It doesn't outright say so, but it seems that Trachtenberg is relying on the canard that students attending on loans are not actually paying full price, which is absurd.
I actually had a college send me an embossed certificate in the mail awarding me a "Faculty of Arts and Sciences Scholarship." It was a low-interest loan. I felt like they were making fun of me. It was humiliating. I really wanted to go to that school, and it was like getting an embossed "Fuck you" in the mail.
They could have given me that money up-front, right? Only that would have been too honest. The fact that they called a loan a "scholarship" is all you need to know about how much respect they had for kids' understanding. They rely on kids not knowing what it's like to pay off loans. Or on kids wanting to cash in on their degree after college, which I had no desire to do.
The homebuilding industry figured that out a long time ago.
GW students’ average SAT scores increased by 200 points
So, this strategy really did improve the quality of the school, it wasn't merely perception.
(On the flip side, and to agree with you, I think the strength of a school is really tied to the strength of the students, since it's one's peers that make a great educational experience, IMHO. Any strategy that gets a school to climb the rankings will likely get the school more ambitious applicants.)
I don't know why everyone assumes that children of the affluent get high SAT scores due solely to test prep. If that were the case, you would expect them to underperform once they reach college, which doesn't occur as far as I know.
Incidentally, at least according to one independent study (as opposed to a study by Kaplan), test prep doesn't help much (30 points on the old 1600 point SAT).
All schools are constantly jockeying for prestige and the quality comes with it. Calling it a "racket" hardly seems fair.
Students no longer drive to class early in the morning. Nor do students have to work around class schedules. Instead, students view prerecorded lectures from their laptops/I-Phones. Gone are the days of live teachers and live students.
These video lectures were recorded many years ago. The university pays the original "recorded" professor a small royalty for each class. This royalty fee costs a fraction of a live lecture. This allows the university to pay for a top notch professor to lecture/record one semester, then reuse that recorded lecture in subsequent semesters. One-time cost.
Student questions are posted to message boards which a professor actively monitors and responds to. Students never ask the same question twice since all previous questions are searchable online. Professor responsiveness is very quick (usually in 1-2 hours). The professor answering questions is a full time professor (which may not be the same person as the original recorded professor). This full-time professor is able to handle four times as many classes due to automation etc.
The need for college dorms is marginalized since they are no longer necessary. Because of this, dormitories with excess capacity are demolished since their operating costs are fixed and become a resource drain if not filled to capacity. OR, students get single rooms all to themselves!
Tuition prices plummet due to a surplus of pre-recorded lectures on the market. New industries develop that specialize in creating top-notch video lectures for colleges and handling student questions on message boards (24/7 rapid response student support). Local colleges contract with these new companies (again at significantly lower costs).
International students also benefit (lower tuition/more accessible classes etc). The reach of the US education system now permeates every continent. This has other benefits to their local economies with a higher skilled workforce. Traveling to the US for one semester may be required (for lab classes which require a live teacher).
Tuition for all students is now affordable (and continues to drop as time goes on). Student loans are minuscule.
In the end, higher education is commoditized. Prices plummet, quality increases.
