The College Board is one of the biggest providers of standardized testing, whether that is the PSAT, SAT, or AP exams.
As it becomes more and more necessary for students to attend college, the amount of applications that universities receive has skyrocketed. With tens of thousands of students to sort through, it's very helpful for admissions officers to have standardized, numerical data to academically compare students (whether this numerical data actually reflects academic achievement is up to your interpretation).
So, by providing exams that spit out standardized numbers, the College Board has made itself an indispensable part of high school education.
Like any oligopolist, the College Board does not want to appear like it is blatantly ripping people off, which is why it hides behind the "competition" of the ACT and the label "non-profit."
The reason why standardized testing is more of an oligopoly than a monopoly is the ACT. Though each may defend its pricing practices by saying that it is competiting with the other organization, there really isn't any competition. Both charge almost exactly the same prices
According to Charity Navigator.Org, "the average CEO compensation is in the low to mid six figures" (College Board's CEO makes $1,711,131). And it's not just the CEO: College Board has other executives who make up to $870,738, and there's even a former trustee who's still on the payroll for $51,668!
These numbers are disconcerting to the average high school student, but for economics students, they are hardly surprising. Oligopolies do not work efficiently: they maximize profits, which in the case of College Board cannot be reported as profits, so they go to executive compensation.
It's ironic that the class in which we learn about the College Board's oligopolistic tendencies is an AP (College Board) class!
sources:
https://www.youtube.com/watch?v=YDHO6e7hP7g
https://www.charitynavigator.org/index.cfm?bay=content.view&cpid=2247
https://projects.propublica.org/nonprofits/organizations/131623965/201713009349301216/IRS990
https://nonpartisaneducation.org/Review/Articles/CBForm990for2013.pdf
Anya, I found you post retable as a student. We all use College Board (we have to) in order to apply and attend college. I see and understand your point in how you talk about it as a oligopoly. I really liked how you explained how it works business wise because it helped me understand that although they claim to be a non profit organization, it isn't a good one. I agreed with you when you claimed that it is an oligopoly rather than a monopoly but I think you should go deeper in that area because ACT and College Board are both essential but in the mindset of a student, how does one choose? And because of that does one company have an advantage over the other. Or similarly to Universal and Disney, do they work together?
ReplyDeleteGreat post Anya! This type of oligopoly is something that I see when I play water polo with my club. The USA Water Polo association requires all players to subscribe to their highest form of membership in order to play in national tournaments which almost all clubs go to and are the best ways to get recruited, almost making it necessary for potential college athletes to buy this membership. The only reason that this market is an oligopoly is that companies like Kap7 also host tournaments, just on a slightly smaller scale, still requiring tournament fees similar to USA Water Polo's. Thanks for such an interesting post that helped me connect this concept to my own life.
ReplyDeleteWhat irony! It's pretty bizarre that we're also a part of this college testing oligopoly writing about the system we're forced into. This system is in part the result of the partnerships schools have with these testing organizations and in some states where the SAT or ACT is required for all students to take junior year. In a weird way, this oligopoly parallels Disney and Comcast too! When you have such a strong competitor, it's often best to just work side by side, competing for smaller entities, like Fox, or pricing their streaming services similarly.
ReplyDeleteSource: https://www.thewrap.com/disney-vs-comcast-why-the-bidding-war-for-fox-is-just-heating-up/
As a student who has strong opinions regarding the College Board, I found this post extremely interesting and relatable. My friends and I were talking about how the College Board is like a monopoly, but we weren't talking about how it was an oligopoly. This post changed my mind, and I see why College Board is an oligopoly due to the existence of the ACT. The fact that colleges require either taking the SAT or ACT makes both of these firms oligopolies.
ReplyDeleteI agree with both the fact that standardized testing is an oligopoly, and the fact that they try to hide their power. However, in a way, they have to. Recently, CollegeBoard has been involved with a lot of controversy with reusing SAT tests and very harsh curves. In fact, the ACT seems to be growing in popularity and the SAT seems to be decreasing in popularity. It makes sense though, because my friends that took both tests got higher scores on the ACT percentile-wise.
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