The idea that fancy colleges bend their standards to admit the kids of wealthy alumni hardly seems like news. But that practice is in fact a violation of an antitrust exemption that had allowed schools to engage in what would otherwise amount to collusion on aid packages. The carve-out which had required that they not consider the applicant’s financial status when making admission decisions, which effectively required them to deal with assistance at a later step.
A new Wall Street Journal story highlights damaging admissions in ongoing antitrust litigation against MIT, Notre Dame, University of Pennsylvania, Georgetown and Cornell University. Twelve other schools have already settled. The snippets in the stories show that yes, indeed, these schools are creating different tracks and standards for kids of rich alum donors.
But for some key background, an earlier Journal account explains how these institutions got into litigation crosshairs:
The colleges were allowed under a federal antitrust exemption to collaborate on aid calculations, but only if they didn’t take financial need into consideration when reviewing applicants. They also couldn’t discuss aid offers for individual students. The suit alleged that the schools did consider finances in some circumstances, for instance giving an edge to children of wealthy donors or when selecting candidates from their wait lists.
The colleges worked together under what was called the 568 Presidents Group, a reference to the section of the 1994 legislation that provided the antitrust exemption. The arrangement allowed schools to avoid bidding wars for low-income applicants but also limited how much they could favor wealthy applicants to keep scholarship spending to a minimum. The exemption expired in fall 2022, and the group dissolved that November.
I don’t see how those who designed this arrangement thought it was anything other than eyewash. Even in the days of my youth, when students were in somewhat worn but perfectly servicable dorms and no one would even dream that glamorous gyms were a reasonable amenity, there were a very few standout legacy admits, as in kids with names of old families (in one case, on a building!) who had beautiful manners, wore shabby old WASP clothes, and were not exceedingly sharp. But on the whole, the preppies, which would include legacy types, came to college much better trained than public school kids. And the public school cohort soon found out that Harvard chose to limit admissions from schools like Andover and Exeter to about 40 each a year, when on raw merit, they could have taken a majority of their entire graduating classes. More on the topic of what strikes me as another antitrust violation, the coordination of elite high schools with elite colleges on college admissions, later in this post.
So the elite schools engage in social engineering a plenty, including in my era, a cap on the percentage of the class that was Jewish, not unlike the confirmation in more recent years of caps on the number of Asian-Americans. So ironically, complete abandonment of the consideration of money might lead to an on-average even more students from moneyed backgrounds.1
A second reason to regard this deal as untenable is it would in theory be possible for a school to over-admit from the needier cohorts, so the total they would need in aid would exceed the budgeted amount. That would result in some kids declining by not getting generous enough packages. The schools would then have to turn heavily to their standby lists, where the students were arguably less strong than the first round admits.
The perceived need to give more preference to wealth donors results from most if not all of these schools becoming hedge funds with educational subsidiaries. The adminisphere has become a self-licking ice cream cone. Alumni relations departments are now larded up with well-paid fundraisers, with a significant part of the operation being dreaming up naming opportunities for the super rich. That often means new buildings that add to the glam factor (also justifying higher admissions) without improving educational content. As Journal subscriber James Foster pointed out in comments on the new story:
The number of non academic/faculty staff at US universities increased by 452% from the 1970s to the 2018. Ivy league schools now employ 1 faculty member to every 11 students (good) but 1 non faculty staff for every 4 students (bad). Some top colleges like CIT, UC San Diego and Duke actually employ more non faculty staff than have enrolled students (terrible).
As we have pointed out, Harvard had Larry Summers blow a big hole in the endowment via an absolutely stoopid interest rate swaps bet that predictably went bad, where he even threw funds from the operating budget into the wager. Harvard had to cancel many expenditures, from a planned expansion across the river in Allston to hot breakfasts. Other schools no doubt faced what they perceived to be legitimate pressures, such as a reduction in students from China who paid full freight as a result of Trump saber-rattling.2
Now to some of the dirty underwear in the current Journal story:
At Georgetown University, a former president selected students for a special admission list by consulting their parents’ donation history, not their transcript, according to the suit. At Massachusetts Institute of Technology, a board member got the school to admit two applicants who were children of a wealthy former business colleague, the suit alleges. And at Notre Dame, an enrollment official in charge of a special applicant list wrote to others, “Sure hope the wealthy next year raise a few more smart kids!”, according to the suit….
