Reversing the Victory of Elitism over Meritocracy

A recent trio of announcements relating to higher education emerged separately but deserve to be linked. By connecting these breaking news stories, we can see just how insidiously the quest for “excellence” has eclipsed every other competing social value, even in the world of higher education.

First are the annual reports of high-achieving students being crushed by learning that they were not offered admission to the elite colleges they had chosen — and that represented the essential next step toward the successful lives they had imagined for themselves. (This year’s letters to the editor from distraught students and parents were in The New York Times on April 22.) Failures at the age of 18! And all because they were going to have to settle for a college that was not at the very top of their lists!

Yet all these students had done is what they had been conditioned to do, almost from birth: work very hard earning good grades and accumulating extracurricular activities in order to join the growing competition for the relatively few seats available at elite schools, all in the name of “excellence.” Nothing less than “excellence” would suffice. The fact that the large majority of these high school seniors would be rejected or “wait-listed” — and based on the tiny number of students who are ultimately accepted off the wait list, “wait listed” seems best defined as “being placed in limbo and ignored for several months before being rejected” — thereby leading to senior angst on a massive scale, is just the price one pays in striving for “excellence.” (In other societies, this whole business might qualify as child abuse.)

Second, Amherst College, in the midst of a $650-million capital campaign, announced on its website that it had recently received a single anonymous gift of $100 million.

Third, in news widely covered by the media, Mount Ida College of Newton, Mass., founded in 1899, said that it will be closing its doors at the end of this academic year, forcing its 1,300 undergraduates (plus prospective freshmen) to find other institutions where they might start or complete their post-secondary education.

Consider the relationship of these three stories.

The elite institutions are not increasing the number of seats they have available for new students, yet they are under increasing pressure to admit more students who are high-achieving, but low-income — even as they are seeing growth in the numbers of highly qualified and relatively affluent applicants. The result is a continuing decline in their acceptance rates, thereby breaking the hearts of even more high school seniors. (The acceptance rate of applicants at top liberal arts colleges is generally now around 15 percent; it is in the single digits at elite national universities such as Harvard, Yale and Stanford.)

Amherst College has fewer than 1,900 students. Now that it is $100 million richer, the college says it will construct a building and hire more faculty, but it has announced no plans to add students. Amherst students may have a marginally better educational experience because of this gift, but there won’t be any increase in the size of the Amherst student body. The number of students applying to Amherst will probably increase, but the freshman class will still have fewer than 500 students. Accordingly, the gift will actually reduce, rather than enhance, the likelihood of any given applicant being offered admission to Amherst.

And that’s regrettable, because for the past 15 years Amherst has been ranked by U.S. News & World Report as the second-best liberal arts college in the nation, just behind Williams College. Ah, but in the early years of this century, Amherst was ranked first, ahead of Williams. What would it take for Amherst to reassume its top position?

As it happens, the Williams endowment is about $200 million larger than that of Amherst. (That both colleges boast endowments of well over $2 billion — or more than $1 million of endowment per student — evidently is not yet sufficient.) Would a larger endowment put Amherst back on top? A successful capital campaign for $650 million may answer the question.

But does anyone other than the students and alumni of Amherst or Williams care which of them is number one and which number two? Moreover, the cost of burnishing Amherst’s already lustrous reputation may come at the expense of prospective college students elsewhere. Mount Ida went out of business because it could not attract a sufficient number of students who could afford to pay its tuition, despite deep discounts. That same $100 million would have kept Mount Ida in business by allowing them to increase financial aid for needy students. Instead, we have a closed college, and 1,300 students (many of whom are low-income) being forced to look elsewhere. The $100 million gift may provide a marginal benefit to Amherst, but it is not a gift that provides any benefit to American higher education in general.

I’m not suggesting that Amherst and Mount Ida were in competition for the gift; it’s almost surely the case that the anonymous donor at Amherst has a connection to that college and no connection to Mount Ida. Yet although current federal tax policy places a modest surcharge on endowment earnings for a relative handful of extremely wealthy colleges and universities, it is still the case that the gifts themselves are not taxed, a policy that encourages wealthy individuals to enhance still further the endowments of already exceptionally rich colleges and universities. And there is no end in sight. The growing inequality we see in the wealth and income of individuals and families is mirrored in the world of higher education. The “1 percent” syndrome also exists in higher education, and the chasm in wealth between the elite campuses and all others continues to widen.

This is a situation that does not bode well for our country. The students at these elite universities are disproportionately from families in the top 10 percent of wealth and income. Although Amherst meets the financial needs of its students, almost half of them have no demonstrated financial need and are paying the full list price, which for the current year is almost $70,000 annually (including room and board) — a figure well beyond the reach of the great majority of American families.

Why, with an endowment of over $2 billion, is Amherst’s list price so high? Two reasons: first, its competitors charge about the same amount. A significantly lower price might suggest a “product” of lesser quality. Second, a high list price discourages most people from applying in the first place, suggesting that the colleges think that families at the very top of income and wealth prefer to be with people of similar means. Four years at Amherst costs more than the initiation fee to join Mar-a-Lago; the mere fact that a person is present says a good deal about his or her wealth and power.

