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Yield Rates are Declining - Why?

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Series: Changing How We Understand the Market

In this new series by Jon Boeckenstedt, we analyze current enrollment and demographics data, uncovering stories that challenge how institutions often understand their marketplace—or that shed new light on emerging trends. We want to encourage a deeper look at the implications of today’s marketplace data. We hope that you will share these stories across your institution and use them to start critical conversations to drive not only enrollment strategy but discussions of curricular offerings, student support, and course design. While we’ll highlight findings and stories worthy of closer attention, each article includes an easy-to-use Tableau dashboard that you and your colleagues can use to drill deep in the data yourself.

More in this series:

By Jon Boeckenstedt (DePaul University)

Colleges nationwide are suffering from declining yield rates, and everyone wants to know why.  In some sense, it’s the tendency of colleges to chase the measure of prestige known as selectivity, as defined by a low admit rate. People believe the best way to do this is to increase applications, to allow for a lower admit rate.  The problem is that colleges have a natural market, and, for the most part, applications generated on the margin are softer, that is, less likely to enroll. This depresses the yield rate, which means your admissions office wheels must spin faster just to keep up.

The marriage of colleges and technology has created many ways, such as The Common App, and so-called Fast Apps, to make it easier to apply to college, and this has increased the number of applications students are submitting.  Unfortunately, there aren’t that many more students to go along with the big increase in applications. While applications have increased by 108% percent from 2001 to 2014, the number of high school graduates has increased by only 11.6%; freshmen increased about 27% over that time, as you see in the data below:

DIG INTO THE DATA:

How to use this dashboard:

I've prepared a two-minute video tutorial showing how to navigate and drill deep into these views of the national data.

Some terms you need to know:

  • Admit rate is the percentage of applicants who were offered admission; for instance, 6,543 out of 10,000, or 65.43%.
  • Yield rate is the percentage of those offered admission who enroll; for instance, 1,950 out of the 6,543, or 29.8%..
  • And Draw Rate, an underused, but very powerful indicator of market position, is Yield Rate/Admit Rate, or in this case, .46.  That means this college is about average in that regard.

First Tab: Decline in Yield is Sector-Wide

On the first tab above, you can filter the data to any combination of regions, Carnegie types, and control. What you’ll find, I think, is that this challenge of decreasing yield rate is system wide, to a greater or lesser extent. If you decide to look at individual colleges, you’ll find that the data are much more volatile, as individual institutions ebb and flow at more rapid rates than the industry does.

Second Tab: Take a Closer Look at Your Draw Rate

On the second tab, we dive a little deeper, and this is where it gets interesting. You can easily see the drops in all three measures industry-wide: Admit rates have fallen (but have recently ticked up a bit), while yield rate is plummeting due to the previously-mentioned soft applications. Of most interest, though, is the draw rate.  Draw rate increases when a college becomes more selective not because the school has taken measures to increase applications but rather because the demand for the school is increasing.

Here’s why draw rate is so important: A college can pretty easily manipulate admission rates if it wants to, by generating more applications from students who are either not likely to enroll, or not likely to be admitted.  But as you do that, it becomes harder and harder to sort out the students who are more likely to enroll, and as a result, you have to admit many of them, which will depress the yield rate at some point.  Put another way: If you believed the overall, increased applicant pool showed the same affinity as those in previous years, you could simply admit the same number of students; the admit rate would go down, and the draw rate would go up. But taking greater numbers (even if it is a smaller percentage of applicants) automatically translates into a lower yield, assuming your freshman target is fairly fixed. In short, if your draw rate goes down, it is usually due to generating too many soft applications. You can’t game your draw rate.

The average draw rate is about .5; Harvard’s hovers around 14, while Stanford’s has risen to over 15. Take a look at your favorites and at your own institution to see how this interesting dynamic sorts the extreme outliers from the rest of the industry.

Third Tab: A Deeper Look at a Competitive Marketplace

The final tab allows you to compare individual metrics across different types of colleges: You can choose admit rate, yield rate, or draw rate, and then break out those values in one of four ways: By Carnegie type, by region, by control, or, perhaps most interestingly, by the 2014 freshman admit rate.  When you look at those colleges in the “Most Selective” category, what you see, I think, is that the winners in the race for prestige via admissions statistics (those whose market positions have led to increased draw rates) are the ones who have been the winners all along: The 18 truly extraordinarily selective institutions who have seen their draw rates rocket upwards while the vast majority of colleges and universities, despite efforts to keep up, continue to lag behind.  This is due mostly to real, increased demand for these super-elite institutions.

