Student Debt and Alumni Giving

Transcription

1 American Student Assistance Report on Student Debt and Alumni Giving

2 Prepared by: Drs. Margaret Platt Jendrek and Jean M. Lynch Department of Sociology and Gerontology Miami University, Oxford, OH

3 Table of Contents Letter From the President 2 Overview Student Debt and Alumni Giving 3 About This Research 3 Context 4 Summary of Major Findings 4 Recommendations 7 Appendices Research and Results 11 Appendix A: Research Method 12 Appendix B: Detailed Research Results 13 Demographics of Givers Sources of Scholarship/Grant Monies Perceptions About Debt Current Finances Giving Behavior Financing Education To Contribute or Not to Contribute? American Student Assistance

4 Letter From the President Dear Colleagues: American Student Assistance s mission is to help students manage their education debt successfully. In support of our mission, we have sponsored the following research, which examines the impact of student loan debt on alumni giving. Our goal was to gain insight on the role higher education institutions play in assisting borrowers to effectively cope with their education debt, as well as on how the guarantor can assist the school in carrying out this role. The study revealed several important facts about the student loan process. First, schools have a crucial role to play in students perceptions and management of their debt. Second, students desire and demand more thorough and universal training regarding the loan process and financial literacy education in general. Third, these students impressions of their schools offices, and of their effectiveness in matters such as financial literacy training, directly affect students proclivity to contribute as alumni. Today the majority of federal student aid consists of loans. Therefore, debt management training should exist as part of the federal student aid program. As this study shows, students have a limited understanding of their loan obligations and feel poorly equipped to manage their repayment. ASA believes that guarantors possess a unique ability to fill this need for debt management education. As impartial organizations that interact with borrowers throughout the life of the loan, guarantors may guide borrowers through the lending process with the support and knowledge they need. We hope you find this research as enlightening as we have. Sincerely, Paul Combe President and CEO American Student Assistance 2 Report on Student Debt and Alumni Giving

5 Overview Student Debt and Alumni Giving About This Research This study used two sets of data to examine student debt. One data set consisted of alumni from ASA s files, and the second data set drew alumni from a medium-sized, public, Midwestern university (herein known as MWU) with approximately 16,000 undergraduates, who graduated with a bachelor s degree in the and the academic years. The selected respondents (2,080 from the ASA data and 2,000 from MWU) were sent a 13-page questionnaire, yielding response rates of 7.8% and 19.9% for ASA and MWU, respectively. The characteristics of the respondents reflect, for the most part, the characteristics of the populations from which they were drawn. American Student Assistance 3

6 Overview Context The cost of a college education in the United States is rapidly increasing at a rate greater than inflation. At the same time, colleges and universities are experiencing reduced or flat external funding. Simultaneously, as these funding sources, such as state appropriations, revenue from endowments, or federal grants, remain static or are reduced, the costs associated with a college or university, such as health care, computer security, and technology, increase. The 1992 Reauthorization of the Higher Education Act raised loan limits for the Stafford loan program, expanded eligibility for need-based aid, and introduced unsubsidized Stafford loans for undergraduates regardless of their financial need. Adjusting for inflation, the federal loan volume for undergraduate and graduate borrowing increased by 35% the first year after the change (i.e., to ). Between and , it grew from $20.7 billion (in constant 2002 dollars) to $49.1 billion, an increase of 137%. Though slightly less than half (49%) of bachelor degree recipients borrowed money to finance their education in , this figure increased to almost two-thirds (65%) in , and borrowing increased among all the demographic categories of students (e.g., females, males, Blacks, Whites, Hispanics). As a result, U.S. students are facing the highest financial burden due to college loan repayment in history. At the same time, colleges and universities are experiencing reduced or flat external funding from sources such as state appropriations, revenue from endowments, or federal grants. The intersection of these factors begets the need to understand how student debt influences alumni giving. Summary of Major Findings Alumni Giving Approximately one-fourth of the respondents contribute to their alma mater. (24.4% for the ASA sample and 21.1% for the MWU sample) Demographics and Alumni Giving Recent graduates are less likely to contribute to their alma maters than earlier graduates. (Both samples) Alumni giving tends to vary by major. Graduates who majored in business and engineering are more likely to contribute to their alma mater than alumni who majored in other disciplines. (MWU sample) Graduates currently enrolled in a full-time graduate school program are less likely to contribute to their alma mater. (MWU sample) Graduates in marriage/partnership relationships are more likely than single people who are more likely than divorced/separated alumni to contribute to their alma mater. (Both samples) Alumni giving tends to vary by race; non-whites are more likely to contribute to their alma mater than Whites. (MWU sample) Financing One s Education and Alumni Giving Student Work Experience The data suggest that working for pay during the academic school year tends to decrease alumni giving (MWU sample). The relationship between working for pay during the academic school year and decreased alumni giving is more pronounced among those who did not borrow money to fund their undergraduate education. (MWU sample) 4 Report on Student Debt and Alumni Giving