Too harsh? Take a look at the Williams College view book that is sent to prospective students, an oversized brochure that gets right to the point. On the second page, in capital letters and a huge font, it reads:






And in case your eyes slid too quickly over the words, “$2.5 BILLION” is printed in gold.

The following page of the Williams’ brochure is focused on the specifics: high graduation rate, low student-faculty ratio, acceptance at famous graduate schools (all the examples are in the Ivy League) — and high starting salaries, high mid-career salaries and the Williams alumni network to get those well-paying jobs.

The quality of the education? The transformative consequences of four years at Williams? Personal development? Those don’t warrant the big type. But in small type, on the same page, Williams tells us: “With strength comes responsibility. That’s why we use our endowment to level the playing field.”

Which playing field would that be? Polo? The one named for a student’s grandfather? How can an elitist school claim to be leveling the playing field when its students are overwhelmingly from the top tier of family incomes?

Federal tax policy has not only permitted but encouraged the development of a set of colleges and universities that are the educational counterparts of exclusive country clubs, where the price of admission deters average people from even considering applying. By allowing wealthy donors to make tax-exempt gifts to the very schools to which their children and grandchildren will be applying, we have created a wealth-based aristocracy that is both self-perpetuating and largely closed to those who would aspire to climb the socioeconomic ladder. A young person of modest means will not have the advantages of a great K-12 education, summer enrichment programs, special tutors and the many opportunities that are commonplace for the children of privilege, and will instead have to hope to be among the tiny number of applicants selected by elite schools who are not of the social elite.

So what to do? In various ways, professional sports leagues have addressed the problem of having too much success repeatedly concentrated in the same handful of teams. To address the same problem, higher education might consider creating a semblance of parity among a larger number of schools than the miniscule few now occupying the top rung. Specifically, I suggest that we follow the lead of the National Football League, which strives for some level of team-performance parity by capping the size of the salary pool for players. The salary cap ensures that rich big market teams do not have a built-in advantage over teams in small markets that lack equal access to financial resources.

How can that idea be applied to higher education?

A first step might be to eliminate the tax deduction for donors on gifts made to any college or university that already has more than, say, $1 million of endowment per student. An endowment at that level would permit colleges to draw down $50,000 per student per year — a figure that should itself be sufficient to educate the student without a need for additional funding (although presumably the college would still be charging for tuition and fees).

I recognize that the situation is far more complicated at those universities with extensive graduate and professional programs, where dedicated endowment accounts are restricted in how they can be used and where expenses can be much higher. So, for purposes of starting a discussion, my recommendation is limited to undergraduate education and the endowment accounts that are used for that purpose.

But unless and until we begin to swing the pendulum away from inequity and back toward parity, America will continue to be beset by the looming educational problem of the day: a rigged system of higher education where those with wealth and power are hugely advantaged in gaining access to a high-quality college education relative to those who have neither. The corollaries of this problem are a decline in the average quality of a college education; costs rising faster than students and their families can afford; rapidly accumulating debt from college loans and rising default rates on those loans, especially from those who started college, but did not finish; and a widening gap in income and quality of life between the college educated and those who are not, with whites and Asians disproportionately represented in the first group and blacks and Latinos disproportionately represented in the second.

That is not the America I want for my grandchildren. Let’s change it.

‘The Death of America’s Universities’ – Overreaction Reaches New Levels

Let’s not confuse legitimate concerns about equity on college campuses with political correctness

On Nov. 16, students at Roger Williams University organized what they referred to as “BlackOut” (pictured below) – a noontime demonstration in support of the students at the University of Missouri whose protests against the indifference of some senior administrators at the university to claims of racism on the campus led to the resignation of the system president and the campus chancellor.


RWU student leaders spoke and presented a proposed list of action steps they wanted to see taken by our campus and then invited me to speak. The prevailing mood at the demonstration was collaborative and civil – no “demands” were made, and no one’s resignation was sought. I was very proud of our students, and I told them that we would form a representative task force to develop a plan, with timelines and metrics, to address their entirely reasonable concerns. Then we returned to our offices and classrooms to resume the work of giving and receiving a university education. The local newspaper wrote a positive editorial about the event (“RWU students’ intelligent requests,” Bristol Phoenix, Nov. 19, 2015).

Does Wealth Inequality among Universities Pose a Threat to the American Economy? (Part 5)

A New Course Heading for the Ship of State

For the past several weeks, we have been considering the ramifications of a Moody’s study done in April of this year that noted a widening gap in wealth between a handful of very rich colleges and universities, and all of the other institutions of higher education in America.

Even as I was writing the posts in this series, something occurred that dramatically underscored my concerns about the wealth gap in higher education. John Paulson, a hedge fund manager and multibillionaire, gave $400 million to the world’s richest university: Harvard.

