- Hello everybody, it's Sam from Financial Samurai, and in this podcast episode, I want to talk about admissions to schools, whether it's better to use an entrance exam or to use a lottery system, and I'm inspired by the presidential debates in this episode which is why I have my wife, Sydney, who is going to argue why the lottery system is a no-no and why she'd rather have an entrance exam, and I'll argue the other side and say, "Hey, I think a lottery system is the way to go." So what's going on here is that at Lowell High School in San Francisco, it's a top-magnet school, it requires an entrance exam, you gotta pass that exam, and you gotta have a top-tier GPA in middle school, and that entrance exam has been abolished for a lottery system, which is what every single other high school, middle school, and elementary school in San Francisco is under.

It's a lottery system where you may or may not get your local neighborhood school that's a couple blocks away, and if you lose the lottery, you might end up at a school 30 minutes away, which has really kind of befuddled and angered a lot of parents in San Francisco, but that's just the way it is.

Yes, there are some weightings where you can have a higher weighting because you're living in the neighborhood, but at the end of the day, it's a lottery, and you really don't know what you're gonna get, and so therefore, you gotta rank something like 10 schools, and hopefully, you'll get your top five, and you just go from there.

So now, Lowell High School is just like every other high school. Thanks to the global pandemic, the school board voted unanimously to eliminate the entrance exam for 2021 and 2022 school year because there's no grades, and there are no exams to be evaluated for entrance, and that's kind of crazy because as of late October 2020, public schools are not open in San Francisco.

This is a problem because the kids in public school are probably falling behind to those kids who are in private school or charter schools who have started the school year a month earlier, and there are talks that school won't open until January, so that is really a big concern.

So the heart of the matter comes down to equality as an equal access to opportunity. Opponents of the entrance exam claim that the system is elitist and racist given the high school is a public institution, and it's not accessible to everyone. Not everyone is born with two parents who are wealthy, who have unlimited resources.

There are a lot of households who are single-parent households who don't have the resources or time to take care of their kids. So of course, there's gonna be a lot of inequities growing up, and the people who do have the resources, who are able to study for many, many hours are gonna be able to get into schools like Lowell and Thomas Jefferson in Washington, D.C., and Stuyvesant in New York City and so forth.

And so I just wanted to have a conversation and really a debate, I guess, with my wife regarding the lottery system and the entrance exam. And so, Sydney, I want you to argue why you believe that the entrance exam, which is based on a meritocracy, one would say, is the better way.

So Sydney, why do you think Lowell High School should have kept its entrance exam that it's had for decades now? - So Lowell is one of 25 public high schools in San Francisco, so it's not affecting the majority of high school students. And there are also enough high-quality high schools in San Francisco besides Lowell.

And in addition, I think there are kids who have been preparing to go to Lowell specifically based on the reputation that the school has, their academic record, and studying extra hard. They feel they deserve a chance to get into that school based on their merit versus some random lottery selection.

And another point that people are making is that Lowell is a very diverse school. If you look at the breakdown of the student body, there are 61% Asian, 11% Hispanic, 8% students who are two or more races. So saying that Lowell needs to be more diverse doesn't seem to be a super strong argument.

- Do you think Asian people are considered minorities? For those who are arguing for the lottery system, it seems as if they are not treating Asians as minorities. - Right, well, I think there's about 6% Asian people in America, and so obviously there's a 10x overrepresentation of Asian people at Lowell High School with 61% of the population who's Asian.

So the minority that you forgot or you didn't get to was the black population of only 2% at Lowell. And then the Hawaiian Native Pacific Islander population of only 1%. So I think the goal of the lottery system is to try to have the representation of the school population be more representative of the city population.

- The black population of San Francisco is still pretty low, though, isn't it? - Well, let's take a look at the latest Census Bureau data. It says San Francisco population is 45% white, 5.2% black. There you go, you're right. The population is pretty low, but it's still higher than the 2% at Lowell.

But I guess that's not that huge of a difference. I thought it was gonna be much wider. 34% Asian, 8% some other race, and then 0.3% Native American. So 34% Asian, and then 61% Asian population at Lowell. 5.2% black population, and only 2% at Lowell. So what it looks like is that the San Francisco Unified School District Board, or whatever, is trying to make these percentages at Lowell more equal to the city population, which I think is a reasonable goal.

What do you think? - Well, my side of the argument isn't focused on race, it's focused on merit. - Well-- - Academic achievement. - But my belief is that merit, there's not really a true meritocracy. There's no such thing as true meritocracy, and it has to do with race, because this is the underlying reason, I think, why they're going to a lottery system, is to make it more equal for underrepresented minorities.

