On Thursday, the Supreme Court ruled that the consideration of race in college admissions was unconstitutional, effectively ending affirmative action. Earlier this year, Peter Dreier, Richard D. Kahlenberg, and Melvin L. Oliver argued for how universities should approach college admissions to maximize diversity going forward. The essay is published below.
Most observers expect the Supreme Court to end racial preferences in college admissions sometime this spring following oral arguments this past October in two critical affirmative action cases. Given the looming decision, universities should already be looking at a variety of new paths to diversity that don’t rely on race in order to preserve important gains in racial diversity won over the years. These should include favoring economically disadvantaged students and ending unfair preferences for the children of wealthy alumni and donors. But an especially promising approach—not yet widely employed—is to provide an admissions boost to students from families that have low (or negative) levels of wealth.
Banning of racial preferences will require selective colleges and universities that are committed to racial diversity to think creatively about how to open the doors to economically disadvantaged students, who are rarely found on today’s campuses.
Consider Harvard University, which is a subject of part of the litigation before the Supreme Court. Using racial preferences, Black enrollment has increased from 1 percent of the freshman class in the early 1960s to 15 percent today. At the same time, research finds that Harvard’s student body has about as many students from the top 1 percent by income as the bottom 60 percent. Seventy-one percent of Harvard’s Black, Hispanic, and Native American students came from the richest one-fifth of those groups.
Many selective public universities in states where racial preferences have been banned (including California and Florida) have provided a leg up to students from families with low incomes and/or low levels of education, and from disadvantaged neighborhoods and high schools. This makes sense. These programs have often been successful in promoting both economic and racial diversity.
But virtually all of these universities (with the notable exception of UCLA Law) have ignored using a family’s wealth (net assets minus debts) in the admissions process. The omission of wealth is a mistake two times over. As a matter of fairness, because more than virtually any other factor, wealth determines opportunity in America. And as a matter of promoting diversity, wealth should be used in admissions because of the huge wealth gaps between white and Black families and white and Hispanic families.
Researchers have found that wealth is even more important than income in determining opportunity in the United States. One landmark study found that parental education and wealth were more powerful predictors of college completion than race or income. The study concluded that “educational advantages are acquired through major capital investments and decisions” such as purchasing a home in a neighborhood with high-performing public schools.
Wealth gaps in America are even greater than income gaps. The richest 1 percent of Americans take home 22 percent of the nation’s income but have 38 percent of the nation’s wealth. The bottom half of all Americans earn 11.5 percent of national income, but possess only 2 percent of national wealth.
Likewise, the racial wealth gap is much larger than the racial income gap. Black families make about 58 percent of what white families make in annual household income, and Hispanic families make about 66 percent. In contrast, median Black wealth ($23,000) was just 13 percent of median white wealth ($184,000), while the median Hispanic wealth ($38,000) was only 21 percent of median white wealth. Black households headed by an individual with a bachelor’s degree have just two-thirds of the wealth, on average, of white households headed by an individual who lacks a high school diploma. This means that any admissions policy that considers wealth will de facto offer the school a path toward racial diversity.
The roots of the racial wealth gap can be traced back to slavery, when most Black Americans were not only prohibited from owning property, but were treated as property themselves. But the most recent causes have to do with widespread racial discrimination in the housing market, especially redlining by government, the banking industry, and real estate agents. Studies reveal that banks and real estate agents continue to discriminate against Black and Hispanic would-be homeowners. Homeownership is the biggest source of wealth for most Americans, but for white Americans in the bottom half of the wealth distribution, the homeownership rate is 46 percent; for Black Americans it is 31 percent, and for Hispanic Americans, 28 percent. Even if all discrimination by lenders and real estate agents was eliminated, the legacy of past racism—and the ability to pass on family wealth to subsequent generations—would continue to influence the wealth of contemporary Black and Hispanic families.
Researchers from the Brookings Institution, meanwhile, note that the racial wealth gap exists even among those at the top. White families among the richest 10 percent have five times more wealth than Black families in that upper tier.
Likewise, among those in the bottom half, wealth varies a lot by race, according to the Federal Reserve. Among white families in the bottom half, median wealth is $19,180, compared with $10,290 among Hispanic families, $8,050 among Asian American families, and $6,601 among Black families.
The good news for colleges facing a likely ban on using race is that using wealth in admissions is not only fair but will also boost racial diversity more than other factors, such as parents’ income and education. Researchers Sean Reardon, William Bowen, and Maria Cancian have found in separate studies that when class-based affirmative action programs are confined to income and education levels, their impact on racial diversity is more modest.
By contrast, researcher Anthony Carnevale found that using wealth alongside other socioeconomic factors boosted racial diversity. He found that if admissions officers rewarded “strivers” who overcame obstacles, including low wealth, then “Black and Hispanic enrollments would actually be higher than they had been under affirmative action with racial preferences.”
Having said that, wealth is not just a clever proxy for race. Some Black families do have high levels of wealth and their children would and should not benefit from a wealth preference. Meanwhile, many low-wealth white applicants will benefit from this approach to college admissions. The child of a white truck driver, warehouse worker, day care worker, retail clerk, hotel housekeeper, or waitress—even some schoolteachers and nurses—is likely to benefit from a preference for applicants from low-wealth families. So, too, will Asian American children whose parents, particularly those from immigrant communities, have little wealth.
Finally, using wealth in admissions is feasible. Economists often shy away from asking people about wealth because families have trouble accurately describing it. But university admissions officers do have access to wealth data because reporting is required when students apply for financial aid.
Information currently comes in two forms. Students provide family wealth data on the Free Application for Federal Student Aid (FAFSA). More detailed wealth data—including home equity and small-business ownership—is required for families filling out the College Board CSS Profile, which almost 400 colleges use to provide institutional aid.
Of course, extremely wealthy families aren’t likely to apply for financial aid. But when tuition and fees at some selective colleges can exceed $300,000 over four years, the very fact that a family does not apply for financial aid speaks volumes about their wealth.
Applications for admission and applications for financial aid are often filled out at different times in the process (with financial aid forms filed later), so institutions wishing to use wealth (and income) data at the admissions stage may need to accelerate the process by why which they ask families about their financial status, including wealth.
UCLA Law school, which pioneered the use of wealth data after it was banned from using race in the 1990s, has asked families about wealth on admissions applications (as well as other socioeconomic factors) for decades. Applicants have been asked to provide wealth estimates within one of several ranges, according to Richard Sander, a law professor and economist who helped devise the program.
The application information is later checked against financial aid data. (Families who knowingly submit false information on the FAFSA can be punished by a $20,000 fine and time in prison.)
An analysis conducted several years after UCLA Law began implementing its admissions system that includes wealth showed that Black students were 11.3 times as likely to be admitted under that system and Hispanic students were 2.3 times as likely to be admitted. And, of course, the wealth approach boosted economic diversity, a quality sorely lacking at selective law schools.
Preferences based on wealth and other economic factors will require more financial aid funds than racial preferences. Universities will have to place greater priority on financial aid than they currently do, as will state and federal policymakers. These are investments in America’s future.
Using wealth, alongside other socioeconomic factors, could also have broader political ramifications for the country and for progressive politics and organizing. Racial preferences have been effective but controversial because they apply very differently to working-class and lower-middle-class people of different races. By contrast, an admissions policy that gives a preference to low-wealth households will remind working families, across racial lines, that they will all benefit by an approach that provides their children with greater opportunities to attend the nation’s best colleges and universities.
