Does the early bird get the worm?
This is the time of year when I get calls from parents and students asking whether they should apply to college via early decision or regular decision. This decision is a very important one, especially if you are considering some of the more selective colleges and universities in the country.
For those new to the process, perhaps it might be helpful to clarify some of the jargon.
Regular decision is the normal process by which students apply by published deadlines, with promise of receiving an admissions decision no later that April 1 of their senior year. Some colleges will give admissions decisions well before April 1, but the student is under no obligation to make a decision about whether to attend until the common response date of May 1.
Early decision is binding promise. Under this program (also known as ED), students apply early (usually by November 1 or November 15, depending on the college), and will receive their admissions decisions early–usually by December 15. In return for this early decision, the student, parents, and school counselor sign a pledge that, if accepted, they will attend that college. The student agrees to withdraw all other applications, and not accept any other offers of admission.
Early action programs are a hybrid. Students may apply early under these early action (EA) programs and receive an early admissions decision. However, the student is under no obligation to accept the offer of admission and can wait until May 1 to select which college to attend. For purposes of clarity, this post will focus exclusively on the differences between early decision (ED) and regular decision.
So when should a student apply under an early decision program? I advise that students apply ED only when the college in question is far and away the student’s first choice, and when the family is not “price sensitive,” meaning that the family is willing to forgo the possibility of comparison pricing.
Let’s take each of these conditions in turn.
Is this college really my first choice? Some students are very confident in identifying their first choice college. I was. But many students are still confused in the fall of their senior year. Both my brother and sister had some ideas of what type of college they wanted, but no institution really stood out in their mind. I applied early because there was no doubt in my mind that this one college was where I wanted to go.
Some people point out that, statistically speaking, it is easier to get into a college during the ED process than during the regular process. Thus, they ask me whether it isn’t a better strategy to apply early. The answer is yes–but only if you agree to forsake all other admissions and financial aid offers.
Many colleges accept as much as 30-35% of their entire freshman class in the ED process, and usually the pool of ED applicants is smaller than the regular pool. So in a statistical sense, a qualified applicant has a better shot of admission in an ED process than in the regular process. (For more on the statistical analysis of how this works, see the book The Early Admissions Game: Joining the Elite by Christopher Avery, Andrew Fairbanks, and Richard Zeckhauser.)
However, keep in mind that what may be statistically true for an entire pool of applicants may not be true for an individual applicant. Admission is not a matter of randomized statistics. If a student does not possess at least the minimum requirements for entrance to a particular college, she will not somehow sneak past the admissions gate in the early round. The fact is that every selective college has many more qualified applicants than space available. The students who are admitted early are just as talented and capable of doing the work at that college. (Again, if you are interested in the intricacies of how this works in practice, and the slight differences in applicant “quality”, read The Early Admissions Game). Early applicants are still judged on their merits in the early process.
So why, then, do colleges like the early decision process? Why is it in their interest to accept a third or more of their class ED? The best way to explain this is to talk about William Shatner and Priceline.com.
Early Decision, Price Sensitivity, and Priceline.com
Priceline is a website that allows you to bid the price you are willing to pay for air tickets and hotel rooms. You name your price. Then through a process of computing magic, airlines and hotels decide whether they will accept your bid. But, in return for bidding a low price, the consumer agrees to two things. First, they agree to pay the price bid. A bidder has to submit credit card information, with the understanding that if the bid is accepted, the card will be charged. Second, the bidder cannot choose which airline or hotel will receive her business. For airlines, you can choose how many stops you are willing to tolerate. Hotel bidders can choose the general geographical area, and they can choose the general quality rating (number of stars) of the hotel. But by bidding for a low price, Priceline customers are giving up control of important aspects of their purchase. They are trading control for price.
This sort of arrangement is good for those involved on both sides of the Priceline transaction. Hotels and airlines boost capacity or occupancy rates. Customers often get great bargains. But by agreeing to Priceline’s terms of sale, customers give up their ability to choose.
So how does this relate to early decision in college admission? As with Priceline, an ED candidate gives up the right to certain aspects of his “purchase” of a college education. What does the ED candidate relinquish? The right to comparison shop based on price. Thus ED is sort of the reverse of the Priceline: name your school, but agree to pay the price offered.
ED and Financial Aid: The Jewelry Store Analogy
The conventional wisdom is that a student’s financial aid package under the ED program will be lower than if he or she is admitted under regular decision. In general–and again, statistically speaking–this is true. Why? Because colleges do not need to offer discounts in the form of merit scholarships to students who make the early decision agreement.
