2009Jun10 College Entrance Changing

 

Those of you with children will be well aware that summer vacation is here. You might also know that high school graduates entering college in the fall will face some of the fiercest competition in the history of American universities. This heightened competition is showing its face in some unexpected ways.

 

Consider the headline above. The state of Texas has had a policy for the past ten years of guaranteeing automatic admission to state schools for high school students who graduate in the top 10% of their high school class. This policy was designed to reward the top performers at rural and inner city high schools with lower rankings than the state’s wealthier suburban schools. The thinking at the time was that, with thousands of open admission slots, the 10% rule would open doors for ambitious but less wealthy students while not materially reducing the opportunities for students from the wealthier areas. There was room for everyone, after all.

 

Then a funny thing happened on the way to college; it got more crowded.

 

According to the Wall Street Journal, fully 86% of the University of Texas 2008 freshman class was admitted under the 10% rule…leaving only 14% for all other admissions!

 

So, what happened? The simple laws of mathematics tell us that we can’t all be above average. Similarly, though school grades can possibly be inflated from time to time, the ratio does not change. The top ten percent is still the top ten percent, even if grades are inflated across the board. 

 

To understand what is happening here, we need look no further than birth demographics. Throughout the 1980s, there was an enormous “echo” baby boom that peaked in 1990. The number of babies born that year (adjusted for immigration) was the highest since 1964. Doing the math, those babies born in 1990 would have entered college in 2008.

 

The good news is that admission pressures should subside for nearly a decade as the Echo Boomers work their way through the university system and into the workforce. The bad news is that we are again experiencing a mini baby boom. 2007 (the last year for which official data was released) was an even bigger birth year than 1990.   And that is just the beginning. Those college girls who started school in 2008 will be marrying and becoming mothers over the next decade.   This will mean that massive expansions of the university system will be needed to accommodate these future college students. More broadly, it means that our elected officials will need to consider the effects of demographics. Otherwise, many would-be students will be squeezed out of the system altogether. After all, as we wrote above, “we can’t all be in the top 10%.”

 

In a similar manner, it is demographics that will be driving us through this recession. Consumer spending is driven by age and stage of life and is very reliable for predicting major trends changes. We have embarked on a new direction as an economy requiring new portfolio strategies.

 

If you have questions or want an appointment, call the office at 800-317-9119. Any staff member can schedule a meeting or a phone appointment on our calendars.