$500K for College?!!

This post is by Jeff Carter from Points and Figures

Click here to view on the original site: Original Post

I am sure you saw the scandal yesterday that broke on wealthy parents bribing their child’s way into various colleges.  Many that went to a selective school took to Twitter to say their parents didn’t bribe their way in.  Ha, defensive people always raise my suspicions.

This also isn’t a political party thing as some people on my Twitter feed tried to make it. I am sure there are both Republicans and Democrats even though the face of the scandal is liberal Hollywood.  It’s not a race thing either except that the offenders were all universally wealthy and white.  It doesn’t have anything to do with religion either.  Protestants, Catholics, Jews and Atheists all tried to game the system.  It is most certainly an ethics thing and hope those who gamed the system get punished.

I can honestly say I understand the mentality of the parents that paid the bribes. patient and let me explain.

My kids went to a very tony private school in Chicago.  The school sends a large percentage of the class to selective schools across the country.  I was unaware of anyone bribing anyone to get in.  I just didn’t talk about it.  I focused on my kids and was happy for other kids when they got into a school they wanted to get into.  I will say the whole college admission process is sort of like valuing a startup.  Dark arts and crystal balls.  I didn’t have personal experience with it myself because I was a recruited athlete.  Not a fake crew, tennis or soccer player, a real live athlete but I digress.

I don’t think the parents that cheated will be ostracized.  In their circles, their behavior might be seen as perfectly acceptable.  They just got caught.  This isn’t like Bernie Madoff or a child sex scandal.  Friends can be forgiving when it doesn’t affect them.  The only way it affects them is if they are tossed out of the network.  That won’t happen. Senator Elizabeth Warren faked being American Indian to further her career, denying spots to people who deserved them, and she is happily running for President with no questions from the press or adverse affects.

When you are paying $30k a year for kindergarten…..I guess what I am trying to say is the parent’s themselves may have grew up entitled or feel entitled because they have made a gigantic investment in their child’s education and if they go to State U they failed.

I was aware of people who tried to get an edge in different ways.  This wasn’t just at tony private schools but if you went to any ultra wealthy neighborhood in the United States it was happening.  In the Wall Street Journal article on the story, they talked about it.

Mr. Singer said Tuesday he would have clients’ children seek doctors’ notes claiming learning disabilities or other issues, which would allow them to take SAT or ACT tests at sites where Mr. Singer could install a proctor who had been paid to either take tests on the students’ behalf or correct wrong answers. He said he bribed test administrators working with sites in Houston and Los Angeles, and parents would fly their children in to take the tests.

The thing is, they not only got extended time on standardized tests but extended time on tests in their regular classroom and it stays with you for tests like the GMAT and LSAT.  So, yes, your doctor might have a learning disability.

Now, imagine being a kid that actually does have a disability and you really do need extra time.  Those kids that gamed the system are crushing you.

One student because of her Mom’s connections got a gig with Amazon Prime and made videos shilling merchandise for them.  I am sure that paid more than it cost to bribe and go to the college of “her choice”.  Her family paid $500k to get into USC and faked being a member of the crew team.  (USC?!)  Tongue and cheek it makes the university live up to its nickname, University of Spoiled Children.

If you are truthful with yourself, there is a nice ego boost when you can go to your club or place of worship and tell your friends that your son or daughter got into a highly ranked school.  It’s why in the first five minutes of any conversation an Ivy League grad will find a way to let you know they are an Ivy League grad.

If you are old enough, you might remember Major Winchester’s character on the 70’s comedy show M*A*S*H.   It would have been impossible to lampoon the character if he didn’t go to Harvard.  The lampoon was about the great unwashed thumbing their nose at the credentialed class.

As a parent, you try to do the best you can for your child.  Because of the way America is today a lot of people don’t look at merit, they look at credentials.  We have an entire credentialed class of people that seemingly float from opportunity to opportunity and it is not available to the great unwashed.

Jason Rowley did a great piece in Techcrunch about where venture capitalists received their degrees.  4 schools dominate; Harvard, Stanford, Wharton, MIT.  Interesting how that is isn’t it?  Now you start to see the psychology of the parents.  If I want my kid to be in venture capital I will do anything I can to get them into one of those schools.

One way to look at this issue is via basic supply and demand economics.

