Hello, everybody. It's Sam from the Financial Samurai podcast. And in this episode, I want to talk about affirmative action, because on Thursday, June 29th, 2023, the Supreme Court invalidated race conscious admissions policies used by Harvard College and the University of North Carolina to diversify their campuses. And this decision has enormous consequences not only for higher education, but also for the American workplace, which is the ultimate goal to try to get a good job, to get good pay, to take care of yourself, your friends and your family.

In a six to three decision written by Chief Justice John Roberts, the court held that the policies violated the Equal Protection Clause of the 14th Amendment. And what's the 14th Amendment? Well, on July 9th, 1868, the 14th Amendment granted citizenship to all persons, quote, born or naturalized in the United States, including formerly enslaved people, and provided all citizens with, quote, equal protection under the laws.

The 14th Amendment was adopted after the Civil War. The amendment was intended to protect the rights of former slaves who were subjected to discriminatory state laws, particularly in the South. During a lengthy oral argument in October 2022, the conservative justices focused on two points. The first point was 2003 precedence, included what some interpreted as an expiration date on the use of race conscious admissions, a line in the majority opinion that signaled a hope that such policies would no longer be needed by 2028.

At the time, Associate Justice Sandra Day O'Connor said, We expect that 25 years from now, the use of racial preferences will no longer be necessary to further the interest approved today. That line suggested the court's acceptance of race conscious admissions wouldn't last forever. And the other point of contention was just how seriously universities are taking the 2003 opinions directive to try race neutral policies.

First, the court said that the law requires schools to engage in a, quote, serious good faith consideration of workable race neutral alternatives that will achieve the diversity the university seeks. Before the Supreme Court ruling, nine states, including Washington, Michigan and California, already banned the consideration of race in higher education.

So the decision is final now. But what does this mean after affirmative action has been banned? Well, I'm not sure too much will change because I think colleges will just simply do a workaround, private colleges, at least, who want to mold and escape their incoming class how they see fit.

I think colleges will just say, well, here's a supplemental essay question that asks about your background. Tell us about who you are, where you come from. What about your heritage, your culture, your ethnicity, your race, your anything? And I think that's the simplest workaround you can have unless the Supreme Court then specifically says you cannot ask in any essay about anything about a background, applicant's background.

I just don't think it really is going to change the dynamics of private colleges and how they select their incoming class. I also think there's going to be continued momentum going forward regarding making SAT and ACT optional or completely application blind. So where colleges don't accept these scores at all.

And this is another way for colleges to select students based on a more holistic view instead of a more objective view in terms of the test scores. There's still going to be grades involved. But as any administrator knows, grades in schools are hard to compare. There's different GPA scales, different rigors, but grades will still be involved.

So for the remainder of this podcast, let's talk about the pros and cons of affirmative action, and I want to share my views as an Asian-American about affirmative action, because I am debating on whether to pay private grade school tuition for 13 years for each of my two children.

Can you imagine paying $500,000 for 13 years of private grade school tuition only for your child to go to Penn State instead of UPenn? And now no offense to Penn State graduates out there and students, it's a fine, fine university, go Nittany Lions. This was just a headline I read on my Bloomberg terminal back in the 2000s, and it has stuck with me ever since, given I think about financial returns all the time.

As a public high school and public college graduate, my preference is for public schools because things have worked out fine for me, but I am only one example. Public schools are where kids interact with a wider range of socioeconomic backgrounds. I think that's a really good thing because the real world is diverse.

There are also more student conflicts and fights in public schools, which may help toughen a kid up. The most violence I have ever experienced in my life all came from my time at public schools. So if you don't like violence, well, maybe public schools might not be the right path for you.

But if you're okay with the occasional conflict, so long as your child doesn't get seriously hurt, well, maybe public schools will be fine because if you can survive that type of conflict and violence, I think it will toughen you up in the future. Or it could crush your soul.

So you've got to figure out what's the best for your child. So first of all, let's talk about the arguments for affirmative action in college admissions. One, promoting diversity. Two, addressing historical disadvantages. Three, ensuring equal opportunity. Four, enhancing educational benefits. Five, promoting social mobility. Six, meeting legal and moral obligations.

