Our shop had three new starters from the number 1 university in the country, wondering how long it will take for employers to start diversifying talent pools. Some people cannot afford to go to top tier schools, so I think it is a matter of time before they get some pressure to take on tier 150 candidates.
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The current system clearly produces some negative social outcomes, but I think that it's not even optimal economically.
Employers obviously want talent, and the most elite universities are the most target-rich environments. So when recruiting for roles where talent is critical, it's most efficient for employers to focus on Yale rather than Perdue. That said, I'm pretty sure that some of the people in the top few percentiles of the aerospace engineering school at Perdue would make better junior hedge fund employees than some legacy history major at Yale. But the latter has a more streamlined path to a finance career than the former.
You'd think that some companies would see this as an arbitrage opportunity and put systems in place to attract some of these people. That doesn't seem to happen, though.
Everyone can afford to go to top schools. All these schools have need blind admissions and many have no loan policies. They will pay for your entire tuition with grants.
Upper class - can afford H/Y/S/P
Poor class - tuition waived
Middle class - ...
Things people tell themselves to justify their rejection 101. You can get aid even if you make up to 150-200k. If your income is higher you can take federal loans.
loan repayment is capped at % of income with forgiveness after ~10 years
'Aid' for middle class families is partial at best. Some schools like Yale/MIT/Stanford/UCs give close to nothing (ik middle class kids who got 5-10k off), while there are a couple schools Cornell/Harvard/etc that are more generous with the aid. The extreme best case scenario ik were a few people who got into one of the schools that gave aid and at the end of the day it was like 25k/yr after aid. Those people though had absolutely rockstar resumes, well beyond what most people would have. Those same people got full rides at state school tier schools and turned it down to go to an Ivy. That is their choice, and I respect that but for many people 100k+ (best case scenario) vs $0 ends up requiring them to reject the Ivy and go to the state school. And that $100k is truly best case scenario. Ik middle class kids who got next to nothing and still decided to bite the bullet for $250k+ (I think their parents also assisted with some of the tuition). And these are people I knew directly not something I pulled off the Internet.
You ignored my points around Loan repayment income and term caps.
Every school is probably different regarding financial aid. My nephew went to UPenn. His parents make a lot of money and he got nothing.
I think it's unlikely. For one, really hard to make a claim you can't fulfill diversity from top tier schools alone. Secondly, the only other distinction between a tier 1 school and non-tier 1 school would be a perception of merit, and I cannot see how you can change the perception of merit on the basis of tiers. Third, no one cares about fresh college kids making more money than god (except the hardos on this board), instead of simply a good, solid paycheck, so getting jobs and wages in a more general sense functioning properly is much more important. And, fourth, it's not impossible to break in from a non tier 1 school, anyway.
It's not going to change in the near future. You will see from time to time a non-target work his way up and then when he's boss he'll start to recruit out of non-targets, so long as the non-target is his own alma mater. There is definitely arbitrage opportunity, but no one who matters seems to care enough to take the opportunity. The reality is, people who go into this biz with a strict career path are risk-averse. They are unlikely to take paths less traveled.
I could be wrong, but I've seen at least with IBs, folks have been recruiting diversity candidates with allocated spots for those who don't fit the T1 education spec. It's tough because I saw a lot of kids from H/W who had the most sterling resume's I've ever seen (freshman year internships, research positions with highly regarded professors, leadership positions within fraternities/clubs, other plethora of commendable accolades) but there were always spots for those who maybe didn't have the chance and went to lesser schools or came from underprivileged backgrounds. Obviously these are all extremely subjective situations and it's not to say a really disadvantaged kid couldn't score the aforementioned resume. But generally there has been an increasing mandate to at least look at schools outside the usual Ivy/similar colleges. Again, this is from banking so I know that candidates for PE/HF are held to a higher standard w/r/t prestige but it's a start
I actively ignore coffee chat emails from students at Ivy League schools and never forward their resumes.
the head portfolio manager at my old shop said he checks the address on applicants CV (resume) to check how hard they had to work to get an interview at the firm. i.e. looks for middle class beginnings as it shows work ethic.
What is really the arbitrage opportunity of targeting lower tier candidates? You pay them $50k vs. $75k 1 year out, so you save $25k? It doesn't really make a difference unless you are a small boutique where $50 - $100k here and there makes a difference. It is also unsustainable because if they are truly top talent they will figure out they're being screwed on comp and won't have trouble finding another role, or else you have to catch them up to Street levels.
I didn't mean in monetary terms, I meant that companies are pushing to seem more 'fair'. i.e. diversifying the straight white middle class male pool.
Sorry, I think I responded to you while I intended to comment more generally about the notion of an arbitrage that is floating around the thread.
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