At the turn of the 20th century, a flamboyant New York City politician named George Washington Plunkitt justified his influence peddling by explaining that what he did was “honest graft,” which was not to be confused with “dishonest graft.”
The current scandal over college admissions—triggered by an FBI investigation that led to charging 50 people, including 33 wealthy parents, with participating in a bribery scheme to help get unqualified students into Yale, the University of Southern California, Stanford, Georgetown, the University of Texas, UCLA, and other prestigious schools—reminded me of Plunkitt’s distinction. The parents and college staffers who are now in the headlines are getting the opprobrium they deserve. They are guilty of committing dishonest graft.
At the center of the scandal is a college admissions consultant named William “Rick” Singer who set up a phony charity to launder the parents’ money. Singer, who pleaded guilty in federal court last week, was charged with taking about $25 million from parents between 2011 and 2018. He used the money to pay accomplices to take the SAT or ACT tests on behalf of the clients’ children and testing center officials to doctor the test scores. He also falsified students’ resumes and bribed college coaches to arrange for the students to get into colleges as athletic recruits, even though they never played competitive sports in high school.
Americans are understandably outraged by these parents’ corruption and hubris. But the secret in plain sight is that the entire college admissions system is a testament to “honest graft.” Most wealthy parents don’t have to resort to dishonest graft because the entire system is rigged in their favor.
George W. Bush got into Yale via a form of honest graft called “legacy” admissions. He was a mediocre student at Phillips Academy (an elite New England prep school), had no distinguishing extracurricular achievements, and had SAT scores far below the average Yale student. But his grandfather and father, both rich and influential, had gone to Yale. Yale’s library was named after W’s grandfather, banker and former U.S. Senator Prescott Bush. The admissions folks who interviewed W had been members of Skull and Bones, the Yale secret society that his father and grandfather (and later W) had joined. Such legacy admissions go back generations and still exist, as Richard Kahlenberg reports in his 2008 book, Affirmative Action for the Rich: Legacy Preferences in College Admissions. In 1939, legacies made up 31 percent of Yale students, falling to 24 percent in the 1980 freshman class and 13 percent by 2010. In 2010, Yale accepted between 20 and 25 percent legacy applicants, much higher than the acceptance rate for students whose families lacked a Yale pedigree.
Like W., Jared Kushner was a lousy student at an expensive private prep school. As Daniel Golden reported in his 2006 book, The Price of Admission, none of Kushner’s teachers at Frisch School in Paramus, New Jersey, thought he deserved to go to Harvard based on his grades and test scores. Jared’s father Charles, a wealthy real estate developer, went to NYU, so he had no legacy to hand down to his son. But he had a big bank account and he wrote a $2.5 million check to Harvard that opened the Crimson doors to Trump’s future son-in-law.
Like major campaign contributions to political candidates, this version of the admissions racket is a widespread form of honest graft. Walk on to any college campus and identify the names adorning buildings, laboratories, sports facilities, and endowed professorships. The odds are pretty good that the offspring of those donors have gone to class in its hallowed halls. Soon after the current scandal erupted, California Governor Gavin Newsom said that billionaires buying naming rights on university buildings is “legalized bribery.”
Affluent parents’ obsession with getting their children into top-tier schools is compounded by colleges that willingly admit unqualified students whose families can pay the full cost of college.
Intelligence is randomly distributed throughout America’s population. There’s no evidence that the children of wealthy families are any smarter, on average, than children from middle- and low-income families. By that standard, only 1 percent of the students at Harvard, Yale, Amherst, Stanford, MIT, and other elite colleges and universities should come from the richest 1 percent of families. And 20 percent of the students should come from families in the bottom 20 percent.
But that’s far from the reality. Children whose parents are in the richest 1 percent are 77 times more likely to attend an Ivy League college than those whose parents are in the bottom 20 percent of family income. At 38 of the country’s most selective colleges (including five in the Ivy League), more students came from the richest 1 percent of families than from the entire bottom 60 percent. More than one-quarter of the richest students—but less than one-half of 1 percent of children from the bottom fifth of families—attend an elite college.
Selective colleges used to make excuses that there were not enough academically prepared low-income students to recruit. Then, Caroline Hoxby of Stanford and Christopher Avery of Harvard documented that there are at least 35,000 very-high-achieving low-income students graduating high school every year, most of whom do not attend—or even apply to—selective colleges.
Rural and urban high schools that serve the poorest students have fewer guidance counselors to help parents and student navigate the admissions obstacles course. Typically, those students don’t think they can compete—academically or socially—at colleges dominated by affluent students. They don’t know that they are eligible for financial aid at elite private and public schools.
