Colleges operating like a Business

Tony Plasencia
4 min readJun 5, 2020

Whether you’re going onto Sales Development at a Start-up or Admissions at a college, at a high-level something like this is happening. You need to have consumers who will buy the product & make a profit. Colleges are ‘not-for-profit’, their profit is Prestige and their consumers are the students who attend their institutions. Measurement of prestige is calculated through published rankings such as the U.S. News. Rising Popularity among the U.S. News and World Report (USNWR) has forced colleges to become more competitive by making College Admissions more difficult to move up these Rankings.

The U.S. News and World Report College rankings became a national standard in 1988, since then there has been a great attention to where colleges place in them for both students and for College personnel. According to Thomas Webster, of Economics of Education, says “The tier rankings are important for college and university administrators because they partly define the institution’s market niche, influence the perception of the institution by prospective students and, ultimately, the perceived value of the institution’s degree. Which affects enrollments and operating budgets, and serve as a guide to the institution’s strategic planning.. (Webster 2). By gaining more quality applicants, they are able to deny more students, dropping their acceptance rate, become more selective and climb up the U.S. News Rankings. Having a stable hold on your Market value is important for Colleges when in pursuit of rising in prestige. Competition drives Colleges to extend their Marketing reach for potential consumers. For example, In the Wall Street Journal Article, U.S. News: Colleges Rise as They Reject — — Schools Invite More Applications, Then Use Denials to Boost Coveted Rankings, Northeastern efforts to lower Acceptance Rate is made evident. Their efforts proved successful as they were able to get 44,000 applicants to apply for 2,200 spots in 2012 which was up from 33,000 in 2007. In the past 6 years, Northeastern has gone up 42 spots in the US News Rankings.

When colleges climb up the rankings, they ultimately are able to reach those ‘business goals’ as they are monetizing and on-boarding quality. By becoming more competitive and focusing on Admissions, Colleges ‘fairly’ price tuition due to their perceived value. Much like Northeastern, where from 2010–2018, there was “[an] increase in tuition of 27%, which stems from the increase of perceived prestige that comes along from ranking highly in Ranking systems.” (Korn & Ensign 3). Across the nation, trends like this are seen in our higher education institutions, Colleges are becoming more difficult to get into, more difficult to afford and taking longer to graduate. The college ranking system has driven Colleges to become data-obsessed institutions, so , that they may benefit from the gain of quality talent. Recently, there has been involvement of college rankings in regards to post-grad life, when students apply for jobs. In College Rankings: History, Criticism, and Reform by Jonathan Robe and Luke Myers, they state, “Boeing created a ranking system to determine those colleges that have produced the most valuable workers in accordance with the company’s goals and standards. The project found that the review of employee evaluations demonstrated significant differences in the quality of graduates from different schools” ( Robe & Myers 35). This turns Colleges into a “workforce pipeline” where Operations are tailored to set students within a Niche business. Post-Graduate rankings give students a plan where they should attend to have a higher chance of success in life which continues the cycle of Business Models.

Colleges are increasingly more and more competitive due to the infatuation for gain in the Ranking systems which has led to a change in approach to Admissions. In recent years, colleges have become more selective and become driven by data to gain higher quality students. This competitive nature has bolstered the cost of higher education in the United States, the Rankings have skewed admissions processes to focus on a juvenile Business Model. Climb up the Rankings and attain high-quality students, Colleges do this by seeing an increase in Applications and denying more of this students. This deters the school as highly selective, this is not accurate it does not rank Academic quality, zero correlation. The rankings hurt the higher education system in the United States by stripping it of its validity as a knowledge giving institution. It’s focus on creating a ‘scalable’ business puts students in detriment of continuing on line of a broken system.

Scalable? Yes, scalable. The system of Higher Education has had a unique ability to continuously improve, monetize & gain one simple product: an education. Their product was able to diversify, they are able to be adaptable as the generations ween through time. An effective strategy to capitalize on is the ‘College experience’ which can find a correlation with a higher amount of funding.

But for now I will continue this thought in a later post….

References

Myers , Luke, and Jonathan Robe . “College Rankings- History, Criticism, Reform.” Eric.ed.gov, Center for College Affordability and Productivity , 10 Mar. 2009, files.eric.ed.gov/fulltext/ED536277.pdf.

Korn, M., & Ensign, R. L. (2012, Dec 26). U.S. news: Colleges rise as they reject — — schools invite more applications, then use denials to boost coveted rankings. Wall Street JournalRetrievefromhttps://search-proquest-com.jpllnet.sfsu.edu/docview/1243331092?accountid=13802

Webster, Thomas. “A Principal Component Analysis of the U.S. News & World Report Tier Rankings of Colleges and Universities.” NeuroImage, Academic Press, 6 Feb. 2001, www.sciencedirect.com/science/article/pii/S0272775799000667.

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Tony Plasencia

Recent SFSU grad in Political Science. 4 years of tech experience in Silicon Valley & keen to possibilities of Big Tech and AI in our public Sector