Those are the positives. Now, arguments against affirmative action in college admissions include one, reverse discrimination. Two, undermining meritocracy. Three, stereotype threat. Four, it disadvantages non-underrepresented groups. Five, lack of individual assessment. Six, there could be unintended consequences. Seven, there could be perpetuating division of races. The more we talk about race, it seems like the more we divide races.

So what are my thoughts on affirmative action when I was a student? As someone who came to America as a high school freshman in 1991, I felt I had no say about affirmative action whatsoever. I had not suffered or benefited from my race given I grew up in Zambia, the Philippines, Japan, Taiwan, and Malaysia because my parents worked at the US Foreign Service.

I understood my parents were middle class given they worked for the US State Department. We lived in a modest townhouse and drove an eight-year-old Toyota Camry. Camry was actually an upgrade from the paintless 1976 Datsun we drove in Kuala Lumpur, Malaysia. I mainly wanted to go to a public university because it was cheaper.

I felt it was absurd to spend over $20,000 a year on private tuition at the time when we could spend just $2,800 a year. It didn't make sense to me how private school could be seven, eight, nine times more expensive. I remember I was working at McDonald's, the local McDonald's in McLean, Virginia for $4 an hour.

Then I got a raise to $4.25 an hour. I was on my feet for five, six hours a day flipping those burgers and grilling those sausages. It was no fun. I was thinking to myself, "Man, worst case scenario, if I went to college, I went to the college of William & Mary and I couldn't get a job, I would just always go back to McDonald's for hopefully $4.50 an hour at that time or maybe $5 an hour at that time and then pay back my parents the $2,800 a year in tuition." Virginia had the University of Virginia, William & Mary, Mary Washington, James Madison, George Mason and Virginia Tech at the time.

So based on the college rankings, these were great schools, good enough schools for me to attend, especially for the cost. And I knew in high school, I knew I was neither gifted academically nor athletically to get into a top 20 private college, private university with scholarships. So I didn't even bother applying.

Private college tuition was just simply too much to bear for our household and I wanted to pay my own way eventually. And it was when I got to the United States that I start learning more about slavery and other historical injustices against blacks and other minorities in America. So obviously I became a proponent of affirmative action because who wouldn't want to right the wrongs of the past?

If we have the opportunity to help, we must help. Even though I was waitlisted from a couple of colleges, I never felt like race was a deciding factor. I felt like my mediocre SAT score and my 3.68 GPA simply weren't good enough to get in. My essays probably didn't sound very natural either since I used a lot of SAT vocabulary words.

Oh, the irony. I remember my sister saying, "You sound like a robot." But I didn't really change because I thought that's what college admissions officers wanted to hear. They wanted to hear kids who could talk about starboard or portside for their yacht that they don't own, you know? Funny, funny words that I had no idea about, but I just looked it up in the dictionary and said, "Okay, this is what they want.

So this is what they're going to get." And I never felt some undeserving kid got into a better school than me due to their race. Instead, I was just thankful that I got into the College of William and Mary. William and Mary and UVA were my two target schools and they were considered two of the best schools in Virginia at that affordable price.

And yes, I absolutely did experience racism in Virginia. The KKK left flyers at my ex-girlfriend's home one day, maybe because they saw us eat at a greasy spoon diner one day in Abingdon, Virginia. And maybe they followed us back and they tried to threaten us. Yes, I've been called names during high school and college.

I've experienced all those things. But as I said in the beginning, it was due to these experiences that have toughened me up, that have made me, well, not wilt like a flower because of name calling, that have made me stand up more for myself to fight for myself and now for my family.

And you know what happened after each racist experience? Well, it made me open my eyes even further and lit a fire in me to achieve financial independence, ASAP. And that meant studying hard, networking, getting the best job I could, putting up with BS at work, continuing to grind and grind and grind so that one day I could be beholden to no one.

So I appreciate those difficult experiences. So what now? What are my thoughts on affirmative action as a father of two children? Over 30 years have passed since I first applied to college. And I have been wondering how long affirmative action in college admissions would continue. And now I know on June 29th, 2023, that it's supposedly not going to continue anymore.

