By Todd Fothergill
President and Founder, Strategies For College, Inc.

On May 1st each year a significant transfer of wealth takes place in America.  Unless you happen to be a participant in this annual ritual, it will most likely never enter your stream of consciousness.  The transfer of wealth to which I refer does not occur between or among family members.  Neither does it occur as a result of federal income tax filings.  No, this annual movement of funds takes place between the parents of approximately 1.5 million college bound students and the colleges in which they have decided to enroll.  In the college admissions business, “National Deposit Day” brings nearly a half billion dollars in the form of $300 - $500 nonrefundable deposits into the college coffers – with much more to follow.  That families send these deposits each year is not of concern.  This is, after all, merely the first step toward paying for a college education.  The factors influencing the final decision – that particular college to which the deposit will be sent - however, should be thoroughly and objectively evaluated by every family before writing the check.  Let’s consider how these decisions are made.

Making consumer decisions about where to spend your money can be simple or complex.  Where to go for lunch is less complicated than what type of car to drive, but both involve evaluating competing alternatives, weighing pros and cons and then making a decision.  One might expect that deciding which college to attend would be similar to purchasing an automobile.  Both are financially significant, require one to digest large amounts of objective data, filter out subjective data and work through an objective decision making system.  But, this occurs in college decision making far less frequently than you might think.  Shopping for colleges is not at all similar to deciding which type of auto to drive.  For some reason, when our children enter the mix, we toss objectivity out the window.

When purchasing the family ride, parents have a pretty well thought out plan.  They know the type of car they need, the required features, how much they are willing to spend and they know whether or not they want new or used.  They also know which message will be sent as a result of ownership. Purchasing a Lexus sends a different message than purchasing a Malibu.  For those intent on a reliable ride at a reasonable price, however, perceived prestige rarely impacts the final decision. 

When it comes to deciding among colleges from which offers of admission have been received, we are likely to abandon the prudence exercised in purchasing the family automobile.  This occurs to some extent, because the alternatives from which we must choose are not similar.  Let’s revisit the auto purchase.  When considering automobiles, we purposely consider similar alternatives – Honda Accord, Toyota Camry, and Nissan Altima etc.  Each satisfies all or most of the criteria we have identified as important.  Usually, once the “final alternatives” have been identified, our goal is to drive away with the best bargain from among the available (and very similar) alternatives.  Apply this model with college decision making, and it breaks down quickly.  Here’s why.

Students are typically counseled to apply to several types of colleges which tend to be quite dissimilar.  For example, they are told to identify a few “reach” colleges (where by definition, they will have grades and test scores in the bottom quartile of applicants).  These colleges, in the minds of most college shoppers, represent the Lexus, Mercedes, and BMW type college.  If admitted, these colleges are perceived as “better” than the alternatives due to the brand name. 

Students are also counseled to apply to “safety” colleges (where by definition they will have academic credentials placing them as high as the top decile of applicants.)  The good news: These are sure bets.  The bad news: Students don’t want to attend “safety” schools.  This is your low prestige Chevy. 
Finally, students are counseled to have a few “target” colleges on their list (colleges where their credentials place them around the median in the applicant pool.)  Chances of admission are good to very good.  These are the Accord and Camry group.  Good fits.  Good value.

Here’s the problem:  Because most students apply to three colleges in each of the categories mentioned above, they typically are admitted to all of the safety schools, at least two of the target schools and none of the reach schools.  Thus, the number of true similar acceptable alternatives from which to choose equals two – the target schools.  Students (and parents) see the safety schools as too far below them, so they never become true alternatives.  They tend to be ho-hum about the targets, since admission was expected.

If admitted to a reach school, however, it is likely to be lustily pursued; similar to a long term lease incentive or 72 month 0% interest rate offered by the Lexus dealer.  You know you can swing the payment at least initially; you’d really enjoy the prestige of ownership, but is this a good purchase in the long run? Or are your emotions getting the better of you?  This conflict occurs for all too many students and parents each year.  Once admitted, "reach" colleges, with few exceptions, come at a very high price.  The question you must answer is this:  Will the more expensive college do any better at equipping my son or daughter with the skills needed for success in life, or have I been deluded into thinking that it will?  How do I justify spending “X” dollars more for an undergraduate education?

Making That Final Decision:  Bottom Line (1)
First, keep in mind that you cannot delegate this decision to your 17 year old.  Your input and mature guidance is required.  Before you make that final decision, go back and review the criteria you identified during the early stages of your college search.  Why was each college on the list in the first place?  You most likely considered factors such as size, location, distance from home, campus safety, availability of professors, graduation and retention rates, ability to get a job within six months of graduation AND net cost to your family.  How well does each college on the “alternative list” stack up now?  What will the real cost be to attend each college?  How much debt will your student (or you) be taking on?  Can you afford this college in the near term and account for other children you must educate?  Will your retirement funds be impacted in any way by making a particular decision?  Is this a responsible decision?  What is your child learning from your input to this decision?  Clearly, these are questions with some gravitas.  However, if you take the time to make a good decision, you are likely to find that your son or daughter will not become a retention statistic and that college in the long run may just turn out to be a whole lot more affordable and satisfying to all concerned than you think.

Don’t get blinded by the shine of that Lexus.  Eventually, they rust out, too!

Todd Fothergill is President and Founder of Strategies For College, Inc. a private firm specializing in college admissions and financial counseling for college.  Over the past 19 years, the firm has assisted nearly 4,000 families through its offices in Lebanon, NH, Burlington, VT and Canton, MA.  Todd is also a faculty member at The Boston Tax Institute where he teaches several 8 hour CPE classes on college financial aid for CPAs and CFPs.   Todd is a member of the National Association for College Admissions Counseling and the Higher Education Consultants Association.  He can be contacted through the company website www.strategiesforcollege.com.