The controversy stimulated by the Education Department’s policy shifts concerning the legality of financial-aid programs designated for members of minority groups is convincing evidence that this is treacherous terrain. Efforts to formulate “pure” positions are almost certain to prove unsatisfactory. There is no escape from the need to make careful distinctions, to pay close attention to the actual effects of alternative financial-aid mechanisms, and to decide consciously how much flexibility should be left to individual colleges and universities.
We agree fully with those who stress the desirability of reaching a condition in which race would not require special consideration because ordinary norms of institutional behavior could be counted on to produce equitable results. The ultimate goal, surely, is a society in which all that matters is an individual’s own abilities, character, and determination. But our society is not yet close to such a condition. Tempting as it is to base policies on a vision of an ideal world, it is necessary to deal forthrightly with the realities that are before us. Race matters in America today -- and more than as a corollary of economic circumstances or other “objective” variables.
Confusion has been caused by equating targeted financial-aid programs with quotas in admissions or in employment. We agree with many others in opposing the use of quotas, except in extreme situations. Quotas allocate a predetermined number of “places” among groups, thereby causing individuals (as in the Bakke case) to feel that they have been excluded from a benefit that otherwise could have been theirs. Quotas tend to create “zero-sum” games, in which one person or group benefits at the expense of others.
Financial aid is a far more flexible instrument, which need not have such consequences. Whereas the number of admission places is usually limited and relatively constant from year to year, the overall amount of financial aid can vary considerably, depending on many factors (including increases or decreases in gifts and grants and the demonstrated needs of students).
Furthermore, while many institutions have restricted scholarships of various kinds, the largest share of scholarship dollars often comes from “general” or “unrestricted” funds that provide assistance for students of all races who can demonstrate genuine need or exceptional merit.
In most actual situations, “restricted” scholarships expand the funds that can be allocated to all students, rather than shrinking the pool of “benefits” (as in the case of admission places) available to those outside the designated group.
Suppose that a college receives a new scholarship fund solely for students from a certain state. This new fund might well replace, wholly or in part, scholarships from “general funds” that otherwise would have gone to residents of the state in question; some or all of these “released” funds could then be used to increase scholarships available to students from other states. The ultimate effect, therefore, could be more scholarship aid for all students -- those from the designated state as well as those from all other states.
Similarly, a new source of targeted financial aid might well permit an institution to help more minority and non-minority students. Even if the released general funds were needed for non-scholarship purposes, because the college was especially hard-pressed financially, the overall scholarship budget would at least have remained constant, and no group or individual need be any worse off than before. It is hard to imagine a real-world situation in which a new source of targeted funds would actually diminish the amount of assistance available to students outside the targeted group. The constraints of a zero-sum game simply need not apply.
But why are racially designated scholarships useful in the first place? Perhaps it is sufficient, consistent with the first ruling by the Education Department, to permit race to be taken into account as one of several considerations in an effort to achieve more broadly defined objectives, such as meeting the financial need of all students from families that are economically disadvantaged.
In principle, we strongly favor this “broader” approach. It is less absolutist, it requires that a variety of factors be given weight, and it allows more institutional flexibility over the long run. There are many situations, however, in which it may prove ineffective, as well as inefficient from the standpoint of achieving maximum impact with limited resources. Graduate education, as contrasted to undergraduate study, represents one such case, but certainly not the only one.
Consider efforts to support minority students pursuing Ph.D.'s in the arts and sciences -- where the lack of minority candidates is especially pronounced. (A total of just 13 black students earned doctorates in 1989 in the combined fields of mathematics, physics, and astronomy.) Advanced fields of study require intensive, lengthy academic preparation; the cost of graduate education is far beyond the means of most minority students; and, consequently, large numbers of minority students never give serious consideration to pursuing such opportunities because the entire set of difficulties appears overwhelming.
Programs that give extra consideration (on an “other things being equal” basis) to minority students are almost certain to be far less effective than programs designed to address the precise problem at hand. Emphasizing financial need, for example, is much less useful at the doctoral level, since almost all students are largely “independent” of their parents and virtually all can therefore demonstrate “need.” Moreover, the objective of many programs is to encourage larger numbers of exceptionally talented minority students to pursue such opportunities, not just to enroll more economically or educationally disadvantaged minority students.
More explicit targeting of financial-aid programs has obvious advantages: Greater visibility and clarity are achieved, a stronger “signal” is sent, and available funds can be invested with the maximum likelihood that they will achieve their true purpose. These considerations no doubt explain why major government-sponsored programs (e.g., certain fellowship programs of the National Science Foundation and the National Institutes of Health) have been explicitly reserved for minority students for many years.
Now that the Education Department’s Office for Civil Rights has issued a revised ruling, modifying the initial attempt by Assistant Secretary Michael L. Williams to bar colleges and universities from administering any racially restricted scholarships, the general argument for special scholarship and fellowship funds may now have been accepted. But the latest formulation is an inadequate response to underlying issues, because it introduces an entirely new distinction between private and government funds restricted (and permissibly) by gift or grant for minority financial aid and the “general” or “unrestricted” funds of colleges and universities, which no longer may be used for such purposes.
This distinction may at first appear to be straightforward, but it is almost certain to prove extremely difficult -- if not impossible -- to sustain. At the outset, one must remember that “general funds” include not only moneys from student fees, but also those from private gifts, unrestricted endowment grants, and many other sources such as revenues from athletics, leases of space and land, and so forth. They may also derive from “block” grants provided by governments.
