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Colleges agree to allow increased competition for applicants

WASHINGTON — The financial aid stranglehold on students who commit to colleges may be broken.

In a proposed agreement announced this month to answer Justice Department antitrust accusations, the National Association for College Admission Counseling said it would allow its member college and university counselors to recruit students even after they have committed to another school and would permit members to encourage students to transfer after they have already enrolled.

Colleges and universities have been heavily criticized for encouraging potential students to enter into agreements, particularly for early admissions, with the understanding that an accepted applicant could not then turn to another school. That understanding, which was not legally binding but was widely followed, prevented universities from competing for applicants by offering more enticing financial aid packages.

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Now colleges will be free to offer perks, like special scholarships or priority in course selection, to early-decision applicants — students who are less likely to need tuition assistance and use the process to secure a spot at their first-choice schools. For many selective colleges, more than half of an incoming freshman class will have been accepted through early admission.

Institutions will also be able to continue recruiting students beyond a widely applied May 1 deadline that is typically imposed for students who have applied through a regular decision process and are considering offers based, at least in part, on financial aid packages.

The changes stand to shake up the admissions process in the next year, affecting some colleges’ ability to predict the size of their freshman classes while allowing some students to benefit from competitive financial aid packages or even bargain for assistance right up until they walk onto a campus.

The agreement brings to a close a two-year investigation into the association’s code of ethics by the Justice Department’s antitrust division, which enforces laws governing fair consumer and competitive market practices. In a complaint, the Justice Department maintained that the organization’s recruitment standards violated antitrust laws because they “substantially reduced competition among colleges for college applicants and potential transfer students and deprived these consumers of the benefits.”

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The department began investigating shortly after the National Association for College Admission Counseling adopted new recruitment rules in 2017, which sought to protect students and families from undue pressure and aggressive tactics that could be construed as coercive. The rules were part of a broad set of voluntary professional standards that the organization writes for its members, more than 15,000 high school and college admissions counselors.

The Justice Department took issue with three provisions: Schools should not offer incentives, like prime housing, to persuade students to apply early decision; colleges should not knowingly recruit or offer enrollment incentives to students who are already enrolled, registered, or have submitted their deposits to other institutions; and members must not initiate contact with students to lure them into transferring.

In September, the organization preemptively voted to strike the provisions from its ethics code to avoid a costly legal fight with the Justice Department, saying such litigation would have “dire consequences on the association’s finances and ability to operate in the future.”

The association “continues to believe that the now deleted provisions provided substantial aid and protection to students in their process of choosing and moving from high school to college,” the organization said in a statement. “However, the association understands its obligations under the decree and intends to strictly implement and abide by its provisions.”

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In a statement, Makan Delrahim, the assistant attorney general who leads the antitrust division, called the settlement “a victory for all college applicants and students across the United States who will benefit from vigorous competition among colleges for their enrollment.”

“While trade associations and standards-setting organizations can and often do promote rules and standards that benefit the market as a whole, they cannot do so at the cost of competition,” he said.

In the early 1990s, the antitrust division investigated the eight colleges and universities in the Ivy League, which used “overlap meetings” to share information and collaborate on financial aid offers.

Last year, the Justice Department began investigating whether colleges and universities were violating antitrust laws by exchanging information about prospective students who make early-decision commitments.

Higher education experts anticipate that the changes will be mostly felt by smaller or less-selective institutions, many of which are already forecasting enrollment losses because of a looming “demographic cliff” from falling birthrates and diminishing interest from foreign students. Institutions may also have a harder time predicting their fall enrollment, and that uncertainty could affect their ability to pull from waiting lists or project how many students they lose over the summer.

Jon Boeckenstedt, vice provost of enrollment management at Oregon State University, anticipated that the changes would prompt colleges and universities to lower costs for some prospective students.

“If there is anything good that comes out of this, it might be that colleges looking to fill their last slots might go and find some low-income students who are extremely price sensitive and would be thrilled to take a slot for a discounted price,” he said.

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Brian Rosenberg, president of Macalester College, in St. Paul, Minn., said he did not believe there would be enough slots for those students. Affluent students will still disproportionately apply for early decision, Rosenberg said, and with the increased competition, colleges will rush to recruit tuition-paying students to secure their revenue early.

“It results in more benefit to the people who already benefit,” Rosenberg said. “The problem that it creates, and the problem that’s most endemic in our higher education system, is the students that stand to be most harmed are the ones already disadvantaged.”