The Future of Secondary Education, Part I
How this year’s AP reflects the defunct business model of the College Board
This is the first part of a three-part series. See part two here, and part three here.
With this year’s Advanced Placement tests finally over, millions of high school students across America can finally breathe a sigh of relief. But while stress may be over, the indignation at the College Board’s handling of the online tests has grown in the past week as students express their dissatisfaction over a myriad of issues.
For one, some students believed that the 45-minute test was too brief to accurately evaluate a year’s worth of learning. At the same, issues over equity arose as households without computers, a stable connection to the internet, or a quiet working place were disadvantaged in an at-home exam. This was further complicated by the College Board’s decision to host all of the tests at the same time in an attempt to prevent cheating, a policy that meant thousands of international students quarantined across the globe took the test at exceptionally unnatural times. Perhaps the most common and prominent source of dissatisfaction was over technical issues regarding the submission. Thousands of students, myself included, were blocked from submitting our work due to a technical glitch or server issue. Though College Board largely resolved the issue in the second week by opening up an email option in the case of a blocked submission, test-takers in the first week wondered why College Board didn’t implement the simple solution in the first week.
All of this anger has amounted to a class-action lawsuit against the College Board, claiming a breach of contract, gross negligence, along with violations of the Americans With Disabilities Act. But this isn’t anything new: students have long expressed dissatisfaction over not only the College Board’s administration of tests but more fundamentally their market structure.
A common explanation as to the College Board’s long-term incompetence revolves around the fact that the company is a monopoly. The three main categories of tests that College Board’s administers are its Advanced Placement Tests, the SAT (and the PSAT), and the SAT II or SAT Subject Tests. With many colleges requiring the SAT Subject tests to demonstrate interest competence in subjects, the College Board retains an effective monopoly on student test-takers. Meanwhile, AP’s are even more ingrained in the high school experience. Not only are AP classes and tests firmly ensconced in the curriculum of classes in nearly every high school, taking AP classes can give you a weighted GPA, which is one that is higher than if a student did not take AP classes. Thus, for many students, in order to appear competitive to colleges in their academics, AP classes and thus the tests are essential tools in the limited toolbox. The only exception of the College Board’s hegemony over standardized testing is the SAT, where students are able to choose the ACT in lieu of the SAT.
OK, so the College Board is a monopoly. But it isn’t just any monopoly. As I’ve ironically realized using my knowledge learned about market structures through my College Board-administered AP Economics course, the College Board is a monopoly that faces highly inelastic demand at the production point, resulting in the quantity effect outweighing the price effect. In other words, since students often have no substitutes for such an essential product like standardized testing as it is seen as a determinant of success in high school, students have little choice but to accept College Board’s AP Tests. At the same time, the relatively fixed and steady number of consumers (students, in this case) already taking an AP course set by their high school means that the consumer base will remain stagnant regardless of the College Board’s actions. As a result, the College Board not only wields immense market power but its inability to improve or to worsen its economic position extends to the utter lack of an economic incentive to improve the quality of its tests.
But if the College Board isn’t serving the interests of the students, as its motto states, are they even serving anyone? When one takes a deep dive into their business model, one begins to realize that colleges themselves are the real consumers of the College Board. It is the demand of colleges for standardized tests that they can use to compare students in their application process that is the ultimate driving demand for standardized testing, with student demand of the test a heavily-related derived demand. Should colleges feel dissatisfied over the effectiveness of the College Board’s exams, there’s always the risk for the College Board that they may stop accepting them and look for other standardized testing options or even spurn the idea of standardized as a whole, as seen recently by the UC schools. Therefore, it is in the economic interests of the College Board to focus on ensuring the integrity of the test over the accessibility, so that colleges will continue to see APs, SATs and SAT II’s as legitimate tests that accurately portray a student’s skills and interests.
This market strategy has been clearly demonstrated in this year’s online testing. It all of a sudden becomes a lot clearer as to why the College Board sacrificed equitable accessibility amongst students for anti-cheating methods. The reluctance for an email option in the first week, strict testing times, and even the possibility of a sting operation on Reddit were planned so that though students may feel dissatisfied with the testing experience, universities and colleges would continue to accept the tests. Instead, the College Board focused on improving the quality of the content of the exam to further bolster its integrity in the face of accusations of an inadequate number of questions for an AP test. And indeed, the strategy has worked. Despite complaints about the equitability, few are questioning whether this year’s take-home test should be accepted by colleges, something that would be an issue if widespread cheating occurred or distrust that the shortened test would be sufficient and comprehensive.
So how can we fix this market externality that ignores the interests of students?
For one, it is essential to recognize though the College Board is a monopoly, it is a natural monopoly. This means that because the standardized testing market that College Board participates in requires high start-up costs and is more importantly dependent on economies of scale, it makes sense for a single corporation to be the sole supplier in the market. This makes sense when considering the fact that the whole purpose of a standardized test is so that there is a standard for students across the country to compare to. Also, the extensive benefits of a single supplier of tests for both students and schools include the ability of high schools to streamline their classes towards exams, in the case of AP’s, and to improve accessibility to the courses for students. Should there be multiple courses and tests competing with AP’s beside the current IB, schools would be forced to either adopt one, preventing students from taking courses from the other or to attempt to adopt several or even all, which would be highly inefficient. Sometimes fewer choices are better.
That being said, while a monopoly may be natural, it also is usually allocatively inefficient and profitable without government intervention. Though the College Board is technically a non-profit, its designation as a non-profit comes under serious question when analyzing its finances. When taking a look at the College Board’s revenues and expenses, one realizes that in the fiscal year of 2017, for example, the College Board had $1.068 billion of revenue but spent only $927.8 million, leaving a $140 million surplus. Instead of reporting the surplus as profit, every year the College Board has placed the consistent surplus into the salary of its board and employees, thus hiding the surplus as expenses. This steady profit means that the College Board can reduce its revenue, or in other words, reduce the price of its products.
Such actions conflict with the College Board’s market role in education as providing a public utility. Its role is supposed to be a public service for public education across the United States, not a lucrative business that disregards the interests of the students. Therefore, just like other public utilities like electric, transportation, and the fire department, there needs to either be extensive government regulation and oversight, or partial or even full public ownership of the College Board. In the end, the problem is not the College Board themselves being “evil”, as some have claimed. Instead, it’s just a mismatch of economic incentives; if we shift incentives through regulation, we can ensure that the College Board truly services both students and colleges.
But while the current manifestation of the College Board is a major roadblock for education in America, it remains just a player in a larger multibillion-dollar system of education. As we’ll explore in our series, cracks and structural deficiencies have begun to appear across the system as a whole.
Continue reading Part 2 here
