A limited bidding solution for higher education - A modest proposal

The current court cases over affirmative action – this time raised about discrimination against Asians at the most selective colleges – has forced some of these elite bastions to reveal some closely guarded secrets about the actual selection process.

Admissions officers have reluctantly revealed just how big a role money plays. Especially really big money. Someone who, for example, pays for a major new building at a school is likely to see his or her child graduate from that same school.

This eagerness for huge payoffs is hardly a shock, except to the most idealistic and naïve of us. But it has been a quiet and largely back-room part of the process.

I suggest that we consider bringing this money chase out into the open, for the betterment of all.

For decades, tuition at all categories of schools has been rising far faster than the cost of living, and the cost of college now leaves students facing the specter of starting their work-lives burdened with truly staggering amounts of long-term debt. For middle-class parents too, the pride of watching their children’s high school graduation ceremonies is mingled with the dread of looming college expenses and a financially truncated life-style that will extend into their retirement years.

A private-sector solution

Can anything be done, especially at a time when raising taxes to support education is out of the question? Yes. There is a clear and straightforward answer that can be easily implemented, and that will provide benefits for everyone on all sides of the equation.

Simply set aside a small percentage – say just 1% – of slots at top private colleges to be bid on by students (and their parents) wishing to enter.

A market approach? For the ivory tower? Blasphemy.

But let’s consider. An auction process would also allow wealth at least some of the privilege appropriate to the hard work and enterprise that it often reflects. And, unlike the currently vilified “death” tax, this will “tax” the wealthy in a way that they will actually enjoy, while also benefiting the families and students who are struggling to meet tuition bills. In fact, this process may make it possible for significant numbers of students who could not otherwise think of going to private colleges to have that opportunity.

But isn’t this unfair? Well, as Jimmy Carter once reminded us, “life is unfair” – and so, for that matter, is the current system. The selection process in effect today has more than a few vagaries and inequities built in. Private selective colleges already favor children of alumni (legacy admissions), most have some sort of “affirmative action” criteria (stated or unstated) that influence admissions of certain categories of students, and, as William Bowen and James Shulman reveal in their carefully documented book, The Game of Life[1], smaller, highly selective colleges are dangerously over-represented by “student-athletes” from a wide range of sports who fall well below their classmates in high school grades and SAT scores, and who continue to underperform in the college classroom.

Top schools long ago shifted from the old-style ideal of the “well-rounded student” to the diversity-enhancing “well-rounded class.” Should we not encourage financial diversity and well-roundedness as well? Remember, bidding out some slots at top dollar will on the other end enable an even greater number of students who could not otherwise have afforded it to become class members as well.

This auction would certainly allow individual schools to set a base for entry (Harvard or Princeton, for example, might set a “floor” of 1300 on the SATs and an “A-/B+” average in high school), but we should recognize that not all the people admitted through the bidding process would necessarily be marginal. At top schools, the real task of the admissions committee is not to separate the “winners” from the “losers,” but to make almost mystical decisions from the middle group of enormously qualified students for whom there are simply not enough spaces. Surely some of these highly qualified but non-shoo-in candidates whose families are wealthy will be happy to bid on a slot and avoid the tense weeks and months of waiting to see whether the envelope they receive is fat with admissions forms or a one-page pink slip.

(Of course, the bidding for these designated slots would be done ahead of the normal decision announcements to assure that these students would not simply wait to see if they “needed” to bid.)

This indeed would be in keeping with the best marketing practices of charging each person what they are willing to pay (price discrimination). Why should the university “undercharge” students who would be ready and able to pay many times more? Subsidies should be for those who actually need them.

And for all students, and indeed for the general public, the “value” of a college education will become highly visible as never before. Parents and students today are aware that college is expensive, but the question of whether it is valuable is murkier. Bill Bennet, our national education curmudgeon, who himself sports both a Ph.D. and a Harvard law degree, wrote some years ago that if a son of his wanted to know whether to go to college or take the money and run, he would encourage him to take the money.

Consider for a moment: what would the impact be if the papers announced that the top bid for a place in a top college was over $100,000,000 (which in this new age of billionaires it surely would be)? A college education would move from being a vale of tears (and keg parties) to Ferrari status. High school students who now aspire to Tommy Hilfiger shirts would aspire to good colleges.

The most obvious role for the bidding process would be within the private college system, but top state universities might use it as well – particularly for out-of-state students. Out-of-state students add an important level of diversity on campuses, but it is difficult for legislators to justify admitting non-residents at the expense of the children of their constituents. A bidding process would gladden the hearts of state taxpayers by bringing in substantial new revenue without increasing taxes – and would demonstrate to them in hard-nosed, bottom-line terms just how valuable an education their state schools are providing their own children.

Finally, to help spread the benefits of this approach beyond only the campuses that will attract the highest bidders, a portion of the bidding proceeds (say 50%) would be put into a national scholarship pool to help lift the level of educational opportunity at all schools.

And, in an arena where partisanship stands as a persistent obstacle to virtually every kind of reform, this proposal offers a unique “win-win” scenario for both sides of the aisle…

• Bringing an element of the free market to the elite college system? – score one for the Republicans.

• “Taxing” the wealthy and increasing the base of financial support for higher education and college scholarships? – score one for the Democrats.

[1]Princeton University Press, 2000

PAH - 10/29/18