Although it may at first seem pedantic to press the question of how to interpret “general funds,” the issue is not a trivial one. For example, if a college receives a new unrestricted endowment gift, the annual yield on that endowment would ordinarily be classified as general funds. Yet it is common practice for boards of trustees to decide, by formal resolution, that such endowments and their income will be committed to specific purposes. Because such actions are taken by an institution’s own board, they can also be modified (or entirely reversed) by a subsequent board resolution. In this sense, the money in question remains technically in the category of general funds. If a board were to pass a resolution assigning such general funds to a scholarship program for Afro-American students, would this action be legal or illegal under the latest guidelines?
An initial gift may have been restricted, intended specifically to support scholarships, and would not therefore have been classified as general funds. If a board of trustees were to choose to “extend” the initial restriction to scholarships for minority students, would this action be legal -- given the fact that no general funds were ever in question?
A donor may choose to give an institution an endowment, expressing a clear preference that the funds be used as scholarships for Hispanic students. Since the restriction is expressed only as a preference, it is not legally binding, and the moneys are classified as general funds. The institution may quite rightly choose to honor the donor’s non-binding preference and create a special scholarship fund specifically for Hispanic students. Is this legal? Is it wise public policy, in any case, to encourage donors to insure that such gifts will be “legal” by specifying that they must be restricted to scholarships designated by race? Should institutions be encouraged to press donors to restrict their gifts, when everyone’s long-run interest may lie in having institutions retain as large a pool of flexible general funds as possible, to meet ever-changing future needs?
These are hardly esoteric examples. Beyond them, of course, lies a more fundamental question, Why should unrestricted gifts from private donors, classified normally as general funds, be unacceptable as a source of funding for minority-designated scholarships, when other private gifts (no more “private” than those in the previous category) will be free from this prohibition simply because they come with donor-imposed restrictions?
There is also an irony concerning the sanctions for failure to comply with the new ruling. Mr. Williams has stated from the beginning that the penalty would be a loss of all federal funds for the college or university involved. It will certainly seem at least highly peculiar to many people if a college can use federal moneys for racially targeted scholarships, whereas if it chooses to use its own general funds for the very same purpose, it then loses all federal support -- including, presumably, the federal funds designated for race-specific scholarships.
Finally, it is clear that many excellent institutions are not well-off financially. They have modest endowments and cannot count on a predictable flow of substantial gifts. Many such colleges are willing to expend some portion of their general funds to provide special assistance to minority students. Yet because they have less capacity to raise private donations, and because they need gifts that are unrestricted in order to retain maximum financial flexibility, they will be severely constrained under Mr. Williams’s most recent ruling. Is this really a desirable outcome? Should only institutions with well-developed sources of private funding be able to provide targeted scholarships for minority students?
The way to solve this class of problems, in our view, is to reverse the presumption in the most recent ruling concerning the intent of donors. We favor a policy that would permit funding for targeted financial-aid programs from any normal institutional source so long as the use does not conflict with the expressed wishes of those donating the funds.
To reduce further any risk of abuse, it could also be specified that: (a) individuals receiving financial-aid benefits under race-specific programs must be members of those “protected” groups named under relevant laws and regulations; and (b) even though participants may come from a particular “protected” group, they must be chosen for the program in question on a case-by-case basis, depending on their individual qualifications, and not given assistance solely as a consequence of their minority status.
The many sensitive issues bound up with the phrases “discrimination” and “affirmative action” are unlikely to be resolved in any simple way, or in ways that will either persuade or please all individuals and groups in America today. The subject by its nature touches upon extremely important issues of fairness, justice, equity, and opportunity -- and these issues will inevitably be interpreted and understood by different members of society in different ways.
All students enjoy certain rights in common, and both internal procedures of colleges and universities and the law are designed to protect such rights. It is hazardous, however, to attempt to devise an overly detailed -- or overly simplified -- list of prohibited and permitted policies, particularly when dealing with the wide variety of complex financial-aid programs that exist in America’s 3,500 institutions of higher education.
As the illustrative questions raised above indicate (and as efforts over many years to close loopholes in the tax code may illustrate even more sharply), a set of instructions designed to correct one problem almost invariably creates other problems.
In fact, our existing (and long-standing) financial-aid arrangements have functioned well -- with whatever tension and sporadic difficulties -- for nearly three decades. Those who wish to change established policies have an obligation, therefore, to present ideas and arguments that would move all of us ahead in pursuit of the important educational goals at stake, not simply threaten existing programs.
In our view, the inevitable campus debates on these questions can be both healthy and effective in producing sensible results. The very sensitivity of these issues and the existence of different points of view are a strong protection. We are very far from advocating a laissez-faire approach, but we begin with the presumption that campuses with a continuing responsibility to design their own programs of financial aid, and to build in safeguards against abuse, can be expected to perform responsibly. Radically new policies should be imposed from outside only when there is compelling evidence that existing programs are clearly inequitable and that new policies will prove to be demonstrably superior in practice.
William G. Bowen, president of the Andrew W. Mellon Foundation, is a former president of Princeton University. Neil L. Rudenstine, the foundation’s executive vice-president, is a former provost at Princeton.