I do believe society should still take action to right historical wrongs. The dilemma, the question is to what degree? When I see Asian-Americans with 1500 plus SAT scores and 4.0 plus GPAs regularly get rejected by top 20 private universities, I feel like there's no hope for my children to getting into any of those top universities.

I don't want them to try really hard during grade school only to be told 13 years later they aren't good enough because of their identity. I think all of us would agree that would really stink. We also know that many private universities game the system by accepting wealthy, underrepresented minorities from outside the U.S.

to help fulfill their diversity requirements. And that's not right since we're trying to help Americans who were screwed over in the past, not people from other countries. So today, I feel that affirmative action based on wealth and whether one has a disability seems like a fair solution. If you are poor, you may not have the same family support and resources to do well in school.

I didn't grow up poor, but I still had to go to the library or Barnes and Noble and flip through those Princeton SAT preparation books that cost like $30 at the time. And I couldn't afford to buy those. I thought I was learning how to be a better test taker by skimming the questions and answers.

But in reality, I was fooling myself by just looking at the book and not really going deep. My rich classmates at McLean High School, on the other hand, had parents who sent them to $2,500 Princeton Review SAT courses. Of course, they ended up scoring better than me. Well, I don't know.

Maybe that's an excuse, but I think there's a high correlation with paying for those Princeton Review classes and doing better on the SATs. Otherwise, those classes wouldn't be in business. How is a middle class or poor kid supposed to pay $2,500 to take those classes? No way. I had wealthy classmates.

One guy named Conrad, he went to Columbia and another woman named Maureen, she went to Dartmouth. They were rich. Their parents were rich. It was obvious. And they were able to get ahead. And like I said earlier, I knew we weren't rich, so I was happy, happy to go to a local state university.

I also strongly, strongly believe we should fight for those with disabilities. Roughly 15 percent of the world's population, one in five, has some sort of disability, minor or major that may make it more difficult to compete. For example, let's say you have a visual impairment where no matter whether you have contacts or glasses, these things cannot correct your vision to 2020 like most other people.

If this is the case, you may have a more difficult time seeing the chalkboard or the whiteboard in class. The questions on exam may also be harder to read because the font size is too small. As a result, you might zone off or just pretend you can see as a teenager just to fit in.

At the very least, you may need more time on your exams. So hopefully the parents or you speak up for yourself in terms of what you need to equal the playing field. However, if you tend not to speak up or if you don't speak up at all, you may fall behind your peers who get to learn in full 2020 vision.

If you were born with a disability that makes it more difficult or impossible to see, hear, move, process, socialize and understand, competing will likely be more difficult. So why not fight for those who were born with disabilities that make it more difficult for them to compete? I think it's a no brainer.

I think it's a no brainer. Over 60 years after affirmative action was introduced, I'd prefer to see economically disadvantaged kids from all races and kids with disabilities from all races get more help instead. In a very big way, I am also an educator. Financial samurai should be for everyone.

When I write my articles on financial samurai or I'm recording podcasts on the financial samurai podcast, I'm not thinking about race of the reader or the listener. I'm thinking about the financial questions or problems the readers and listeners have. I'm conscious about people with visual impairments, which is why I've increased the font size in my latest site redesign.

And I'm recording more podcasts on here on Apple, on Spotify, Google Play to provide more accessibility, because I don't want anybody to feel left out or be left out from trying to gain financial freedom sooner rather than later. We're all on the set clock here, folks. All the content on financial samurai is free, including my weekly newsletter at financialsamurai.com/news.

And it's free because my main goal is to help educate folks about money. I've already got my quote endowment, which consists of our investments that generate livable passive income. So charging a fee to access my content doesn't feel right. It's not my main goal to make money. Money will come on the side.

But really, it's the stories that I hear from you through your emails and your comments that say so and so article or so and so podcast episode five or six or seven years ago helped make a difference because, man, since starting Financial Samurai in 2009, so many of our lives have changed and hopefully for the better.

