ACE's Startling Discovery

In 2015, officials at the American Council on Education, the leading higher education lobbying group, made a startling discovery. They were shocked to learn from U.S. Census data that the share of low-income students enrolling in college straight from high school had plunged during the Obama administration, despite the White House’s successful efforts to substantially expand federal financial aid funding. They found that while Pell Grant funding had nearly doubled between the 2008-2009 and 2013-14 academic years, the share of low-income high school graduates enrolling immediately into college had fallen by 10 percentage points to 46 percent.

“Put another way, low-income students are much less likely to enroll in college immediately after high school than they were seven years ago, despite all of the efforts to increase their post-secondary participation,” ACE’s Terry Hartle and Chris Nellum wrote in a blog post. “As a result, the percentage of low-income students attending college today is only about 3 percent higher than it was 20 years ago.”

While the ACE officials said it was “unclear” why low-income student enrollment straight from high school had dropped so precipitously, they offered five possible reasons to explain the data:

• “Rapid price increases” at public colleges and universities, as a result of widespread and substantial state disinvestment during this time period, led “many students – particularly low-income students – to think that college is out of reach financially”;
• Growing public skepticism about “the economic value” of attending college had discouraged low-income students from applying;
• The recovering economy, after years of financial crisis and recession, had enticed many low-income students to get jobs rather than go to college;
• The shrinking of the for-profit college sector, as a result of the Obama administration’s aggressive oversight, had “disproportionately impacted low-income students”;
• Potentially inaccurate data from the Census was providing a misleading picture of what was happening.

There may be some truth to those explanations, although the last one seems more like wishful thinking. But while ACE’s analysis finds plenty of blame to go around for the troubling trends – stingy state legislators, a misinformed public, short-sighted students, over-zealous regulators, and even faulty data crunchers – it lets one major player mostly off the hook: the colleges themselves.

And that omission is pretty remarkable considering the dramatic transformation that has occurred in admissions and financial aid practices at both public and private four-year colleges and universities over the past several decades to the detriment of low-income student and students of color alike.

In the aftermath of World War II, generous federal funding from the GI Bill encouraged private colleges to open their doors to less advantaged students who had been largely shut out of their schools. By the 1950s, private college leaders recognized that they needed to become more systematic in their use of student aid rather than continuing to take a scattershot approach. To try to prevent schools from getting into bidding wars for the students they most desired, selective private college leaders embraced the notion of providing need-based financial assistance to students whose families could not afford to send them to college without the help. Meanwhile, public universities kept their prices low enough so that they were generally accessible for students regardless of family income.

For much of the 1950s through the 1970s, the doors of college opened wider to low-income students and students of color than they ever had before. But by the late 1970s and early 1980s, colleges’ commitment to these models began to waver. Private colleges, many of which were struggling financially, began to embrace a new model known as “enrollment management.” Under enrollment management, the firewalls that existed at most schools, in one form or another, between the admissions and financial aid offices were removed, and colleges began to use their financial aid strategically to compete for “the best and brightest students” and the wealthiest. The introduction of the U.S. News and World Report rankings in 1983 accelerated this process, as colleges competed for students with high SAT scores and wealthy parents who could make large donations.

And once some private colleges began using their financial aid strategically, it became difficult for others to resist for fear of being put at a competitive disadvantage. Throughout the 1980s and 1990s, the enrollment management industry was born, with well-paid private consultants encouraging schools to leverage their aid to get the students they most desired, rather than to meet financial need.

Meanwhile, in the 1980s, the low-tuition approach that public universities had taken for generations was no longer working as effectively as it had been. States were starting to pull back funding for public universities, especially during recessions. Unable or unwilling to raise taxes to increase revenue and facing ever-growing health care and public safety costs, state policymakers left public universities with little choice but to jack up their tuition and fees and provide institutional financial aid to try to keep their schools accessible and affordable.

While public universities initially used their institutional aid primarily to meet students’ financial need, it did not take long for enrollment management firms – recognizing a lucrative market when they saw it – to approach public flagship and research universities and show them how they could benefit from adopting the enrollment management tactics of their private college counterparts. Today, public universities annually spend billions of dollars on non-need-based aid, with much of it going to wealthy out-of-state students who can bring in revenue for the institutions. At many of these schools, affluent students from other states appear to be taking up seats that used to go to low-income and working class in-state students.

Despite the power and influence of the extremely lucrative enrollment management industry, few people outside of academe (and even many within it, including presumably ACE) are aware of it or know what it does. As a result, the enrollment management industry has received little attention in federal and state higher education policy discussions despite the pivotal role it has played in making college less accessible and affordable than it used to be.

This is the first in a series of blog posts I'll be writing in the coming weeks and months – under the banner of "The High Price of Higher Ed's Enrollment Management" – aimed at lifting the veil on the enrollment management industry. In part I will be doing so by highlighting key events that helped fuel the growth of the industry, and articles and books that have shed light on the industry and its practices.

My purpose is not to point fingers but to provide policymakers and the public with a much more thorough understanding of an extremely lucrative industry that has made higher education less equitable while staying largely in the shadows.

Stephen Burd is editing a forthcoming book with Harvard Education Press on the enrollment management industry

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