Hello, everybody. It's Sam from Financial Samurai, and in this podcast, I'm going to talk about the rapid depreciation of a Harvard education and how private school grads can still save themselves. Funny topic, I know, but it's something that's a current event and I think everybody should be aware of, parents and alumni and non-elite private school education graduates as well.

When I was applying to college in 1994, I thought only extremely smart people attended Ivy League schools. I'd heard stories about the rich buying their kids ways into the Ivy League, but I was unaware of the details. As a public high school kid with an OK SAT score, a 3.63 GPA, and unspectacular extracurricular activities, I didn't go to Rwanda and save a starving village from disease.

I was a tennis team captain, for example. I decided to save myself, but really my parents, hundreds of dollars in application fees and apply to mostly local state schools like UVA, Mary Washington, and the College of William and Mary instead. Paying less than $3,000 a year in in-state tuition even back then felt like a steal.

After graduating from William and Mary in 1999, I got a job in the International Equities Department at Goldman Sachs in New York City. That's where I got to interview hundreds of Ivy League and other elite private institution graduates as part of Goldman's consensus-driven interview process, where even the most junior members got to interview candidates.

We ended up rejecting 98% of the candidates due to poor fit. It wasn't that they were not smart, because they were. We only wanted people we would feel comfortable sitting next to for 12-14 hours a day. It obviously helped if they had an international background, spoke multiple languages, and had a passion for the stock market.

But we were mostly looking for great teammates, because everything is really learned on the job. Interviewing the majority of elite private college graduates made me realize they are no different from you and me. For the next 13 years, I'd compete with these folks on the ruthless battlegrounds of finance and smash them to bits like Hulk, most of the time because of my hunger.

Coming from a non-target public school background with middle class parents who worked for the government, I wasn't going to squander my opportunity for financial independence. Today I am a small business owner with business owning friends, and what we've noticed is that there is a growing negativity towards those who attend or have already graduated from elite private schools.

Don't get mad, just be aware of this trend against the 1%. We saw that with Occupy Wall Street movement during the financial crisis. We're seeing that now with politics, Jared Kushner's dad donating $2.5 million for his son to get into Harvard. There's this uproar and it's thanks to technology and the internet.

So don't be upset if you're one of these alumni. Instead, listen with an open mind and pay attention as your future or your kid's future might depend on it. So this podcast will address why there is a growing negative perception about private university graduates, what we've learned from the Harvard Asian American Discrimination Lawsuit, what you can do to fight back against this negative perception, and the future of higher education.

So one of the reasons why Harvard University fought so hard to keep its admissions process a secret was because it didn't want the world to judge it for how it picked winners and losers, because boy do they ever. Due to social media and the internet, they knew that the jury of public opinion would come down on them like a guillotine.

Here are some interesting facts that we've learned so far from the Asian American Discrimination Lawsuit against Harvard. The overall acceptance rate is about 5.9%. But if you're a legacy, in other words, if one or two parents went to Harvard, the acceptance rate is 33.6%. If you are a child of donors and not legacy, your acceptance rate goes to 40%.

And if you are both legacy and your parents are donors, the acceptance rate is above 70%. So think about these statistics for a bit. You are simply born into a family where one of your parents or grandparents, I think, went to Harvard, you have a five times greater chance of getting to the university than someone who has no legacy status.

One can argue legacy admissions help create a stronger university culture. I believe that. And there should be some preference. But a 5x preference seems quite excessive. Meanwhile, if you donate money to Harvard, which already has the world's largest university endowment at over $35 billion, your child's acceptance rate goes up by 7x the average admissions rate.

Based on conversations I've had with a Harvard undergraduate and business school alum who also was on their fundraising committee for a couple years, between 2000 and 2010, you could probably donate between 250 to 500,000 and effectively help give your child a 7x advantage. Today, he says the donation figure is in the millions.

Now imagine you are a legacy candidate whose parents are also rich enough to donate millions of dollars to Harvard. You've got a 12x greater chance of getting to Harvard than some smart kid with great extracurricular activities whose parents are simply not as rich or connected enough to help. You are practically a shoe-in guarantee.

In other words, this is not a meritocracy by any means. This is affirmative action for the rich. So nobody likes a rigged game. If you are competing one-on-one against your friend and he's cheating because he's got a cheat code, and you find out, you're going to be pissed off.

So it's no surprise that there is a growing negativity against Harvard and other schools that practice this type of admissions criteria. Now we should accept that Harvard and other private institutions have the right to craft their classes however they see fit. This is one of the benefits of not accepting government assistance and being private.

After all, we have the right to apply to wherever we want as well. However, Harvard and other private institutions should at least acknowledge they use race, legacy, money, and athletics as determinant factors in their subjective crafting of an incoming class. They should own their subjectivity with pride. They should say, "Yes, we do discriminate against people based on whatever criteria we choose is the right criteria." Instead, they just say, "No, no, we don't.

Everything is quite objective," which we all know is false, which is another reason why the public, who is not stupid, is going to have a negative perception on these universities and their graduates. But the real fallout may rain on those private university graduates who actually have no legacy connections and no donor parents.

So in terms of no legacy students, it's about 67%. So the majority who simply got in due to merit. As the reputations of private universities decline with the wider understanding of how the system works, many of its graduates may be unfairly lumped with those graduates who received massive non-merit-based advantages.

