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The Debt Threat
The Debt Threat

The scale of student loan obligations undermines alumni giving

By Brian Daugherty


Sébastien Thibault/agoodson.com for CASE



The value of a college education, long held in the United States as a ticket to prosperity and a sound investment, is increasingly being called into question. Rising tuition, mounting student debt loads, and dim employment prospects—topped off by incessant news coverage and opinion pieces about the three—are causing many to ask whether college is worth the cost. With more and more students re-evaluating their investment in a college education, those of us in advancement should consider the following: How will rising student loan debt affect alumni giving in both the short and long term?

While many undergraduate institutions are wrestling with this issue, the problem is more pronounced for professional schools. Consider law schools, where the average debt load for many exceeds $100,000; for numerous graduates, this balance is on top of loans used to finance an undergraduate degree. One need look no further than the recent class-action lawsuits brought against several U.S. law schools by their alumni regarding allegedly misleading postgraduate employment data to detect the budding resentment among many new graduates.

Today's weak job market contributes to a growing sense of frustration for a multitude of graduates. The job market will eventually recover, but the challenge of appealing to an ever-growing number of graduates with significant debt will remain. The New York Times describes this generation of college graduates as one "hobbled by debt." Significant student loan debt can shape their lives adversely in many ways—such as stalling or thwarting their efforts to buy a house or start a family—and can forever change the way they feel about their alma maters.

Are we naïve to believe that our traditional fundraising methods will appeal to this generation of "hobbled" graduates? We must do more to change students' and alumni's perception about college and the need to support their alma maters by adjusting our messages and by establishing and maintaining a meaningful presence in their lives.

The challenge ahead

Most advancement teams are tasked with increasing alumni participation amid generational shifts that make it more challenging than ever to engage our young alumni. In the past we could rely on loyalty and a sense of pride in our alumni's affiliation with their alma mater. But the millennial generation increasingly views its collegiate experience as more transactional in nature than transformational. Couple this with the unprecedented level of outstanding student debt and it doesn't take a clairvoyant to see that we face an uphill battle in convincing recent and future graduates to give back to their alma maters.

The College Board's Trends in Student Aid: 2011 report details how both the percentage of students taking out loans and the amounts borrowed have risen in the past decade. During the 2010–11 academic year, 34 percent of U.S. undergraduate students took out federal student loans averaging $6,744, compared with the 22 percent who borrowed $5,628 (adjusted in 2010 dollars) a decade earlier. The Project on Student Debt estimates that two-thirds of the undergraduate Class of 2010 graduated with debt; the average debt load, accumulated during four or more years in school, was $25,250.

Many of us are not truly aware of the debt burden our alumni bear. A student who graduates with $50,000 in student loans can expect to pay $575 a month for 10 years (at the normal 6.8 percent interest rate for federal loans before Congress phased in temporary reductions) until those debts are paid. Extending the payback period to 20 years brings the monthly payment to $382. This example illustrates the financial implications of student debt that an increasing number of graduates will face. This debt and other factors stand to have significant effects on annual giving, and research bears this out.

Affirming earlier research that indicates student debt limits graduates' capacity to give, economists Jonathan Meer and Harvey Rosen also note in a 2012 study published by the National Bureau of Economic Research that alumni annoyance with school debt affects their willingness to give. In their 2012 study "Student Loans and Alumni Giving: Who Repays the Loan?," sociologists Margaret Platt Jendrek and Jean M. Lynch found that alumni who lacked help repaying their loans were less likely to give to their alma mater than alumni with benefactors.

Competing messages

Still, many young alumni will continue to support their favorite causes. Three-quarters of millennials made gifts to nonprofits in 2011 and 70 percent raised funds for a nonprofit, according to survey results summarized in the 2012 Millennial Impact Report. However, compared to their parents, millennials are growing up in a world with far greater competition for their philanthropic dollars. There are more than a million nonprofits besieging them with heart-tugging appeals for both local and global causes, such as rescuing animals and aiding disaster victims.