Right. We became fathers and mothers. We changed jobs and joined startups or joined big corporations. We got fired, but hopefully we got a severance. We were able to save and invest for the future and benefit from the bull market. Our parents passed away, but we were able to manage their estate in an orderly manner.

Life continues to change and go on. And that's why I'm going to continue to write and record. I don't want anybody to be excluded from learning about personal finance if they want to. But maybe some universities do in order to maintain their air of exclusivity. What I think will be really interesting going forward is whether affirmative action for legacy students will go away, because if you look at the legacy student data admissions rates, they are way higher.

We're talking five to eight X higher than the general pool. So if you just happen to be born into a wealthy family where your parents went to these prestigious schools, well, is it fair that you got a, let's say, 33 percent acceptance rate chance versus the general pool of five point nine percent?

If your parents are able to donate 50 million, 100 million dollars to a school wing, is it fair that you face a 42 percent acceptance rate if you're on the dean's interest list versus a six percent rate if you're not? Or if you're a child of faculty or staff, is it fair that you have a 46.7 percent chance of getting in versus only a six point six percent chance?

Maybe it's fair. Maybe it's not. But if we're trying to diversify the student body or if we're trying to be fair, well, I think legacy admissions probably has to change. In conclusion, let's agree that the ultimate goal of affirmative action is to provide upward mobility for historically disadvantaged people.

After generations of discrimination, the compounding effects can be extremely detrimental. We all know the positive compounding effects of investing and we can see how that really builds over just 10 years, 20 years. But if we're talking about getting shut out from opportunities such as housing, jobs, colleges for generations, well, of course, the playing field won't be level.

And we should do things to help those who have been disadvantaged. Unfortunately, affirmative action in college admissions is often perceived as a zero sum game. And now it's gone. So we've got to figure out different ways to move forward, whatever side you're on. I believe the best policy is to control what you can control, except that society is the way it is, except the Supreme Court rulings for whatever they may be.

You can do things as a parent and as a student to help ensure that you're going to do better in life. Some of the things include spend as much time with your children as possible to educate them about the ways of the world. Have a harmonious relationship with your significant other to provide more love and support at home.

Maintain or start a lifestyle business until your kids graduate college to teach them business and provide career insurance just in case they can't get a job. You might want to write multiple books. Doesn't have to be a traditionally published book. It can be e-books to set an academic example about the importance of reading and writing while your kids are in school.

You can teach them a second language to provide them with more opportunities if the English world shuts them out. You can invest and maintain a rental property portfolio so that they have housing security just in case. You can take out term life insurance policies so that they will be fine if you were to die prematurely.

You can teach them communication skills to help them build a better personality and better ways to connect with other people. You can encourage them to try harder and build grit because effort is what they can control. And finally, you can teach kids to love who they are to help build their confidence and self-esteem.

I think spending more time educating our own children is the biggest win. We shouldn't outsource all our children's education to schools. It doesn't make sense. I think if we can spend more time on the weekends and the mornings and the evenings talking about practical education, practical knowledge, I think that's going to go a long way to helping them succeed.

Where you go to college matters, but whether you go to an accredited four-year college or not matters way more. Either go to a trade school or go to a reputable college that is affordable. The more affordable education you can get, generally the better. The thing is, most of us aren't attending one of the top 25 private colleges in the nation.

Therefore, affirmative action probably has little to no effect on the majority. Schools like Harvard and UNC Chapel Hill, these are elite schools. And just be frank, most of us can't get into these elite schools. I know I couldn't, but I still turned out OK because I was able to go to college and apply my knowledge and learn and build practical skills.

All right, everyone, I hope I provided a balanced view on a very contentious topic. I know it's not easy, but I hope we can all have an open mind and move forward and take action to better our lives and the lives of people around us who we care about.

If you enjoyed this episode, I'd love a positive review. Please don't forget to subscribe to my weekly newsletter at FinancialSamurai.com/news And to read the best personal finance book out there, In My Biased Opinion, pick up a copy of Buy This, Not That at FinancialSamurai.com/buythisnotthat. Take care, everyone.