Think about it.
You walk into a jewelry store and tell the shopkeeper, “I’d like that diamond ring, and only that diamond ring…I intend to buy that ring.” The shopkeeper thus knows he has a red-hot customer, and has no incentive to offer you a discount because he is absolutely sure you will buy. He may offer discounts to other customers who are doing more comparison shopping, or who are looking at diamonds and rubies and sapphires and haven’t made up their mind about which ring to buy. He knows that unless he offers discounts, those other potential customers may walk out the door and he’ll lose a sale. But with you, the determined buyer, he can smile and read you the price tag, knowing you will not walk out of the store without paying the full price.
How does this work for colleges? It depends on whether the college awards merit-based financial aid. Some elite colleges award financial aid only on the basis of need (more on those colleges in a second). But the hundreds of colleges that compete for students by offering deep discounts and other financial inducements to bring in the customers, colleges love ED because they need to discount much less–if at all–for those customers who walk in to their office with a signed promise to buy the diamond ring.
This does not mean, however, that a student who has financial need should necessarily avoid ED altogether. Many colleges, especially those that do not award merit-based aid anyway (e.g., the Ivy League), will still award solid financial aid packages based on the family’s ability to pay. Students with high financial need should be able to get a solid, early offer of financial aid from an ED institution. (And since insufficient financial aid is the only legitimate reason to be released from the ED commitment to attend, financial aid offices do have good reason to work with less affluent students who are accepted under the Early Decision programs).
Still, the ED system tends to discriminate against students with high financial need in other, more subtle ways–ways that are not easy to prove. If a student with high financial need is qualified for admission, but not necessarily a clear stand-out in the eyes of the admissions officers, he may be deferred to the regular round to compete for an offer with everyone else. The reason? A high-need student costs the institution more money. If the admissions office feels that they will have to pay a heavy price (in tuition discounts or scholarships) to admit a student in the ED round, then the college may as well release the student from the ED agreement so as to “shop around” for better customers.
To return to the jewelry store analogy, let’s say you walk in to the shop and point to the ring you want to buy: this one and only this one. But then you tell the shopkeeper that you will buy it only if the price is right. You promise to pay, but only if the price is low enough. Now the shopkeeper has a different incentive. If he doesn’t know your ability to pay–but knows he must discount–he may decide it’s not worth discounting too much just to get the sale. Furthermore, if our jewelry store clerk (like our admissions officer at a selective college) looks around the store, he’ll see that there is a long line of potential customers winding out the door and down the street, all of whom are waiting to buy that same diamond ring–and a large percentage of them are willing to pay full price. Why should he offer a discount to you, if others are willing to pay full price? His incentive is to pass you by and see if the next customer is more attractive.
And that’s the rub, isn’t it? Selective colleges choose their customers!
College admission is not like any other consumer transaction we ever make. In most any other business, it is illegal to pick and choose customers. In any other business, the producer sets the price and sells the product or service to the first person who slaps down the greenbacks. Not so with colleges and universities in the US. Because college admissions officers are not only sales and marketing professionals, but also social engineers, they not only permitted, but required by their bosses (i.e., the faculty) to be selective about the people to whom they sell their diamond rings.
So what does all this mean for you? Should you apply early decision, or not?
You should apply early decision if you meet two basic conditions:
1. The college in question is far and away your first choice. You want this particular diamond ring above all others.
2. You are not price sensitive, meaning that you are so enamored of a particular school that you do not mind foregoing your right to compare one financial aid package against another.
So for students with high financial need who are determined to pay the lowest price for a college education, ED is not a good idea.
The one exception might be for a student with high financial need who is also a standout, both inside and outside the classroom, and who is sold on a particular college. If offered admission in the early round, this student can work with the financial aid office to come up with a reasonable financial aid package. And the student should make it clear that if the package is not good enough, he will have to be ask to be released from the ED promise to matriculate. Quality students with high financial need may very well be deferred to the regular round. But if they are accepted under ED, then they suddenly have more power to bargain for a good package. But even in such cases, students lose the right to comparison shop: unless they go to the regular round, they will never know what sweet financial deals they might have received from another college.
Generally, I advise all my clients who are sensitive to price (regardless of their true ability to pay) to pass up the Early Decision option and apply regular decision. This is the only way to comparison shop.
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