Supreme Court Shifts Stance on Affirmative Action in Higher Education

The world for risk managers changes daily as it does for insurance carriers, underwriters, brokers, and other risk professionals that comprise the commercial insurance ecosystem and the ancillary firms that support the industry. These changes are often shaped by judicial decisions that alter our risk landscape. One such alteration includes the Supreme Court ruling in Students for Fair Admissions, Inc. v. Harvard, which has found it unconstitutional to consider race in higher education admissions decisions. The Court’s ruling stopped shy of saying race absolutely cannot be a factor in the admission process. Instead, the order indicated that race must be tied to a specific character trait or success story that embodies a university’s overall mission to be legally considered in the admissions process.

There is still a lingering question around the propriety of assuming that ‘simply because one shares the same skin color,’ there is also an implied shared set of life experiences. Many minorities would likely agree that there can be an extreme life difference between, for example, someone of African-American descent living in the southeastern portion of the United States versus someone with a similar background located in the northwest part of the country. And yet, when situations such as the tragedy of George Floyd occurred, African Americans throughout the nation expressed a homogenous sigh and associated pang of familiarity. Indeed, it is the tension between these two realities that support the premise expressed in a “Dear Colleague Letter” by officials in the US Department of Justice and the US Department of Education affirming the educational benefits of diversity and pledged support for colleges “that recognize racial diversity is core to their commitment to excellence, and that pursue lawful steps to promote diversity and inclusion.” Furthermore, fulfilling that commitment, the officials wrote, would require “sustained action to lift the barriers that keep underserved students, including students of color, from equally accessing the benefits of higher education.” (Eric Hoover, August 14, 2023)

What’s An Institution to Do?

So, what does this mean for our educational system’s well-intentioned and laudable efforts aspiring to do nothing but maintain our status as a world leader in higher education? The most appropriate action is coordination with your institution’s legal counsel. In the interim, you can use the language within the opinion to evaluate, review, and adjust - if necessary - your school’s admissions process.

Creating Measurable Admissions Metrics That Match Your Surrounding Community

Chief Roberts noted that “training future leaders in the public and private sector” and “promoting the robust exchange of ideas” were too vague as measurable goals.ⁱ This compels at the least the consideration of quantifiable metrics that can take race into account. Consider an admissions policy that states the purpose of having a student body population that correlates, at a minimum, to the ethnic diversity of your city, state (or other geographically based restriction) as identified in the most recent census.

Creating an Automatic Periodic Policy Review Process

Chief Roberts noted that the University of North Carolina and Harvard admissions policies have no “logical end point.”ⁱⁱ Establishing a periodic review of the admissions practices would seem to suggest that institution can avoid contravening this point by, for example, reviewing the admissions results every 10 years to see if it aligns with an institution’s stated missions. Although 10 years may seem extended, it dovetails into a coordinated plan when aligned with the suggested census metric above – the arc of societal change also tends to be measured from decade to decade.

Creating Admissions Goals That Allow for Certain Traits Concerning Race-Conscious Initiatives

Chief Roberts noted that perseverance through race-based discrimination, demonstrating “a student’s courage and determination” was an acceptable goal. Even scenarios inspiring an applicant to develop leadership aspirations in a “unique [way] to contribute to the university” was likewise permissible. While it is a bit uncertain, consider establishing an admissions policy that places a premium on narratives that illustrate courage and determination. Further, identifying specific leadership traits the university wants to espouse could align well. This meets the strict scrutiny compelling the court to disallow “racial stereotypes” inherent in the assumption that shared skin color automatically means shared life experiences.ⁱⁱⁱ

Applying the Ruling to Insurance and Risk Management

There are several considerations, though, from the perspective of insurance and risk management. Let’s look at a few:

Loss History

Do you have any previous litigation alleging discriminatory practices by your institution, particularly in admissions, within the last three to five years? If so, what measures have you implemented to improve the admissions process for your applicants? If you have experienced litigation and have a loss sensitive program, then you need to discuss your admissions process, end to end, based on the context of historical reasons for litigation.

Underwriting Strategy

No one understands or can tell your story like you do. The risk manager still reigns supreme when it comes to demonstrating your institution’s values and operational environment. This may be the year for a deeper dive. Initiating risk identification methods such as questionnaires, expert analysis, benchmarking, and other research tactics can help you present your story with conviction and transparent clarity.

Leadership Support

As a risk manager, part of your role is to influence your organization to ensure the greatest level of stability and lowest impact from litigation and claims. There is your relevant cost of risk that is transferable and what you may or may not need to do to secure manageable future renewals. It begins with research. Articles, conversations, current practices, litigation history (your own and broadly across your industry and the insurance market as a whole), and any other ancillary, relevant information that can help you inform your organization.

Legal Decisions

Finally, we strongly urge consideration of what the Court’s opinion did not address by providing you with some provocative questions about what may be coming.

The Students for Fair Admissions ruling concerns race-based admissions. How does that ruling impact targeted outreach, recruitment, and pathway programs? Many scholarships are based explicitly on race as a minimum criterion, if not specific, factor in selecting the successful candidate, arguably close to the same issues underlying the rationale behind the Court’s opinion regarding admissions. Could financial scholarships soon face the same scrutiny?

Another consideration of significant focus is legacy preferences (and associated decisions) and the treatment of alumni. Considering the removal of affirmative race-based action in admissions might cause some institutions to reconsider legacy-based admissions, now ripe for attack because those decisions can suggest preferential treatment that disproportionately benefits students from wealth and are White. Per the Court’s ruling, preference that can be linked solely to the color of one’s skin can be unconstitutional. In fact, on the heels of the recent Supreme Court ruling, a lawsuit was filed against Harvard by a Boston-based non-profit, Civil Rights, raising this very issue.^iv

New Risks to Add to an Overflowing Plate

In conclusion, while race-based admissions and affirmative action are extremely important concerns of the day, they should be considered within an overall enterprise risk management view and strategy. Risk managers today still need to focus on what is driving their current losses and the existing challenges they face. The largest losses remain in certain key areas, including but not strictly limited to the following:

This is a partial list, but it demonstrates that being a risk manager in today’s higher education environment is complex. Yesterday’s risks are growing in settlement values today, and the risk landscape continues to evolve and shift in ways that are not necessarily clear and transparent. Litigation around admissions is a reality and factors into underwriting decisions around Educators’ Legal Liability. Carrier relationships and upcoming underwriter meetings will likely experience a shift in focus. We are all on a learning curve together.

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