And so the underrepresented minorities are the black and Hispanic population in San Francisco at Lowell High School. - But if we look at the numbers, the student body has 11% Hispanic, and San Francisco has roughly 15%, so that's not that big of a difference. And the white population of San Francisco is 40%, however, at Lowell, it's all the way down to 18%.

So that's the biggest difference between, if you look at race of the student body versus San Francisco as a city. - So it sounds like maybe, actually, the lottery system is to try to help white people, because they're the most underrepresented, not minority, they're the most underrepresented racial group at Lowell High School.

- You could say it that way. - So that's actually something really interesting that you pointed out regarding the white percentage difference. Right, if it's 40% population and only 18% representation at Lowell, that is what, 22% differential, 22 percentage point differential, whereas the black differential is only a three percentage point differential.

And so yeah, the lottery system will actually help white people more, right? And maybe black people, and maybe Hispanic people, and probably not Asian people, because there's such a massive over-representation. - All right, so using race as a reason to abolish the admissions exam doesn't really seem to make a lot of sense if it's to help underrepresented minorities, when, when we've looked at the numbers, the white population could end up benefiting the most.

- Well, it probably should end up benefiting the most, because like in any lottery system, whether it's NBA, draft pick lottery, NFL, I think, let's talk about the NBA draft lottery. The bottom line is, if you have a greater percentage representation, you have a greater percentage chance of winning the lottery.

It's very correlated. So white people have 40% of the population, so they're gonna win the lottery 40% of the time. It's very consistent. I think that's how it works. And therefore, I think you're right. The lottery system, which is supposed to make things more equal, will make things more equal for white people.

And you say it that way, could be. - It could be. I mean, I think that's the truth. That's math. Unless, you know, like you're a white kid and you win the lottery to Lowell High School or, you know, Thomas Jefferson or whatever, and you say, you know what, I don't wanna go.

And that's kind of one of the arguments that I've heard is that white kids, white parents are intimidated. They don't wanna send their kids to Lowell High School because they would be the minorities. And that's pretty interesting because that's what minorities face all the time when they do anything, join an organization, go to school.

Minorities are always the minorities by definition. And so, you know, welcome to the minority world, folks. All right, so we've got some progress, but I wanna hear more of your arguments why you think the lottery system is not good for this particular school and maybe other magna-type schools. - So Lowell has a reputation for being very academically rigorous, very competitive.

The students are under a lot of pressure. So if you throw a bunch of unprepared kids into that type of environment, they're probably not going to thrive. They may struggle, they may get frustrated and stressed out, they may wanna quit and just drop out. It's hard to say. It could be very tough on them.

- Yeah. And I guess if you have bad grades from a good school, I think that's worse than getting good grades from a bad school, a mediocre school, because a lot of these universities, they're not gonna just accept everyone from the best school. They wanna diversify their student body pool as well.

- Yeah. - All right, are there any other arguments you have against the lottery system? - I'll just throw one more in there. So teachers tend to be attracted to good schools with good students. They want to teach, that's their passion. So they wanna be able to help students who are interested and who are excited about being there.

If all of a sudden they have students who are frustrated and struggling 'cause they simply can't keep up with the curriculum, that's gonna be not only frustrating for those students, it's gonna be difficult for the teachers as well, which may over time lead those good teachers to go to another school, potentially in the private sector instead of staying in the public school system.

We just don't know. - Do you think that students rise to the top and get better as a whole or do you think they rise to the, don't rise, they just fall to the bottom as a whole? - I'm sure that personality has a lot to do with it.

So I don't know that you can make a generalized argument that way. It's hard to say. I think if you are maybe not the brightest student in the class but you're not that far behind, you might be inspired to try to learn like your peers and try to get good grades like they do.

But if there's too much of a gap, I think it's just demotivating. - Do you really think there's that big of a gap of intelligence? - I have no idea but-- - I mean, just let's recall high school in our days. - Well, weren't we looking at some article the other day that was showing literacy or something like that, breakdown by race for the San Francisco School District.

- I don't remember. I don't remember. But I'm just trying to ask you directly. In your school, did you notice a huge gap? - In my public school, yes. - Yeah? - Yeah, there was a very broad range and-- - And wasn't there like gifted and talented programs or whatever?

