwhelmed by it and it comes at us all at once, rather than when we need it.

To that end, I'm supporting two organizations that I think can help provide better information and better advice about college.

First is Open Campus, where this newsletter lives.

• Open Campus is a nonprofit news organization dedicated to establishing a local network of sophisticated higher-education journalists at a time when local news organizations have been decimated.
• With help from the Joyce Foundation and the Bill & Melinda Gates Foundation, my friends at Open Campus are moving into more than half a dozen new markets this fall—places like Cleveland and California—to improve local coverage of higher education.

Sign up for their email newsletter here or donate to their cause here.

Second is the College Advising Corps, which is modeled after Teach For America and places recent college graduates in high schools to increase the number of low-income students entering higher education. One of the students the corps helped is featured in my book.

You can learn more about the Advising Corp and donate here.

As always, thanks for subscribing.

Cheers — Jeff

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