Therefore, the one solution is to clearly state on your resume or job application, "Not a legacy or a donor graduate." By clearly stating, you got no help from what society hates most about the aristocracy, you distinguish yourself and enhance your accomplishment. You may feel that highlighting you're not a legacy and not a donor might come across as too forward, and it will, especially if the hiring manager comes from a private university whose parents did donate and did go to such a university.

And this is why you must do your background checks on your interviewers before making your case, and when you state it, you just must state it as a matter of fact and not flower it with opinion and a lot of subjectivity. The vast majority, vast vast majority of parents will not have donated hundreds of thousands, let alone millions to buy their kids way into an elite university.

They don't even have the means, right? Nobody has those type of means except a very few. Just look at the statistics. Even only 40% of Americans have a two-year college degree or more, less than 5% of all Americans will have attended elite private school universities. The reality is it's probably less than 1%.

In other words, a super majority is on your side, so don't be afraid to stand up for meritocracy. The gatekeepers agree. Who are the gatekeepers? Well, they are the employers. As a small business owner, I want to hire the most collaborative, smartest, efficient, and hungriest person available. I don't really care where they went to college.

All I care about is their attitude and willingness to learn and get things done, and whether they're going to be a prima donna and pain in my butt, or are they going to do and say what they say they're going to do and stay hungry and keep on hustling.

If I can find an Ivy League graduate with such attributes who got in 100% due to merit, I'm going to hire this type of person all day long, all else being equal. But if I can't, because the person is unwilling or cannot say they aren't a legacy donor, then I'm going to have to do a thorough search.

More thorough search. I've spoken to a couple friends who both employ over 100 people, and one friend, who is a public CEO, who employs over 3,000 people about the Harvard lawsuit. They all actively welcome graduates of elite private universities to declare they are not legacy or donors. Two went to public university, so therefore they are biased just like me, and while one went to an elite private university and doesn't think he got in due to money or connections.

Old money industries like banking, private equity, venture capital, money management, and management consulting are filled with elite private school alumni who will continue to have their biases, so tread carefully. But new money industries like tech and biotech are extremely focused on meritocracy, because after all, they must create something new and hustle and strive to get ahead, whereas the big guys, the old establishments, it really is like old money in your neighborhood.

People who are just living off trust funds and generational wealth thanks to their grandparents. But over time, I'm confident old money industries will slowly remove their biases as well, starting by casting a wider recruiting net beyond specific private universities. One of the end goals of going to college is to get a good job as possible, so if the gatekeepers are changing the way they hire, you best believe universities will change the way they accept students as well.

The internet democratizes knowledge and access. I've said this before and I'll say it again and forever. Therefore over the long term, college degrees will be devalued. Elite private university degrees will be no exception. Nobody wants to help the rich and powerful get more rich and powerful anymore because people have a better understanding of how the system works.

We've had an incredible recovery in the bull market for almost 10 years now, and as a result, the rich have gotten way richer and the disgruntlement, the anger is starting to fester, starting to build against these folks. More people will be empowered to create their own fortunes through entrepreneurship or freelancing.

The rich and powerful are clinging on to elite education as the last bastion of the aristocracy, while the commoners are using battering rams to break down the gates. So if you are or will be an alumnus of Harvard or other similar institution, I encourage you to do the following.

1. Don't voluntarily tell anybody where you went to college. If people ask, talk about the state or city where you went to school and then quickly change the topic. It's so funny here in the San Francisco Bay Area, you know when someone went to Stanford because they'll tell you in the first two sentences.

2. Stay humble. Instead of talking about your wins, discuss your struggles. 3. Build your giving resume. That includes time and money, and hopefully time. Eventually people will find out about you, and if they realize you've received all this help while you've done little to nothing to give back, you'll be skewered.

Besides, helping other people is the greatest gift on earth. 4. Stop working at companies that create useless products or take advantage of minimum wage laborers. Don't let your education and family wealth go to waste. If you're oblivious, you'll know once you see your company being questioned on the news about their labor practices.

And then finally, let your kids earn their way through life. One of the worst things you can do is take away your kids' sense of pride and accomplishment by giving them everything. Let your kids deserve what they've earned. Nobody, let me be clear, nobody should blame parents for giving their kids every advantage possible to get ahead.

And no kid should be blamed for receiving every advantage possible either. We're all trying to do our best here. It's a competitive world. Let's just not fool ourselves into thinking there aren't extreme biases in the system that put the majority of people at a competitive disadvantage. We will never be a true meritocracy.

We will have different definitions of what is fair and what is not fair. But at least we can take steps to help even the playing field by fighting for our beliefs. Ignore the uprising at your own peril. This is really important, especially if you're a parent. And I'm thinking out loud here as a parent, am I willing to spend a million dollars on a private school education when this is happening in the future?

I don't know. I could see a huge uprising in 10, 20 years where people say, you know what, we've had enough of this aristocracy and this unfair rigged system. No more. Let's bar people from such institutions. It could be extreme, but you can see that happening as people see the rich, the widening wealth gap just continue to get wider.

I think there's a good chance this this uprising will happen. I've personally decided to keep some insurance, which is to keep Financial Samurai running until my little boy grows up and tells me he wants nothing to do with running a location independent small business that gives you all the freedom in the world.

That's gonna be interesting conversation. And even when he tells me, I hope he doesn't. But even when he tells me, I don't want all the freedom in the world to be my own boss and to make my own rules. I think just in case he changes his mind and faces the harsh realities of the world, I'm going to keep Financial Samurai going for as long as possible.

Maybe one day he'll thank me and maybe I'll one day continue to have something to do and talk about long into the future.