This illustrates a black market in college admission.  You could construe it to say that the money being paid in bribes should rightly go to the colleges and that there is dead weight loss in the admission market.

Do not underestimate other effects on the college admission market.  Public policy has a lot to say about creating incentives both positive and adverse.  Given what we know, the elasticity of demand for certain universities is vertical.  People will pay any price to get in.  Subsidies have driven up the cost of college.  Affirmative action has decreased the amount of spots for white people.  International demand for American education has also decreased the number of places for American children.  College admission personnel have discriminated against Asians.

That created the incentive for parents.  We aren’t building any new Harvard’s.  Of course, if the parents were ethical they wouldn’t have acted on it.  Again, this goes back to the “ruling class” that is above it all and one of the reasons Trump was elected President.  I love what my friend Jason Kunesh (no fan of Trump to be sure)  said on Twitter, “Yup. I’m having a real hard time processing this as a parent. How does that teach your kid resilience & grit & self-reliance?”, and “Yes. You should teach em how to recover from failure & resiliency. You shouldn’t bribe people because my Susie’s a special snowflake WHO NEEDS INTO YALE NOW.”

I agree! I had a hard time processing this as a parent when my kids were competing to get into college.  One of my daughters scored very high on standardized tests.  The other scored very very well too.  We did everything we could for them.  We paid Academic Approach to tutor them.  One of them wanted to go to a selective school.

I had the chance to get that edge for my daughter and didn’t.  I knew someone that was very connected at a selective school.  I could have asked that person to write a letter for her and she would have most probably gotten in.  I didn’t.

We had a long chat at home about getting in on your own merits.  How would you feel about yourself if you know that you cheated the system to get in?  Yes, you’d have the degree, but would there be knowledge in your heart of hearts that you didn’t really measure up creating all kinds of insecurity and self-doubt later in life?

One of my daughters went to Davidson College in North Carolina and had a great experience.  The other went to Ole Miss in Oxford, Mississippi and had a great experience.  We didn’t do anything to get them in.  They both are leading great lives now and they will be fine.  Davidson is highly ranked.  Ole Miss isn’t.  Didn’t matter to me because they chose their schools.  They each applied to between 10-15, got rejected by some, and of the ones that accepted them they made their pick.

My wife applied to two colleges and went to Illinois.  She hadn’t even visited the campus until her first day there.

I went to three colleges in four years.  I started at the US Air Force Academy where I was recruited to play basketball. Dropped out and went to Triton Community College and played there.  Then, I went to Illinois and graduated from the Gies College of Business.  Later in life I went to Chicago Booth and got my MBA.  Northwestern rejected me when I applied to their MBA program.  I wasn’t a fit.

When I traded on the floor, no one gave a shit where I went to school or even if I went to school.  In my first job when I sold glue for 3M, none of my customers gave a shit where I went to school.

However, after I got my MBA every headhunter I spoke with told me I wasn’t qualified or didn’t have the right degree to be a venture capitalist, a private equity person, or frankly anything else.  They wouldn’t even let me interview.  I wasn’t even allowed by the gatekeepers to have a chance to fail.

The credentialed class doesn’t just persist in finance.  It persists in law, consultancy and other high profile high pay scale occupations.

In my case, I was lucky because of my past experience I was able to blaze a trail on my own.  Most people can’t do that.  It was brutally hard on me and almost broke me.  I was lucky to find people that had the same vision that helped.  I was also lucky to have a nuclear family that understood what was going on and supported me.

Suppose you had none of that.  It’s not impossible but it is not probable.

The above is one of the reasons I loved Professor Paul Magelli who was at Illinois until he passed away.  He found people like me and gave them opportunity.  I wish I would have known him as an undergrad.

You might be able to start to put the pieces together in your mind where all of this scandal stems from.  In America, we need to get rid of the “credentialed class” and start to judge people based on who they actually are and what they actually can do.  The credentialed class crowds out a lot of people from ever getting the opportunity.  We need to change public policy on how we accept students and fund colleges and universities.  It will never be perfectly merit based, but it ought to be a lot more transparent.

If there is one good thing that comes out of this it is that in the private sector, kids from non-selective schools will get a look.  Some will get a chance over the kid from a selective school.  Because we know that the lobbyists and dividers that control public policy won’t change things anytime soon.