It’s also interesting to look at draw rates among that second tier of colleges: The 23 who are still in the rarified air of “Highly Selective” but still not among the super-elites.  Essentially, over the past 13 years they have collectively lifted themselves to a perch vacated by the institutions higher up the pecking order, while those institutions moved to a completely new neighborhood.

It’s really hard to change market position in higher education (which doesn’t mean it never happens, of course).  But for the most part, change is incremental, and similar colleges tend to move with—and at the same speed—as their peer institutions. 

What All of This Could Mean for You

Faced with a decline in yield, institutional leaders often pressure enrollment managers to “do a better job of marketing,” assuming that more (or better) marketing will mean greater demand and increased selectivity, allowing the institution to move up the food chain. But focusing just on yield—without considering other critical measures—can lead to unfulfilled and unreasonable expectations about enrollment. For example, if your draw rate is also going down, you don’t just have a marketing problem; you probably have a situation where you are losing admits to other institutions that are doing better at defining and delivering value.

Look at your rates in comparison to your peers both above and below you, and to your aspiration institutions.  Understand that different regions move differently, and an institution in St. Louis is probably different than one in New York based solely on the population it draws from. If you see a negative trend line in draw rate across several years—if you are consistently losing admits to peer institutions—there may be some hard truths to face. Draw rate can provide a proxy for institutional competitiveness, and you may not be moving in a sustainable direction. Prospective students may see a disconnect between your price and your value. It may be time for some difficult conversations:

  • In light of serious concerns about affordability and continually escalating tuition (coupled with escalating expenditures on unfunded aid), ask whether your sticker and your net price to students you wish to serve are, in turn, serving you well.  Is the combination the right mix?
  • Can your institution’s enrollment managers and academic leaders take a hard and honest look, together, at whether your academic programs are offering the value you say they are, and at how-well aligned that value is with the demand from the specific student niches you’re recruiting from?
  • Project forward. Even traditional college-aged students are a rapidly changing population in both size and shape. (A future article in this series will help you visualize that changing population.) How well will the academic programs you offer that market fit with the students of tomorrow? Can you see a better way to align your unique mission with the needs of the market?

These conversations can’t be left to occasional discussions among a few people on campus, nor to just the weeks leading up to the quarterly trustee meetings. Unless yours is one of the rare colleges that is less tuition-dependent, there are few topics that merit greater focus – and not just from enrollment managers.

Where This Data is From

I started by going to the IPEDS Data Center, to download the data.  I selected US, Title IV participating, degree-granting, public and private, not-for-profit colleges and universities that admit freshmen, which takes the universe to 1,943.  Some of those institutions are “Open Admissions” and thus not required to report admissions statistics, so I used any institution that is categorized as Doctorate, Research, Master’s, or Baccalaureate in the 2010 Basic Carnegie classifications.

There will be some data reporting errors in this IPEDS data set, often resulting from typos or a misunderstanding of the data definition.

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About the Authors

Jon Boeckenstedt

Jon Boeckenstedt has been with DePaul, the largest private university in the Midwest, since 2002. He is responsible for undergraduate admissions and for setting and coordinating new student financial aid strategies that affect over 5,000 new undergraduates each year.  In addition, he works with external data sources and research tools to understand and monitor DePaul’s market position.

He brings almost thirty years of experience in higher education, all spent in admissions and enrollment management. His interests include predictive modeling and the intersection of corporate and higher education management issues, and he was among the first in the nation to present on the application of brand to higher education, in 1993.  He has written a chapter on the place of admissions in the academy in Contemporary Colleges and Universities: A Reader edited by Joseph L. DeVitis.

Jon has worked at Mount Mercy and Grinnell Colleges in Iowa, the University of Dallas in Texas, Communicorp (a marketing consulting firm working with not-for-profits) in Atlanta, and St. Bonaventure University in New York, where he spent seven years as dean and then vice president of enrollment management. He earned his master's degree in management and marketing from the University of Maryland University College.