The College Board is the “non-profit” that administers the PSAT, SAT, and AP exams. They are essentially a monopoly that makes enormous profits. Let me share with you how much money the College Board makes off the SAT and AP exams.
The SAT Reasoning Test plus the essay costs $64.50 ($93.50 if registering late) and the AP exams cost US $94 each. The SAT Subject Tests cost a baseline of $26 with a $22 fee for each test.
SAT score reports cost $12 per college for 1–2-week electronic delivery, or 2–4-week paper or disk delivery, depending on what method the school requires ($31 extra for two-day processing).
Even College Board’s College Scholarship Service Profile (CSS), a college financial aid application meant to help students pay for college, requires a fee. For the 2021/2022 school year, the price is $25 for the first report sent and an additional $16 for each additional college receiving the information.
The College Board’s Revenue And Profits
Due to the College Board’s monopoly in administering exams, they generated over $1.1 billion of revenue in 2017 and generated over $1.2 billion in revenue in 2020.
The College Board has grown operating profit margin to roughly 14%. Therefore, the College Board made $150 – $160 million in profits for 2019 based on data publicly available. Finally, the College Board also has over $1.1 billion in cash and investments according to public records.
See the College Board’s financials below. For 2021, the College Board’s financials are likely even stronger.
Thanks to hefty profits, the President of the College Board makes over $1 million dollars a year while several of its executives make $300,000 – $500,000 a year in salary and benefits. Those are some great non-profit salaries!
As a non-profit, this compensation structure seems egregious. The College Board is using monopoly profits to pay their executives excess wages. One of the best running jokes about non-profits is that they reason why they aren’t profitable is because they pay their executives so much money.
Unfortunately for students, there are no other competitors for the SAT Subject, AP, and PSAT Tests. ACT still is far behind when competing against the main SAT test. When you have a monopoly, you can make excess profits.
The New SAT Adversity Index
The College Board came up with a new SAT Adversity Index in May 2019 to try and help underprivileged kids. It’s about time given we all know richer kids tend to have more access. How many poor families do you know can spend $3,000+ for a Princeton Review course? Not many.
See some of the data about The Score Gap below.
Nobody is going to argue against trying to even the SAT playing field for poorer households. Having parents who attended college or received a graduate degree is a huge competitive advantage because attending college is an expected part of the child’s upbringing.
See the variables that are included in the new Adversity Index. The score is between 0-100, with 100 being the highest adversity score.
Good The College Board Is Trying To Make The SAT More Fair
I applaud the College Board for trying to create more fairness in its test scores. The variables seem reasonable. But what about one of the biggest variables of all? Having some type of mental, visual, or physical disability that may prevent a student from reading as quickly or understanding as clearly?
Having a disability is one of the most important variables that will make life a little to a lot harder. To not include disability as one of the variables in the Adversity Index is a huge oversight, especially since more than 15% of the world’s population has some type of disability. There are over 1 billion disabled people in the world.
Further, why keep the Adversity Index score of between 0 – 100 a secret? Secrecy is what creates consternation that the system is rigged.
Finally, why did the College Board and the WSJ have to include race in its Adversity Score promotion?
It is not your race that allows you to score better or worse on the SAT. It is your circumstance and the environment you’ve been brought up in over your first 16-17 years that determines your SAT score.
Please do not let others make you believe race determines your SAT test-taking abilities. Whatever your race, know that you are good enough.
I truly do not believe my SAT score would have been any lower if I were White, Black, or Hispanic. And if you are White, Black, or Hispanic, do not believe your SAT score would be higher if you were Asian.
The College Board Is Trying To Boost Revenue
The College Board is all about making as much money as possible. By creating these statistics and highlighting its secret Adversity Index, not only does it get a lot of publicity, but it creates a lot of anxiety.
When parents have more anxiety, they tend to spend more money to try to fix such anxiety they have for their kids.
I have little problem if the College Board and Universities want to penalize children of affluent families who have parents with graduate degrees. However, it does not seem right that kids are getting penalized for their race. Nobody gets to choose the race they are born with. But everybody can choose their work ethic.
More Anxiety For Families
Consider all the Asian and White families who are now thinking they need to spend even more money on SAT tutoring and materials to run in place.
Now think about all the Black and Hispanic families who can now either believe the College Board’s pontification that race is a factor in their SAT test results or think they should perhaps spend more money on SAT tutoring and testing because they then might have a better chance at attending college.
The College Board is race-baiting families into spending more time and money on the test to ameliorate the anxiety they manufactured.
Unfortunately for the College Board, their attempt to boost its revenue from nervous parents of all socioeconomic classes and races will prove temporary.
The Long-Term Trend Is Negative
Students and parents aren’t going to be forever stupid. As the value of a college degree depreciates due to the lower returns, higher costs, higher student debt, free internet, and an increasingly exposed rigged system, more people will begin to opt out of going to a traditional four-year college.
As more people opt out of a four-year college, fewer people will be taking the SAT and AP exams. Revenue for the College Board will ultimately drop.
We need to pressure the “non-profit” to share some of its massive profits by lowering the cost of test-taking and test preparation to allow for more underprivileged kids to score higher.
Unfortunately, it’s hard to expect the College Board to share the wealth when so much money is involved. Greed is a very hard thing to conquer.
A Solution For Parents And Kids
Parents and students should consider starting their own business so they are beholden to nobody. One of the main reasons why I’m so motivated to run Financial Samurai is because I want my son to have options just in case he gets discriminated against by educational institutions and employers.
At the end of the day, we need to rely on family and ourselves to get ahead. Not only do I plan to keep our small online business going, we’ve also built up a rental property portfolio as well. Never expect anybody else to help you succeed because society is generally rigged against you.
SAT Is Becoming Optional
Starting in 2020, the University of California system voted to phase out the SAT and ACT by 2023. Beginning in the fall of 2023, UC campuses will not consider either test when deciding on a student’s admission.
The UC hopes to have another test in place for freshman students enrolling in the fall of 2025. If there is no test in place by then, the SAT and ACT tests will remain eliminated for California students.
This is huge news because the UC system is MASSIVE, and I’m sure other schools will follow. In fact, many of the Ivy League schools for the 2021 application year made SAT scores optional. The result is that applications surged by 20% – 30%. The downside is that getting in was even harder than ever!
Don’t worry about The College Board though. The College Board will always find ways to make a lot of money.
The Wide Implications Of The College Admissions Scandal
What If You Go To Harvard And End Up A Nobody?
Private Or Public School? Depends On You Fear
For more resources check out my:
- Top financial products page to find the best products for your finances
- Invest in real estate page to invest in my favorite asset class,
- Free wealth management page to manage your money better.
Financial Samurai has been online since 2009 and is one of the most trusted and largest independently-run personal finances today. You can sign up for my free newsletter for more insights.