- There was, there was but not for, I don't think, I mean, it was a long time ago. My memory's not the sharpest. But I think it was only for certain subjects. It wasn't for every single subject. - Right. I don't know, I just feel that, I mean, how much do you remember of college, what you learned in college or in high school?

- You know, it's a small percentage, I would say. And I think most people would agree with that. I do think it's important to teach a broad range of subjects. - Yeah. - Did I need to really understand chemistry or physics? No, but I'm glad I was exposed to it.

It helped me realize in high school that I did not wanna take a career that would require physics 'cause it was just way too hard for me. - Okay. Well, I just wanna argue against the entrance exam. - Okay, let's hear it. - Against meritocracy. One, because I think there's no true meritocracy.

Nobody is born with equal opportunity. We know this, you know this. Some people are born wealthy, some people have two parents, some people have stay-at-home parents, and some people are born strictly into poverty. You cannot pit these students together and expect them to have the same outcome when they don't have the same opportunity.

It just isn't that way. So when you have an entrance exam, what you're testing for, what you're testing for are the people who have the most opportunity to study, to learn, to have extra resources and so forth. So what you're doing is you're siloing these people who have the most opportunity to have more opportunity as they get older.

And the people who didn't have the opportunity, who are not gonna get those good grades, who don't have those high test scores, are not gonna get bunched in with these other people. And that gap is gonna continue to widen in school, in college, in the workplace for generations and generations to come.

- Even though Lowell is only one of 25 schools? - Well, why do we have to do one, why don't we make them all the same? Why does it have to be this one school out there being the iconoclast and saying, "We're different"? - Yeah, I don't know. - And so in a world where the rich are getting much richer, we've seen this during the pandemic, it's a K-shaped recovery, right?

The investor class, the super wealthy, the mega millionaires, the billionaires are just raking it in, while the working class are losing their jobs and they're hurting, right? Do we want that to continue? I don't think we want that to continue. And there needs to be an artificial way to break the cycle if we're truly to help those who have less opportunity.

And so introducing a lottery system is not the cure-all, end-all, right? It's, okay, here is a chance to break what has been happening for the past several decades and see what can happen. Maybe there will be a lot of good that comes out of the lottery system with different types of students from different backgrounds, and they can build upon it.

It shouldn't be this 40-year inertia of the way things are. We should change, I think, and evolve to help society. You know, one of the things I hear a lot about going from an entrance exam to a lottery system is that it's very anti-Asian. And the reason why it's anti-Asian is because the majority population is Asian, right?

61% at Lowell, things like 70% at Thomas Jefferson High School. And it's very similar at a lot of these schools. If you look at the UC system, I think it's like 50% Asian at UC Berkeley. So if you go to a lottery system, that takes away meritocracy, takes away people who are studying hard to try to pass these exams and get good grades.

And I think, unfortunately, the result is that there will be less qualified Asian students who are gonna enter these schools. However, we must not forget about the relativity of racism in this country. So black folks, they've been around for hundreds of years. They've had slavery to deal with. They've had systemic racism with regards to the banking sector, housing sector, every aspect of society, and we're still trying to right these wrongs and rectify the situation today.

I'm not saying that Asian people have not faced a similar amount of discrimination in America. They haven't, actually. It's a different level of racism. I've experienced plenty of racism growing up in Virginia for high school and college, but it's a different level of racism. And so I believe, why not?

Why not try to boost that population at Lowell High School from the 2% it is now to the 5%? It's still not a big percentage, but it can happen. It can happen with some effort and with some changes. And 61% Asian population versus a much lower San Francisco Asian population, I think it says it for itself.

There is a lot of benefit to the Asian community already. Yes, of course, there are first-generation Asian Americans and poor Asian Americans, and the reality is, look, life is complicated, and we're just gonna have to figure out. If you can't get into Lowell, don't worry, because you're gonna have your fundamentals down pat.

You studied hard, you prepared, nothing is ever gonna be easy street your entire life. You're gonna find different ways to get ahead. I think at the end of the day, this is a public school. So given it's a public school, everybody should have access to the school. Now, of course, not every public school can accommodate everybody because there are classroom size limitations.

However, there needs to be a way, an equitable way to gain access to the school if you want to attend that school, and that's how the lottery system is. If the lottery system is truly a random system, that is the most equitable way possible. All right, what's done is done.

It's gone to a lottery system, and we can't do anything about it. We'll see what happens a year from now. And I just wanna ask you, Cindy, what if our kids are in middle school and Lowell was still a lottery system admissions? What do you think? What would we do?

