The Real March Madness- Selectivity, Cost and the Search for Value in Higher Education

March 26, 2015

UCLA Wins Another Title...But for Different Reasons This Time

As a man with a broken heart, given the departure from the tournament of the Maryland Terrapins last weekend, a non busted bracket, with all four final 4 teams still alive, a 17 year old looking at colleges, and a penchant for financial analysis I find myself in a unique positon to perhaps offer a different take on this year’s field of 64.  Though the winner in my tournament will have the least points, not the most, based on a RMM (Real March Madness) score that represents the sum of the school's annual tuition costs and student acceptance rate.  The idea is to develop a reliable measure of overall value, both educational and financial, in a college environment plagued by spiraling tuition costs.

The seeds of this analysis were actually sown in last year’s tournament, with the heartwarming first round exit of the Duke Blue Devils at the hands of the Mercer  Bears.  I will confess to never having heard of Mercer until that moment.  Further investigation yielded a 180 plus year old institution in Macon GA with over 8,000 students, though two other metrics, Mercer’s acceptance rate (around 70%)  and tuition (around $35K for an RMM score of 105) , really caught my eye.  And those two metrics form the basis of an index I have used to analyze the March Madness field from a different perspective.

Fast forward to this year, with 114 year old Sweet Briar College in Virginia announcing its intention to shut down and some well publicized, and on target in my view, comments from Mark Cuban suggesting the closure as indicative of a much larger bubble in higher education and student loan debt.  While inclined to agree at a high level, especially as a father experiencing the sticker shock of initial collegiate exploration, I wanted to put some quantitative analysis behind what to date has been a gut feeling that institutions that accept more than half of their applicants should not be charging $40K in tuition.

The simple analysis I have conducted is aimed at finding out why that might be, with a feeling that the fact that some do (for now) was more a result of widely available student loan funding than anything else.  As we saw when the Federal government became a major actor in housing finance, it tends to distort the rational economic function of a market.   Thus my analysis attempts to find the “real” national champion from the field of 64 in terms of bang for the buck in education by adding two factors into an overall RMM (Real March Madness) score.

  • Acceptance Rate- a proxy for a school’s overall level of desirability, encompassing issues of academic quality, job placement, alumni networks and so on.
  • Tuition Amount- Dollar amount for tuition only, with an average taken for in and out of state tuitions in the case of state schools.

The lower the score the better in this analysis, with scores ranging from a low of 45 (UCLA, 20% acceptance rate plus $25K average tuition- 20+25=45) to a high of 115 (Valparaiso) with an average of 84 (Arkansas) , which yields some interesting results when applied to this year’s bracket seedings.  It is notable in this context that Sweet Briar’s score comes in at 119, and there are some nuances in the analysis of private vs state school that are discussed below.

We have listed our Sweet 16 by region below for a broader sense of schools that score well on the analysis, and note that our Final Four is composed of Hampton, North Carolina, Virginia and UCLA, with UCLA taking the National Title, defeating North Carolina in the finals.  Number 3 overall San Diego State has some hard luck in meeting UCLA in the Elite 8 after barely squeezing by Duke in the Second Round.  In many cases the analysis imitates real life, with the Tar Heels nosing out Harvard in the First Round,  and Georgia State reprising their First Round victory over Baylor only to lose in the Second Round (to Ole Miss in this case)  Iowa State did narrowly survive its first round matchup with UAB is this tournament, though was also in UCLA's path in the second round..

However, the RMM Tourney Bracket is primarily about upsets.  Top seeds Kentucky and Villanova went out in the First Round, losing to  to Hampton and Lafayette, respectively.  Second round seeds also dropped like flies, with Arizona losing to Texas Southern, Gonzaga losing to North Dakota State and Kansas losing to New Mexico State, all in the First Round. Interestingly, we end up with a Sweet 16 almost perfectly balanced between perennial powers and Cinderallas.

Midwest                              West                                                     East                                        South

Hampton                             Wisconsin                                            NC State                 San Diego State

Maryland                             North Carolina                                   UC Irvine                           Georgetown

Texas                                   Ole Miss                                                   Albany                                 UCLA

Indiana                                Texas Southern                                 Virginia                               Davidson

As a graduate of two wonderful state institutions, Maryland and UCLA, I would be remiss not to point out a few mitigating factors in the analysis.  First, by taking an average of in and out of state tuitions state schools are penalized to some degree given what is in some cases a very wide gap. Things look somewhat, though not terribly, different from a purely in state perspective.  Second, given what I view as the appropriate mission of state institutions to cast a wide net in terms of in state admission, admission rates in some cases are understandably high.  Having said that, it's arguable that some of the more competitive state schools may be underserving their in state missions.  The risks appear to accrue more to private institutions with RMM Scores in the 90’s or triple digits, of which there are a dozen in the analysis, to demonstrate value to both students and their families.


Tim Savageaux, BS University of Maryland 1987 MBA UCLA 1992