At Notre Dame, the university’s Institutional Risk and Compliance Committee said the admission of so many children of major donors represented a major risk to the institution’s brand should it become public, according to the motion. In 2020, the school admitted 86 applicants who were connected to large donors, or about 4% of the incoming class. Within that group, 76% of those donor admissions needed special consideration to get in, the motion said…
The lawsuit also includes testimony from Sara Harberson, Penn’s associate dean of admission from 1999 to 2008, who was deposed for the case in October 2023. She said that the school had a “bona fide special interest” tag for students from families who were big donors or knew someone on the board of trustees.
Those students were assured of admission.
If the school was over-enrolled, they were protected, regardless of their academic record. “You had absolutely no power as an admissions officer,” Harberson said in her deposition.
A spokesman for Penn said it sees no merit in the lawsuit….
At Georgetown, a former president selected students for an annual president’s list after reviewing information about the parents’ donation history and capacity, but without reviewing the applicant’s transcript, teacher recommendations or personal essays. Atop the list he often wrote “Please Admit,” according to the motion.
The plaintiffs are seeking class certification and $685 million in damages, which under antitrust law, would be increased threefold to over $2 billion.
What rankles many is that these institutions hold themselves forth as bastions of meritocracy, and that status in turn serves to justify the notion that credentialed members of our ruling classes deserve their outside pay and power. We explained long-form in a 2007 Conference Board Review article why meritocracy is unattainable in practice. But if the members in a hierarchical or status-driven system do not believe that the authority of their betters is legitimate, the alternative for maintaining order is coercion. So defending the practices of these societal validators is more foundational than it might seem.
I wish I could do more justice to a second topic, the way top-tier private schools collude with prestigious colleges on admissions. I had a colleague whose kids went to one of these schools explain the workings in great detail a while back, but did not record the details. Apparently these schools have access to data services which allows them to see on an anonymized basis the admissions practices of top colleges, and I believe it is much more granular than SAT scores and GPAs (as in it may include things like varsity sports and awards). So these secondary schools have a very good idea of how their current crop of seniors maps into the admissions criteria of these sought-after colleges.
At each of these schools, there is a cohort of students who are assured of getting in pretty much everywhere they apply (think math competition winners or a high GPA/SAT student who is also a pole vaulter). I am told the high school guidance staff restricts where they apply since they could crowd out admissions of very good but not super standout applicants from the same school. Remember, the school’s incentives are to get as many of their students as possible into highly regarded colleges, and not maximize outcomes for particular students. There is apparently a lot of information trading between these top high schools and sought-after colleges, but I cannot recall what the details were. My source, who is legally savvy, thought this would amount to an antitrust violation if anyone had the gumption to go after it.
Given the fact that it’s not possible to have a true meritocracy, some arbitrariness is inevitable. But with yawning inequality, virtually no income mobility for the bottom 40%, and the deterioration of schools like the old City College of New York, which trained many poor students and got the best of them into elite careers, the stench of money is becoming too apparent all across American society.
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1 The admission staffs know high schools across America very well, so one way they create diversity that is politically acceptable is geographic diversity, as in making sure not all the kids grew up in rich suburbs. That means they can also identify applicants with strong board scores from so-so secondary schools to mix things up. That can sometimes have very specific effects. When I moved in my junior year from Escanaba, Michigan, to a Dayton, Ohio suburb, that made it possible for a different girl in my class in my high school in Escanaba to be admitted to Harvard (it seem vanishingly unlikely that Harvard would have admitted both of us).
2 It seems to be outside the scope of these suits, but these students were widely perceived to be given undue preference in admissions.