In a recent AdvisorRADIO segment, Lynn O’Shaughnessy, leading expert in late-stage college planning, discussed the college admissions scandal with Horsemouth editor-in-chief, Sean Bailey. You can listen to their conversation below, or read the following article for a recap of Lynn’s major points.
The big college news recently has been the admission scandal that prompted federal prosecutors to indict dozens of people including wealthy financiers.
It would have been hard to miss all the news and indignation that Americans felt about wealthy people cutting the line to secure spots for their children at elite universities.
I wanted to share my thoughts on the admission cheating scandal, which I do think is an outlier. At least I hope it is.
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Wealthy families like to fish in a small pond
Plenty of high-income parents believe that only two or three dozen universities out of the nation’s 2,800 private and public institutions are worth attending.
Fishing in such a small pond for college has led to high-income parents spending more than $300,000 for a single bachelor’s degree.
And it’s this tremendous cost that should worry you. Perhaps spending $600,000 to send a couple of kids to fancy East Coast universities won’t financially hurt the one percenters, but most high-income families aren’t in that league.
You can inject some sanity into the process which will help your stressed-out clients and your own bottom line. After all, if a client spends a half million or more on college costs, that’s a heck of a lot of assets that you won’t be able to invest!
Fixation on elite schools led to the admission scandal
I can’t emphasize enough the strong need to gain admission into elite schools among the wealthy. And it’s that pursuit that led parents to hire people to take tests or classes for their kids or bribe athletic coaches.
I once gave a talk at a very tiny public high school that overlooks the Pacific Ocean. I had barely walked in the auditorium door, when one of the school foundation volunteers started complaining about the rampant cheating happening at the school. Teenagers are cheating, she explained, because they all feel they need to be in the top 10% of their class to gain admission to a golden-ticket school.
The story that I heard from a mom last month, who runs in elite circles in the Bay Area, is even more shocking.
She told me about a friend of hers who was desperate to get her oldest child into a private high school in California that is known as a pipeline for elite universities.
When the private high school rejected the teenager’s application, the mom and dad tried something different. Through an intermediary, the parents offered to donate $5 million to the school.
Bingo!
Two hours after the offer was made, the teenager received an acceptance. (In case you’re wondering, the parents didn’t even try to bribe at a lower amount!)
When you have extremely wealthy people fixated on elite schools, even the comfortably rich will have trouble getting their ticket punched.
Help your clients dispel the golden-ticket belief
The notion that the nation’s most elite schools are the only gatekeepers of a successful and prosperous career is stubborn despite plenty of evidence that this is absolutely wrong.
Ironically, the pursuit of the nation’s most elite schools is not necessary for high-income students. Studies have repeatedly shown that.
You can do your clients a huge service if you discuss the realities of this obsession with them. Here are two articles that will give you great ammunition:
Colleges favor students born on third base
No admission directors were implicated in the schemes. College coaches were the ones who got caught. That said, admission directors do favor the wealthy and privileged.
An eye-opening 2017 article in the New York Times documented this favoritism.
The article discovered that 38 elite schools, including some caught up in the current scandal, have more students enrolled from the top one percent of the income scale than from the entire bottom 60 percent.
If you check out the article, you can type in the name of any state or private college and see how many one percenters attend any institution that interests you.
Here is an illustration from the article that shows the schools that attract the most one percenters:
Schools That Draw the 1%
Source: New York Times
Here is something else the New York Times discovered:
Roughly one in four of the students in households with the top 0.1 percent of income attend an elite college, which are universities that typically cluster toward the top of U.S. News & World Report rankings.
In contrast, less than one-half of one percent of children from the bottom fifth of American families attend an elite college and less than half attend any college at all.
The allure of full pay students
People gripe about affirmative action, but affirmative action overwhelmingly favors rich teenagers. You don’t have to be as accomplished if mom and dad make a lot of money.
Schools love to attract what they call “full pay” (i.e., rich) students. Most colleges must give these children merit scholarships to attend their schools, but the most prestigious don’t.
These elite schools aren’t dummies. They know that parents are desperate to get their kids into U.S. News’ darlings and they will pay any price.
The super rich can start at the development office
A book published back in 2006, and still very much relevant, captured many ways wealthy students are treated preferentially. The author revealed, for instance, that some of these parents simply start the admission process by heading to the development office with promises of a hefty donation.
You may want to check out the book: The Price of Admission: How America’s Ruling Class Buys Its Way Into Elite Colleges—and Who Gets Left Outside the Gates.
The author is Dan Golden, a journalist who won a Pulitzer Prize on the subject for the Wall Street Journal.
In a recent article in the Washington Post, Golden remarked that some rich parents treated his book as a how-to-guide to game the college admission system!
News articles since the current scandal broke suggests that the donation required for an easier admission at some elite schools has risen. A $10 million donation might not be a guarantee at some elite schools.
Test-optional practices favor affluent families.
When colleges roll out test-optional policies, they like to emphasize that this will boost the diversity of their campuses.
That’s because SAT and ACT scores are highly correlated with income. Teenagers with a household income of $200,000, for instance, will, on average, have higher test scores than students whose parents make $150,000 and on down the income ladder.
Peer-reviewed research by my friend Andrew Belasco, the CEO of College Transitions, however, suggests that colleges tend to be no more diverse than before they roll out their test-optional policies.
The practice, however, does benefit colleges by increasing applications and boosting published test scores. The practice also favors high-income students, who can pay full price while keeping their mediocre test scores private.
There is a reason why schools inquire about parents
Ever wonder why the Common Application wants to know the identity of the parents’ occupation and the colleges they attended?
A parent who got an MBA at Harvard University and is now a venture capitalist is going to be more attractive to a school than a parent who earned an associate degree and is a dental hygienist.
And schools can discriminate against those who need help. Parents are understandably freaked out by a question on the Common Application that asks if the family intends to apply for financial aid.
No school would admit that answering “Yes” to the aid question will jeopardize admission chances, but it certainly happens. Most schools, after all, are need-aware.
Don’t expect anything positive to happen
Some people are hoping that this scandal will encourage schools to examine their practices that are so heavily weighted towards helping those who don’t need it.
In an article in the Chronicle of Higher Education, Todd Rinehart, the vice chancellor for enrollment at the University of Denver, said that after the scandal broke he was encouraged to see many of his peers double down on their promises to examine and remove barriers to low-income students.
I wish I could be encouraged, but I’m not.
The wealthiest universities in the country that could end legacy admissions and accept more “normal” students haven’t done it.
These institutions have always catered to the powerful and the wealthy. Despite what they say, it’s their mission.
Stop stressing!
Rich parents need to stop thinking that they have failed as a parent if their children don’t attend an elite research university.
Conveying this attitude toward a child, even if it’s unspoken, is toxic. And, yes, heartbreaking.