Our recent graduates will be making decisions on how to allocate their limited philanthropic budgets, and we will be much better positioned to garner their attention in this crowded marketplace if we have created a meaningful connection with them. To accomplish this, we need a relationship that stretches beyond direct mail, e-solicitations, and once-a-year calls from students making annual fund appeals.

In today's crowded philanthropic sphere, we advancement officers need to do a better job of telling our stories. Many of our institutions are working on causes that resonate with millennial donors, who want to see the effect of their giving and want greater transparency in how their gifts are used. At the University of San Diego School of Law, for instance, we can focus on highlighting programs such as our legal clinics, the Children's Advocacy Institute, or the Energy Policy Initiatives Center and how they are addressing key societal issues. Through these messages, we can articulate that we are more than just a law school; we are an active player in addressing some of the regional and global issues that students and alumni care about. By supporting our cause, they can benefit their alma mater while simultaneously helping address issues that may resonate with them on a more emotional level.

A meaningful presence

The messages we send are important, but advancement shops must also develop new ways to engage alumni and remain relevant in their worlds. This starts with the student experience, typically the domain of student affairs and career services departments. For advancement teams to thrive, it is essential that we be more visible in the lives of students while they are on campus, and this means more than just running a senior class gift campaign. While we have seen many examples of successful student philantropy education programs and young alumni giving initiatives, the truth is most advancement teams around the country still struggle in this area. A structured and strategic program for engaging students is an increasingly essential element in setting the stage for future support.

At USD Law, such a program is called USD Law Connect. It was launched two years ago by the Office of Development and Alumni Relations to establish a strategic, long-term relationship with our students and foster for them a seamless transition from students to alumni. The program encourages consistent and strategic interaction between alumni and students, and demonstrates that alumni support plays an active role in the student experience.

Building a network

We recruited alumni who volunteered to stay involved with students for the entirety of their legal education. In the first year of the program, 20 committed alumni volunteers were on hand to mentor 320 students. This effort to develop long-term relationships between alumni and students begins with an introductory email from a volunteer welcoming students to the USD School of Law family and outlining the commitment volunteers have made to enhance the student experience. The entering class of students meets with alumni at a reception or luncheon in the first month of classes.

Alumni stay in touch with the students throughout the year, sending them congratulatory notes on achieving certain milestones, like completing their first semester. Alumni share information related to their career paths or offer insights on their experience in law school, telling students what they wish they had known when they were enrolled. All of this helps students understand that our alumni community is there to provide an added value to the more traditional programming that already exists for them.

In the second semester of their first year, students attend a small event hosted by alumni volunteers. The volunteers set the terms for the events, which can be as simple as getting together with a few students for breakfast or a more lavish affair like a catered lunch or dinner for 10 to 20 students. Alumni pay for these events, which provide another opportunity for students to connect with them in a highly personalized manner. Students can also use these interactions to talk to and network with alumni in the area of law they plan to pursue.

This same structure repeats itself for the second and third years of law school. By the time our students graduate, they have had multiple opportunities to build their alumni network, which helps in their job search, and to see firsthand what an active alumni body looks like.

Since the program's first cohort of students has not yet completed its studies, we do not have the quantitative data to demonstrate how this program will benefit our graduating class gift campaign and young alumni giving. We know from our annual survey of students that we are gaining greater awareness of our efforts at an earlier stage in the students' legal education. The year after this program began, the percentage of students who said they are "aware of the Office of Development and Alumni Relations" increased to 83 percent, from 52 percent.

State of awareness

The USD Law Connect program provides an active model of alumni-student interaction and helps the Office of Development and Alumni Relations cultivate a meaningful relationship with students. Through this program we hope to teach our students that their involvement with the law school does not end at graduation. Instead, it begins their transformation from students to active alumni poised to return the favor of giving back to others to ensure that future students have the same opportunities that they received when they were on campus.

It is this type of structured effort that can help better position our institutions when we solicit our recent graduates for support. Yes, many of them will be paying off student loans, but they will graduate with a greater understanding that their alumni network is there for them—and has been there for them. This greater awareness should pay off in the long run through greater affinity, volunteerism, and philanthropy.

About the Author Brian Daugherty

Brian Daugherty is the executive director of the San Diego State University Fund in California.

 

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