Ep52 “Should Legacy Admissions at Universities Be Illegal?” with Patrick Awuah

Legacy Admissions at University of California and Stanford

• The University of California has passed a law banning legacy admissions to private institutions in the state, but the law's constitutionality is questionable and it does not impose penalties for non-compliance (41s).
• Legacy admissions at Stanford University do not provide a significant advantage, but rather serve as a deciding factor among qualified applicants who could succeed at the university (1m30s).
• The use of legacy admissions at Stanford is not intended to admit unqualified students, but rather to choose among those who are capable of succeeding at the university (1m37s).
• The topic of legacy admissions is complex and involves trade-offs, with potential benefits including increased donations and alumni engagement, but also potential drawbacks such as unfairness and unequal access to education (2m43s).
• The business model of private universities like Stanford relies heavily on donations and endowment, and legacy admissions play a role in maintaining relationships with alumni and encouraging gift-giving (3m11s).
• Eliminating legacy admissions could potentially lead to a decrease in donations, which could in turn affect the university's ability to provide financial aid to students who cannot afford tuition (3m29s).
• The hosts acknowledge the potential for "all else equal mistakes" in the discussion of legacy admissions, highlighting the need for careful consideration of the complex issues involved (1m48s).
• The hosts also note that the concept of legacy admissions is somewhat foreign in European universities, where admissions are typically based solely on academic merit (2m6s).
• The US university model seems to be working better than the publicly funded model in Europe, with many top-ranked universities in the world being from the US, and it's worth exploring why this is the case (4m47s).

University Funding Models and Challenges

• In the Netherlands, the government has cut funding to public universities, making it difficult for them to finance their operations, highlighting the challenges of relying on government funding (5m0s).
• The question remains whether the model of having rich people pay for their children's admission to universities, in exchange for cross-subsidization of poorer students, is the best way to achieve this goal (5m23s).

Ashesi University: Founding and Mission

• Patrick Awuah, President of Ashesi University in Ghana, is an expert in this area and has experience in creating a university that aims to educate leaders who can bring about positive change in their country (5m30s).
• Patrick Awuah's motivation for creating Ashesi University was to contribute to Ghana's development, which he believed could be achieved through higher education, as only 5% of college-age individuals in Ghana had access to it at the time (8m3s).
• Awuah's business plan for the university involved charging tuition to the children of rich Ghanaians who would otherwise study abroad, and using that money to finance the education of poorer Ghanaians who couldn't afford it (6m54s).
• Ashesi University has been successful in achieving its goals, with some considering it the best university in Africa, 20 years after its founding (6m41s).
• The goal of a university education is to prepare students to be in charge of important institutions and organizations in the future, making the type of education they receive critically important (8m12s).

Ashesi University's Business Model and Financial Sustainability

• The university's business model is based on two key aspects: the economic engine and the institutional culture, both of which must be strong to achieve the university's mission (9m3s).
• The university aims to be financially self-sustaining, with tuition revenues covering the cost of running the institution, while also being accessible to those who cannot afford tuition (9m30s).
• To achieve this, the university sets fees that allow it to subsidize 20% of tuition from those who pay full and partial fees, and raises philanthropic money to further support students who cannot afford to pay (9m53s).
• The university's economic model is designed to facilitate meaningful dialogue on campus about what a good society looks like and how to achieve it, by having a cross-section of students from different backgrounds (10m30s).

Ashesi University's Admissions Process and Diversity

• The university does not currently have legacy admissions, as it is only 22 years old and its oldest alumni are about 40 years old, but it does see families who send multiple children to the university as "repeat customers" and values their loyalty (11m53s).
• The university's approach to admissions is designed to create a diverse and inclusive student body, which is essential for having meaningful dialogue and achieving the university's mission (11m13s).
• The admissions process at Ashesi University involves reviewing applications without considering financial aid, and then sorting qualified applicants into four buckets based on their financial needs, with each bucket ranked by merit, a composite score of academics, essays, extracurriculars, and interviews (12m31s).
• The university allocates money to each bucket, from zero to a significant amount, and selects students until the allocated funds are depleted, ensuring a diverse cross-section of society in the student body (13m21s).
• The university's financial model includes philanthropic money and cross-subsidization, allowing it to support students from various economic backgrounds (14m8s).
• Initially, the university considered a purely merit-based admissions model, but later decided to include students from wealthy families, recognizing their potential to contribute to the university's leadership, provide a unique perspective, and generate revenue (14m30s).
• Students from wealthy families also bring a valuable network to the university, which can benefit students from disadvantaged backgrounds (15m59s).
• The university aims to create a diverse and inclusive environment, where students from different economic strata and circumstances can engage with each other, building future leaders and citizenship (16m33s).
• The importance of having a diverse student body is emphasized, as it allows for the creation of a network that can benefit students from disadvantaged backgrounds in the future (16m52s).