Equally important, Congress has failed to increase the Pell grant to keep pace with increases in college tuition, books, fees, and room-and-board. The maximum Pell grant currently covers only 28 percent of the cost of attending a public four-year college, down from 84 percent in the 1970s and 38 percent in 1998. At private colleges, the maximum Pell grant covers only 12 percent of yearly costs. Compounding the problem, Pell Grants are taxed as income if they are used to pay for transportation, food, housing, or other non-tuition costs. Colleges have to supplement the federal aid with their own resources if they want to have low-income students on campus.
But many of the nation’s wealthiest colleges—with endowments per student in the $1 million range, including Princeton, Yale, Stanford, and Swarthmore—do little to recruit low-income students, measured by the proportion of students who receive Pell grants. The failure of wealthy universities to admit many qualified working class and poor kids is a scandal.
Kids from affluent families also benefit in the college admissions competition because their parents can afford the panoply of “enrichment” activities—private schools or outstanding public schools, SAT prep classes, tutors, books, high-quality child care, summer camps, trips to Third World countries to do volunteer work, travel costs to participate in competitive private soccer leagues, and music, art, and tennis lessons—that help them pad their resumes. Economists Greg Duncan and Richard Murname discovered that in 1972 high-income parents spent four times more on “enrichment” activities than low-income parents. By 2006 they were spending seven times more. No doubt the gap has widened further since then, paralleling the widening income divide.
Actresses Felicity Huffman and Lori Loughlin, investor Bill McGlashan, and the other parents involved in the pay-off scandal should be prosecuted for their dishonest grant. What they did was illegal. But why aren’t admissions based on alumni legacies and big donations—the kind of honest graft that helps unqualified rich kids get into top college—also illegal?
Every private college and university in the country is funded by taxpayers directly (through research awards to faculty and Pell grants to students) and indirectly (through tax-exempt donations, tax-exempt bonds for facilities construction, and exemption from local property taxes). Several years ago, economist Richard Vedder estimated that subsidized tax breaks provided to donors to Princeton cost the federal government about $45,000 per Princeton student. As Senator Charles Grassley, the Iowa Republican, once observed: “John Doe pays taxes. John Deere pays taxes. But Johns Hopkins does not.”
Universities receive tax breaks and other government subsidies because they are supposed to serve the public interest. Federal policymakers should review the tax-exempt status of corporate and family foundations that donate most of their resources to universities that already have large endowments but admit few low-income students.
In 1986 and again in 1997, for example, the Danforth Foundation—endowed by Ralston Purina founder William H. Danforth and run by his heirs—donated $100 million to Washington University in St. Louis, among the largest private donations to higher education at the time. By 2015, however, Pell Grant recipients comprised only 11 percent of its freshman class, scheduled to graduate this spring.
In 2015, Stephen Schwarzman, cofounder and CEO of private equity giant Blackstone—whose net worth is $13.5 billion, according to Forbes—donated $150 million to Yale, his alma mater, to build the Schwarzman Center for student activities. Last October, MIT announced that he is donating $350 million to create the Stephen A. Schwarzman College of Computing. Pell Grant recipients comprised only 18 percent of Yale’s and 17 percent of MIT’s graduating class of 2019.
Last year, billionaire Michael Bloomberg, former New York City mayor, committed $1.8 billion—the largest-ever single contribution to an American university—to Johns Hopkins University, his alma mater, where only 13 percent of this year’s graduating class comes from low-income families. In contrast to Schwarzman’s gifts, however, Bloomberg targeted the money for financial aid. That’s fine, but no federal agency is responsible for monitoring whether Johns Hopkins actually targets the scholarships to low-income students.
Government funding and tax breaks should trigger federal requirements so that college admissions are not rigged in favor of unqualified students from privileged families at the expense of qualified students from low-income and working class families. These institutions should be held to a minimum requirement to enroll and graduate low-income and working-class students. The standard could vary by endowment size. In fact, the federal government should provide additional funding to colleges that exceed that minimum requirement by shifting their financial aid to prioritize students in actual need.
The solution to the admissions scandal isn’t simply to put Huffman and her counterparts in jail. It is to level the educational playing field. That involves:
- Improving public education, which requires federal (not state) funding of public schools to eliminate what Jonathan Kozol called the “savage inequalities” that come from Zip Codes determining the quality of one’s school;
- Creating a universal pre-school program with higher funding for low-income children to prepare them for K-12;
- Dramatically reducing class sizes by hiring more (and more experienced) teachers in schools serving low-income students;
- Expanding the number of college counselors in high schools serving low-income students;
- Significantly expanding the number and size of Pell grants;
- Increasing funding for community colleges, especially for courses that prepare students for admission to four-year universities; and
- Providing free tuition for all college students, or at least creating a financial aid program based on economic need, so that low-income and working-class students don’t have to work more than 15 hours a week while in college and don’t graduate with outrageous debt.
It would be a real scandal if the current FBI stings don’t trigger a national debate about these larger issues.