boston.com News your connection to The Boston Globe
Pamela Rojas worked on fund-raising at Boston University late last month. Former scholarship recipients are among the most dependable donors, conventional wisdom holds.
Pamela Rojas worked on fund-raising at Boston University late last month. Former scholarship recipients are among the most dependable donors, conventional wisdom holds. (Evan Richman/ Globe Staff)

Colleges fear debt puts damper on donations

The fund-raising appeals started even before Adam Minsky received his diploma from Boston University six weeks ago. The envelope not so subtly left on his plate at the senior breakfast. The tug on his heartstrings with a request to donate in honor of a favorite professor. E-mails asking the class of 2007 for a token $20.07.

Proud BU grad that he is, Minsky is immune to the message, thanks to his $40,000 in debt.

"I got a great deal with my financial aid, but I'm still paying tens of thousands of dollars," said the Orlando, Fla., native. "And now they want more money? I think it's just ludicrous."

University fund-raisers are increasingly worried over young graduates like Minsky. They fear that with student debt ballooning today, campus coffers may be suffering tomorrow.

Private student loans are growing an average of 27 percent each year, according to the College Board. Almost a quarter of college students are turning to credit cards to help pay tuition, another study found.

University leaders don't expect 20-somethings to be donating millions, but research shows that major donors are almost always people who got in the habit of giving soon after graduation.

A survey of more than 300 young graduates that was released last month found that those who left school with no loans were twice as likely to donate to their alma mater. And those with loans below $20,000 were much more likely to give than those with higher debt, according to the study by two sociologists that was commissioned by American Student Assistance, a Boston-based nonprofit involved in the loan industry.

A growing conflict between debt and donations may expand the chasm between the richest schools and all other schools. A few colleges, such as MIT, Harvard, Williams, and Amherst, can afford to meet the full financial need of all students, thereby keeping the debt of their graduates manageable. Princeton spends some $12 million extra each year to make sure that its financial aid recipients graduate with no loans .

Officials at less wealthy schools worry that the Princetons and the Harvards will have yet another advantage in the future because their graduates will be that much more likely to donate .

"For the rest of us in the food chain, we reduce the pool of people who are able to contribute," said Eileen K. O'Leary , assistant vice president for finance at Stonehill College in Easton.

Conventional wisdom among university fund-raisers holds that former scholarship recipients who become successful in life are among the most dependable donors because they are grateful to the institution and want to lend a hand to the next generation.

"The principle is payback," said concessionaire Joe O'Donnell , a prominent donor who helps raise funds at Harvard and elsewhere. The son of an Everett policeman, he attended the university on a scholarship. "When I'm raising money and I call someone up, I can't wait to ask if they were a scholarship kid."

But at most colleges today, even a financial aid recipient may have to borrow thousands of dollars to cover tuition, as Minsky did. They may feel resentful or overwhelmed.

Scott G. Nichols , BU's vice president for development and alumni relations, is worried not only about the dollar figures that his alumni owe but also what he calls their "psychological debt burden."

"Whether your debt is $200 or $200,000, you don't tend to write checks as long as you have it," he said.

Beyond the payoff of getting alumni into the habit of donating early, colleges need their newer graduates for another reason: US News & World Report rankings. The percentage of alumni who contribute every year counts in the tabulations, while the amount they donate does not.

That alumni giving rate has been languishing nationally, even as the total amount of money colleges raise has climbed. The rate fell from 16.8 percent in 1996 to 11.8 percent in 2006. There are a variety of factors -- besides disaffection -- that may contribute to the drop, including a growing number of living alumni and better recordkeeping.

Several fund-raising officials said their best hope to head off a drop in donations is to raise the alarm now with donors about the need to build endowment for financial aid.

Luckily, they said, financial aid is one of the most popular areas for alumni to contribute. And when it comes to headline-grabbing mega-donations, it has become perhaps the trendiest cause.

In April, 92-year-old alumnus John W. Kluge donated $400 million to Columbia University for financial aid. The media baron was a German immigrant of modest background who credited Columbia with giving him his start in life.

Then in May, the University of Chicago unveiled a $100 million donation, also for financial aid. The anonymous donor wrote in a statement: "I give this gift in the hopes that future generations of students will not be prevented from attending the College because of financial incapacity and may graduate without the siren of debt distracting them from fulfilling unremunerative dreams."

Sidney Frank , the liquor magnate behind Jagermeister and Grey Goose vodka, gave Brown University $100 million for financial aid in 2004, even though he could only afford to attend Brown for one year. (That year was the first time he slept on real sheets instead of flour sacks sewn together.)

Noting that loans generally weren't available to students of previous generations, Nichols mused about whether Frank, who died last year, would have ended up as rich or as grateful if he had left Brown with a degree and a ton of debt.

"The modern version is that instead of dropping out, he would have just borrowed more money," Nichols said. "How would that have affected him and his future philanthropy?"

Minsky got need-based aid and a merit scholarship from BU, but he still had to cover about $10,000 a year. He's glad he didn't go to state school in Florida, where he feels his options would have been more limited.

But his money troubles are just beginning. He's starting law school at Northeastern in the fall, and expects to come out in three years with a total debt of $160,000 -- for a low-paying career in public interest law.

"It'll probably be 30 years before I give anything to BU," he said.

Marcella Bombardieri can be reached at bombardieri@globe.com.

SEARCH THE ARCHIVES