The Admissions Scandal in Context

In specific terms, the scandal was possible because of two vulnerabilities in internal control, one housed in the universities and the other in the testing companies:

·        Special treatment for athletes in sports where the college competes

·        Disability accommodations for ACT and SAT test takers made by the testing companies

The wealthy have always had advantages in admissions without violating the law. This particular case allows discussion of those advantages even though the specifics were an exception to standard practices. Some ways the wealthy have advantages:

• ·The wealthy (broadly defined to include the upper middle class) have an automatic advantage (without effort) because of two factors:
•  Their children enroll in high schools that are academically the strongest and have the strongest relations with admissions offices.
• Their children are highly likely to do well on the SAT and ACT tests because of the strong correlation between high economic status and high test scores. There is no correlation between test scores and academic achievement (!).
• The wealthy (again, broadly defined) have access to perfectly legal coaching services for testing taking, for the admissions process itself, and for writing application essays.

Attendance at elite colleges has always been a status symbol, which was sought by the parents in the case of this scandal. It is about status, not the future achievement of their children, because for white students life achievement is equal whether you attend one of these colleges or one of the many other good colleges available.

The scandal highlights our culture’s ambiguous and tense relationship with the college search and admissions process, which any parent has experienced. That's why it has hit such a raw nerve.

The scandal has spotlighted various practices in the admissions process that highlight the multi-faceted nature of colleges: they are a public good and an educational institution, but they must run like a business (i.e. produce sufficient net revenue to support their mission). Sometimes the “produce sufficient net revenue” compromises a pure interpretation of the “public good” and “educational” purposes.

As a public good, parents and students think they should all get a “fair” shot at admission. Or be admitted based on “merit.”  Yet “fairness” and “merit” are in the eye of the beholder, and those with greater economic status get an advantage without having to do anything to get it. (Or, as some would say, the system is “rigged in favor of the wealthy.”) Another public good, improving economic and social equity, is advanced by seeking out individuals with less means to pay for college, which “disadvantages” those who do have the means.

As educational institutions, colleges do a disservice to all of their students, and to their educational mission, if they only admit those who come from strong high schools and have high test scores, who are predominantly white and well off. They have an educational obligation, as well as a moral one, to admit a diverse class.  Diversity is what “shaping an entering class” usually means, by which you choose to have people from different geographies, genders, economic statuses, cultural backgrounds, races, and personal interests, among other dimensions.  They don’t just judge an applicant based on that applicant’s “merits,” but they also look at the overall pool and make decisions to create the needed diversity. That’s a key reason why a student with high academic achievement and good test scores might be admitted into places that are highly selective but not get admitted into other places that are just as highly selective, as an example.

As business enterprises, colleges must also produce the revenue necessary to achieve their mission. As a result, some colleges may give preference to students connected to donors to the institution, although in my experience that is very rare, in spite of media reports. (It’s more common for a donor to think, mistakenly, that their donation made a difference.) Much more typical, for many colleges, is preference given to those students whose parents can pay the full freight. (Which can be seen as another way that the system is “rigged” for those with higher economic status.)

Two others aspects of admissions are worth mentioning:

Colleges give preference to relatives of alumni(ae), i.e. “legacy” admissions. They do it to “build brand loyalty” as any business would. But it also undermines the notion of “fair” (in the eyes of those who are not benefiting) and reinforces the advantage of wealth.

Colleges also give preference to athletes so that they can field competitive teams. If the football team needs a center next year, the university must find a center who at least meets its minimum standards (but who usually would not be admitted otherwise). Traditionally, recruitment of athletes has been left to coaches. It’s likely that the coaches’ traditional latitude will change, with far greater scrutiny of candidates being considered because they are needed on a team. The larger issue is whether competitive sports programs even relate to the mission of a college.

There is another issue not directly related to admissions that merits attention. The key perpetrator set up a not-for-profit organization (the Key Worldwide Foundation) to receive his payments, so those who paid for his “service” were able to do so on a tax deductible basis. Some observers of the not-for-profit sector have noted the lack of IRS oversight of such abuse.

What drove the parents to do it? Two articles (here and here) attribute the motives of status, entitlement, and rationalization. 

The root causes of the scandal are primarily cultural and economic conditions beyond the control of any one university, but there are some specific concrete steps a university can take, including:

• Conduct an internal audit or investigation of the admissions function. The audit or investigation should include the influence of commercial admissions coaches or advisers. Grant Thornton, with its deep knowledge of the industry, can assist.
• Conduct a more broad-based fraud and compliance risk assessment in other functions or enterprise wide. Again, Grant Thornton can assist.
• Equally important to a specific audit and enterprise-wide assessment is renewed strong leadership from the president and board demonstrating zero tolerance for unethical and illegal behavior. It cannot be left unsaid.
• Update or enhance the overall Enterprise Risk Management process, because this scandal gives you a good reason to do so. Grant Thornton can use its proven methodologies, customized to higher education, to assist.
• Close the loophole allowing coaches so much freedom in determining athletes to be admitted, and, more broadly, reconsider the ways the university gives preference to sports.
• Review current practices regarding legacy admissions and the possible influence of donors to make certain those practices reflect the best values of your institution.