University Business Models and Admissions Considerations

• The concept of a university's business model is discussed, highlighting the advantages of having committed alumni send their children to the university, as seen in institutions like Stanford (17m8s).
• Universities consider various factors when selecting students, including academic merit, athletic ability, and financial resources, with the goal of building a diverse and well-rounded class (17m24s).
• Legacy admissions, where preference is given to applicants whose parents attended the university, can be seen as a way to reward loyal alumni and secure future donations (17m31s).
• However, this practice has been criticized for being unfair, as it can give an advantage to applicants based on their family background rather than their individual qualities (17m41s).
• Some argue that universities should prioritize academic merit alone, enrolling only students who achieve top marks in standardized tests (20m14s).
• Others believe that universities should consider a broader range of attributes, including athletic ability, musical talent, and financial resources, when building their class (19m15s).
• The consideration of financial resources in the admissions process is often implicit, but making it explicit could be uncomfortable for some parents and students who would prefer to attribute their admission to their own qualities (21m21s).
• Universities like Stanford have a large pool of qualified applicants, and the admissions process involves selecting students who will add value to the university community in various ways (17m46s).
• The business model of universities, including the consideration of legacy admissions and financial resources, is a topic of ongoing debate (18m4s).
• Some people argue that universities should not give preference to applicants based on their wealth or family background, while others believe that this is a legitimate way to build a diverse and successful class (18m10s).

Financial Aid and Discomfort in Admissions

• There is an uncomfortable friction when it comes to admitting students based on their financial situation, whether it's because they're poor or wealthy (21m42s).
• A student who received a significant scholarship to attend Ashesi University felt uncomfortable when other students assumed her parents were wealthy, and she chose not to correct them (22m3s).
• The student didn't want others to know that she got in because her parents were poor, and she didn't want to make others feel like she only got in because of her financial situation (22m48s).
• It's essential for students who receive financial assistance to take pride in their qualifications and the fact that they made the cut to attend a university like Ashesi (23m1s).
• Even students who are part of legacy admissions at universities like Stanford are qualified to be there and have met the necessary standards (23m28s).

Legacy Admissions and Financial Considerations at Ashesi University

• The issue of legacy admissions and the role of money in university admissions is uncomfortable and will likely become a problem for Ashesi University in the future (23m45s).
• Research suggests that on average, poorer students are more qualified than richer students, but it's often easier for richer students to get into universities because they can pay their way (24m29s).
• The business model of universities like Ashesi relies on admitting a mix of rich and poor students, as the tuition from richer students helps support the education of poorer students (24m48s).
• If universities didn't admit richer students, they might not be able to provide the same quality of education to poorer students due to donor fatigue and limited funding (25m11s).
• Earned income from tuition is an essential part of making universities like Ashesi successful, especially for private non-profit universities (25m33s).

Conclusion and Podcast Information

• The guest on the show is Patrick Awuah, and he is thanked for coming on the show and having a good conversation about important topics (25m51s).
• The conversation covered tough questions, but they are important things to be talking about (25m57s).
• The podcast is called the "All Else Equal" podcast, and listeners are asked to leave a review at Apple podcasts (26m7s).
• Listeners can catch the next episode by subscribing or following the show wherever they listen to podcasts (26m15s).
• For more information and episodes, listeners can visit all else equal podcast.com or follow the show on LinkedIn (26m21s).
• The "All Else Equal" podcast is a joint production of Stanford University's Graduate School of Business and the Lauder Institute at the University of Pennsylvania (26m30s).