Wow! That’s an enormous amount of money! A gift of that size would have instantly placed the beneficiary among the richest 200 institutions of higher education in the country – even if that institution’s endowment had been zero when the gift was received. But think about this: John Paulson’s gift of $400 million is, on the one hand, the largest gift in Harvard’s 379-year history; but, on the other hand, it increases Harvard’s endowment by a little more than one percent, and, after taxes, it represents less than two percent of Paulson’s net worth. Isn’t it extraordinary that a gift of $400 million can be made with so little sacrifice on the part of the donor, and have so little impact on its recipient? And since $400 million is equal to the total annual income of all of the people in a city with a population of 25,000 (median family income in America is just over $51,000; assume three people per family, on average), this gift to Harvard epitomizes the outrage of many that our economic rewards system is completely out of balance.

Does Wealth Inequality among Universities Pose a Threat to the American Economy? (Part 4)

Pros & Cons: How America Funds Higher Ed

In the first three parts of this series, we initially looked at a report from Moody’s regarding the growing separation by wealth between a small number of extraordinarily rich colleges and universities and the very large number of institutions that are heavily dependent on tuition to fund their annual budgets. Subsequently, we reviewed the history of wealth acquisition by the very rich campuses and noted that it was a relatively recent phenomenon. Then we examined the consequence of this imbalance in wealth in terms of the long-term viability of tuition-dependent colleges and universities.

Now, in Part 4, we will consider the relationship between historic patterns of public and private financial support for higher education, and the current very high level of frustration, on the part of parents, politicians and pundits, regarding the diminishing opportunities for young people to receive a college education that is both excellent and affordable.

Does Wealth Inequality among Universities Pose a Threat to the American Economy? (Part 3)

It’s Not a Good Thing to Be Other Than a King

In Part 1 of this series, I examined a recent report from Moody’s that predicted growing economic separation between a handful of the wealthiest universities and the rest of higher education. Media coverage of the report did not examine the consequences to either higher education or the American economy, should Moody’s prediction prove true, nor did the coverage assess the accuracy of the analysis, something that I sought to address.

In Part 2, I noted that extreme wealth in a handful of famous universities was not true historically, but is, instead, a relatively recent phenomenon.

Now, in Part 3, we look at the other side of the story: What does it mean to higher education in general that wealth is so unevenly and inequitably distributed across the 4,000-plus colleges and universities in this country? And why isn’t there greater concern about this extreme inequity on the part of the American public?

Does Wealth Inequality among Universities Pose a Threat to the American Economy? (Part 2)

The Growth of Institutional Wealth

In Part 1 of this series, “It’s Good to Be the King,” I addressed a recent report from Moody’s Investors Services that predicted a growing separation of a relative handful of super-rich universities from the rest of higher education. I also considered the media coverage generated by the Moody’s report, and expressed my bewilderment that the report’s conclusions did not generate deeper analysis and greater concern.

Perhaps the reason that there was not more media attention and review was because Moody’s summation of the institutional wealth of the richest universities did not surprise many people. There is evidently a broad understanding – and perhaps even acceptance – that some universities have amassed significant wealth, and that the universities with the most recognizable names, and/or the strongest reputations, are often the wealthiest universities.

Does Wealth Inequality among Universities Pose a Threat to the American Economy? (Part 1)

It’s Good to Be the King

On April 16 of this year, Moody’s Investors Services published a report entitled “Wealth Concentration Will Widen for U.S. Universities.” This report was the subject of articles on the same day in such major media outlets as the Boston Globe, The Wall Street Journal and BloombergBusiness.

The underlying tone of the Moody’s report was fundamentally positive, as was true of the media reports referenced above. Given Moody’s previous grim reports regarding the perceived financial weakness of much of American higher education (see an earlier blog post in this series, Moody’s Blues, Feb. 14, 2013) a positive report on a few enormously wealthy AAA-rated institutions was presumably welcomed by many readers and investors.

Higher Ed, Income Inequality & the American Economy (Part 3)

The role of income inequality in our ailing economy

In my last post, I considered the claim that more and better education is the answer to fixing our troubled economy. However, as I pointed out in the first post to this series (Sept. 8), there is a second explanation to the uneven nature of America’s economic recovery from the Great Recession: the game may be rigged to favor the very rich at the expense of everyone else. If this explanation has merit, then trying to repair the economy through more and better education will eventually prove to be not just futile but potentially very destructive to long-established institutions of higher learning.

Higher Ed, Income Inequality & the American Economy (Part 2)

Will more and better education fix the economy?

Last week, I provided an overview on a topic of vital importance: the highly uneven nature of America’s economic recovery since the Great Recession of 2008. Corporate America and its shareholders are doing very well – but the great majority of wage earners are not. What accounts for this unevenness? Noted Harvard economist Gregory Mankiw is quoted as saying, “The best way to address rising inequality is to focus on increasing educational attainment,” (The New York Times, “Income Inequality and the Ills Behind It,” July 30, 2014). Is this statement true? Or does the real answer lie elsewhere?