The Problem With Getting Out of an Early Decision Contract

Author and New York Times columnist Ron Lieber just wrote an excellent piece titled “Early Decision Isn’t Binding. Let Us Explain.” He deservedly calls out NYU and the Common App for providing misleading guidance on ED rules, and he helpfully clears up some myths. His most important point: if you can’t afford to enroll at the price the college asks you to pay, you can back out of the agreement.

True, but there is more to this story than Lieber’s piece can address. Let’s look at a typical case of a family who may have to back out of their agreement. Isaiah Jones decides to apply to Brown and he’s heard that it’s easier getting in during the early decision round. His parents have calculated that they will require about $35,000 in institutional grants each year to make Brown’s $80,000 price tag affordable. They know the school meets full need and that they can get out of the binding contract for financial reasons, so they enthusiastically give their son the okay to apply ED.

Isaiah receives awesome news in late December. He’s in! The family celebrates, but then they see the details of his financial aid award. He’s only been offered $20,000 in grants, leaving a shortfall the parents cannot meet. The problem is not Brown’s lack of generosity—they covered the family’s need. The problem is that the parents had not done their homework—they had not run Brown’s net price calculator before agreeing to apply ED, and had not gone to other calculators to approximate what their expected family contribution would be.

The next business day, Dad calls the financial aid office but gets a recorded message that they will be closed for the holidays until early January. Not sure if he will be going to Brown or not, this won’t be a fun winter break for Isaiah. Two weeks later, Dad gets through to a financial aid administrator who explains how to file an appeal. A week after that, the family learns there will be no adjustment to Brown’s financial aid award because the school has met the family’s full financial need.

Isaiah’s parents have put him in an impossible situation. On the one hand, how can he walk away from Brown’s offer of admission before hearing from the rest of the schools he’s applied to? Maybe no comparable schools will admit him, or maybe he gets in but their financial aid offers won’t be as good. On the other hand, how can his parents say yes to a school they can’t afford?

Walking away from a not-so-binding ED offer, while permissible, can be a heartbreaking experience. If parents want to take advantage of the perceived bump that ED bestows—in reality, it’s recruited athletes and legacy kids who get a big advantage and raise the acceptance rate for the entire cohort—they must first know their approximate net price at that school and be comfortable with it. More fundamentally, can higher education continue to support a popular admission program that clearly advantages the wealthy few over the great majority of applicants?