Schools turn to little-known consultants, owned by private equity firms, to find applicants and calculate scholarships. Here’s how that affects the price you pay.
Last month, four Republicans from the House and Senate sent letters to the presidents of Ivy League schools demanding years of data about how they decide what to charge.
These institutions, the letters said, “establish the industry standard for tuition pricing, creating an umbrella effect for all colleges and universities to justify higher tuition costs than they could otherwise charge in a competitive market.”
In fact, no more than a few dozen other schools can command Ivy League prices from a high percentage of their students and their families. Every other private institution — and most public ones — compete brutally on price up until the May 1 reply date each year (and sometimes afterward). The average tuition discount among private colleges is now over 56 percent for first-time, full-time students.
Those discounts — which often come in the form of merit scholarships — can make a six-figure difference in what families pay over four years. This aid is different and often less predictable than the need-based kind that depends on a family’s income and assets.
The driving force behind college pricing is not some evil genius at Harvard or Penn. Instead, it’s a series of algorithms developed quietly over decades by consulting firms operating just out of sight. The two biggest — EAB and Ruffalo Noel Levitz, or RNL — are owned by private equity firms.
To understand how all this happened — and how things really work today, for families and the financiers hoping to make money off this opaque system — we need to turn the clock back 50 years to when an unlikely character took over the admissions department at Boston College and upended everything.