Information is power. This is especially true when two parties are trying to come to terms on a potentially expensive deal...say, for instance, an undergraduate college education that can cost a quarter of a million dollars at some high-priced institutions.
That's why it's big news that two long overdue changes in college admissions this month have altered the information flow in college "negotiations"--both in favor of the student.
Like any other negotiation, college admissions involves two different parties coming to the table, each with his or her own self-interested agenda. The college student is seeking to spend as little as possible to get the most valuable degree he can acquire. The college, for its part, would like to acquire the best students and charge them the highest possible rate.
And the poker game begins.
As in any financial negotiation, each party would like to keep certain information hidden from the person on the other side of the table. Transparency works against this goal. Meanwhile, you look for a "tell" and try to sneak a peek at the other player's cards, if you can. That's how you improve your odds of winning the transaction.
The student doesn't want the college to know where else she is applying and what other financial deals she is considering while the college doesn't want the student to know how low they are willing to go on price and how much institutional aid is available.
This two-party standoff is further complicated because in college admissions there's a third, invisible "party" at the negotiating table. This extra participant is the federal government, which may or may not be chipping in to cover a portion of the student's financial share.
It all depends, you see, on the students' parents' financial information from the past tax year which they'll be expected to account for once the FAFSA comes online January 1...even though taxes aren't due to be submitted until April.
Got that?
Therefore, this third variable was always considered "unkown" until the spring of senior year--long after applications were submitted and students had already placed their bets and tipped their hands. Hence, students were annually cornered into deciding upon their college lists based on incomplete information and schedules that were out of their control.
In several ways, then, the deck has been stacked in favor of colleges during these negotiation proceedings. They've traditionally had access to more information than students, and they also have much more experience playing this particular game.
Advantage: colleges.
A recent move by the government, however, has helped to remove one uncertain variable from the decision-making process for college-bound students. Thanks to the new decision to allow HS seniors (starting in 2017) to use their parents' "prior-prior year's taxes to calculate their federal financial aid eligibility, families will soon have more information available when deciding which colleges they will be able to afford...and they'll have this information sooner in the process.
So, that's good news. It might not tilt the advantage all the way over to the student's side, but it does level the playing table somewhat. It's also likely to slightly increase financial aid eligibility since, as Steve Elias of Planet Tuition in Worcester, MA points out: "On average, incomes have been going up by about 3% annually, so using the lower prior-prior year's income will give families a bit of an edge in the process." This change also helps college-bound families to better understand what kind of financial hand they're holding earlier in the process (the FAFSA will be available in October 2016 rather than January 1, 2017), so they'll have a better sense of how and where to "place their bets."
The other improvement in transparency takes away yet another advantage previously held by the colleges. Traditionally, the Department of Education would allow colleges to see the students' list of other colleges on the FAFSA, so they would know who their competition was. In other words, colleges could sneak a peek at some of the students' cards. Could you imagine a real estate transaction that would allow potential sellers to know what other houses you might be interesting in bidding on? It's definitely harder to bluff that way.
This practice is also going to end, which will enable college-bound families to employ a bit more strategy and gamesmanship in their college negotiations.
If you don't want colleges to know where else you're applying, you'll soon be able to play your cards a bit closer to the vest, while receiving earlier information about how much you can afford to wager. This game is definitely getting more interesting!