- I think a lot will depend how our kids are doing academically. If they're doing very well and Lowell is still teaching at an above average, what would you call it? - Level? - Above average level, okay, then I would think they could do well. But if they were struggling, I don't think putting them in an environment where there's a lot of competition and it's really intense, the coursework is really hard, I wouldn't want our kids to be frustrated and feel like they're just lagging behind all the time.

Nobody feels good in that kind of situation. - Imagine if you always felt like one of the dumbest people in class. That would be bad, right? - That hurts your self-confidence and I think a lot of high school students, they're under so much pressure with social media and all that stuff.

And if they're struggling with self-confidence outside of academics to then throw on academic stress, I think it's just too much for a teenager to deal with. - You think so? - Maybe we're just, what do some people say, snowflakes? Maybe we're just so soft on the next generation, every single generation gets softer and softer and softer to the point where they're really not getting challenged and struggling as they should before they enter the real world.

'Cause the real world is not a very friendly place. - Yeah, I don't know. - I think at the end of the day, you gotta know your own child and see what their maximum tolerance for discomfort, stress, and pain is. And maybe try to get close to the max, maybe like 80% of the max, but don't go to the max, otherwise they might just turn out to be massively rebellious and not bother to study, maybe they'll do drugs, do all that stuff.

So it's just such a tricky situation. - It's hard, parenting is hard. - And you don't really know what a school environment is like. - Right, you're not there unless you're the actual student. - Unless you're a student, and then the student only gets usually one perspective because students aren't going to multiple high schools, well, not normal students, right?

They'll just have to suck it up and go through one. - Yeah, it's hard to say. - I think for us, if our kids cannot get into a well-rated public school that's within 15 minutes driving, hopefully that's 15 minutes walking, I think we're gonna have to homeschool or go to private school.

That seems like the logical solution. - Yeah, I do think it's silly that some students have to go to a school that's all the way across the city and deal with traffic, 'cause I don't even think San Francisco has a school bus system. I think they have to take MUNI, which is our public transportation.

- MUNI or your parents' drive. - Right, and MUNI is so low. - Right, and that's the sad thing. I don't think the lottery system is really working, unfortunately. I think if we're honest, you look at the data, the wealthier families, the white families, dominate the private school system, and minorities and poor families, and just normal middle-class families, dominate the public school system.

So I think there needs to be some kind of change. We can't just focus absolutely on equality, equality, equality of opportunity, and then not look at the resulting data. And I think one commenter said something really smart, and that is, we should focus on equality of opportunity, but we can't focus on equality of outcome.

We cannot say, hey, you guys have all the same opportunity, and you guys will all end up multimillionaires by the age of 30. We know that life is complicated. There's so many variables, a lot of lucky breaks, connections, all that stuff, that'll determine your actual outcome. So I thought that was a really, really smart and poignant comment, so thank you very much for that.

And I wanna leave you guys with this one thought, and that is, it's so weird to think about education and just that hustle and grind to get into these best schools possible. For what? For what, to get into a prestigious university? I don't know, as a 43-year-old now, I look back and I'm like, I don't care where you went to university.

I care what you do, I care what your character is, and if you lead a purposeful life. And people wanna get into a prestigious university so they can get a prestigious job, maybe make a lot of money, or maybe they can get into politics and get a lot of power and fame.

And I look at that, I'm thinking, why do you want fame and power? I think that's so overrated. That's like a prison of your own making. But in terms of money, yes, money definitely is great because it can buy freedom, but after a certain amount of money, again, it doesn't lift happiness at all.

I think it makes a lot of people miserable because they're constantly chasing more money and more status, climbing that corporate ladder. It's just so interesting to me now that we're so far removed from that way of living. I mean, what are your thoughts on status, money, and all that stuff?

What's the point of all this if we don't even remember much of what we learned in college and high school? - I know. Maybe it's about seeing what your maximum potential is and finding yourself in the process. - Yeah, I think that's good. It's good to see what your max potential is because you develop a feeling of what if and kind of regret not trying to go as far as you can in your studies or in your career or playing a sport, even recreationally.

So trying to discover your max potential is important. And I think at the same time, we've got to just realize if we've done our best, that's all we can ask for. Alrighty, well, let's just wrap up this podcast episode. Thanks so much for arguing with me. - Thank you.

- We'd love to hear from you guys on whether it's better to have a lottery system or an entrance exam. I've written a pretty detailed post on the pros and cons of everything and also our personal thoughts and what we do. So check out the post and stick around and we'll talk to you guys later.

- Thank you. - Take care.