7 Loans Who assumes responsibility for the repayment of undergraduate loans may be more important in predicting giving behavior than whether debt was incurred; graduates responsible for their own loan repayment are less likely to contribute to their alma mater than graduates who either have no loans or are not responsible for their loan debt repayment. (MWU sample) Loan Amounts Respondents with higher loan amounts were less likely to contribute to their alma mater than those with lower loan amounts. (ASA sample) The amount of monthly undergraduate loan debt repayment influenced alumni giving; alumni with higher monthly undergraduate loan debt repayments are less likely to contribute to their alma mater than those with lower monthly debt repayments. (MWU sample) Perceptions About Debt and Alumni Giving The Impact of Debt on Life Plans Alumni are more likely to delay professional life choices (graduate school and career plans) than personal life choices (marriage and children) because of their undergraduate student debt. (Both samples) Understanding Undergraduate Student Loans and the Debt Incurred A majority of alumni agreed with the following statements: 1) Students who borrow money should receive financial counseling ; 2) College students should receive more information about loan repayments ; and 3) When I borrowed money to complete my undergraduate degree, I had only a vague idea about the amount of debt I was incurring. (Both samples) These data suggest that alumni who believe that students who borrow money for college should receive financial counseling are less likely to contribute to their alma mater than alumni who disagreed with the statement. (ASA sample) Is the Debt Worth It? Most alumni believe that the amount they borrowed to fund their undergraduate education was well worth their intellectual and personal growth. (Both samples) Alumni who believe that the amount they borrowed was well worth their intellectual growth were more likely to donate to their alma maters than those who did not share this belief. (Both samples) Alumni who believe that the amount they borrowed was well worth their personal growth were more likely to donate to their alma maters than those who did not share this belief. (Both samples) Feelings of Burden Alumni who agreed with the statement, I feel financially overburdened because of repaying my undergraduate college loans were less likely to contribute to their alma mater than those who disagreed. (MWU sample) Alumni who agreed with the statement, My loan repayments cause me more hardship than I anticipated were less likely to contribute to their alma mater than those who disagreed. (MWU sample) Alumni who agreed with the statement, If I had to do it all over again, I would choose a less expensive college were less likely to contribute to their alma mater than those who disagreed. (MWU sample) Current Finances Current salary tends to influence alumni giving; graduates with higher salaries are more likely to contribute to their alma mater than lower salaried graduates (both samples). The association between salary and alumni giving was more pronounced among the MWU graduates than among the MWU graduates. (MWU sample) Alumni enrolled in graduate school are less likely to contribute to their alma mater than those not currently enrolled. (MWU sample) An index of debt understanding indicates that most alumni misunderstand their debt. (Both samples) American Student Assistance 5

8 Overview Involvement With One s Alma Mater As an Undergraduate Alumni who are more intensely involved in activities/ organizations are more likely to contribute to their alma mater. (Both samples) The pattern of giving by intensity of participation held only for graduates who did not have undergraduate debt repayment responsibility. (MWU sample) Perceptions About One s Alma Mater Most alumni believe that their alma mater provided them with an excellent education, quality classes, personal growth, pride in their alma mater, a social life, career preparation, and an easy integration into college life. (Both samples) Less than half of the respondents claimed that their alma mater s financial aid office provided them with helpful information in all service areas. (Both samples) Less than half of the graduates found their alma mater s career planning and placement services satisfactory. (Both samples) Graduates who state that their undergraduate education prepared them for their chosen career are more likely to contribute to their alma mater than alumni who do not share that belief. (Both samples) Perceptions About Services/Resources and Alumni Giving Satisfaction with the helpfulness of the financial aid office in terms of debt management information tends to increase alumni giving. (Both samples) Among those who participated in the study abroad program, satisfaction with that program tended to increase alumni giving. (MWU sample) Reasons Not to Contribute (Asked only of alumni who did not contribute) I feel no desire to contribute to my alma mater. 49.0% ASA agree and 25.3% MWU agree If my budget allowed, I would contribute to my alma mater. 41.7% ASA agree and 46.4% MWU agree Alumni who assume responsibility for their own debt repayment are less likely to agree with this statement. (MWU sample) I am waiting until I have more money before I contribute to my alma mater. 35.4% ASA agree and 55.3% MWU agree Alumni who assume responsibility for their own debt repayment are less likely to agree with this statement. (MWU sample) I intend to contribute to my alma mater. 18.8% ASA agree and 45.4% MWU agree Alumni who assume responsibility for their own debt repayment are less likely to agree with this statement. (MWU sample) Once my college loans are paid, I intend to contribute to my alma mater. 17.7% ASA agree and 37.4% MWU agree Satisfaction with the helpfulness of the financial aid office in terms of explanation of loan repayment plans tends to increase alumni giving. (MWU sample) Satisfaction with the helpfulness of the financial aid office in terms of an explanation of loans tends to increase alumni giving. (MWU sample) 6 Report on Student Debt and Alumni Giving

9 Colleges and universities should recognize the relationship between students debt burden and their satisfaction with their education, financial solvency, and inclination to participate in alumni giving. Recommendations This research indicates student debt has profound repercussions on borrowers mindsets and behavior, including their propensity toward alumni giving. At a minimum, this indicates that alumni fundraising requires active cooperation among a college or university s Alumni Affairs Office, its Career Planning/Placement Office, its Financial Aid Office, its Student Life Office, and its faculty. Although the recommendations are presented office-by-office, the most important recommendations are that colleges and universities recognize the relationship between students debt burden and their satisfaction with their education, financial solvency, and inclination to participate in alumni giving use a system-wide approach to generating gifts from alumni American Student Assistance 7

10 Overview The Financial Aid Office This research indicates that the Financial Aid Office could and should play an important role in college and university fundraising. Although the Financial Aid Office may not actively seek funds from alumni, these data indicate that alumni satisfaction with this office tends to increase alumni giving. After all, students who borrow money (or contemplate borrowing money) to fund their undergraduate education need to learn about all aspects of borrowing. In addition to knowing about the amount of debt they are accumulating, students also need to know about the incomes they will need to earn in order to maintain a manageable debt burden, repayment plans, and deferment possibilities. So, here too, a college or university office has the ability to develop and expand programs that help students, which in turn helps the college or university. What services do Financial Aid Offices need? Such an assessment should include whether sessions routinely offered by the Financial Aid Office guide students through the availability and eligibility requirements of different forms of student scholarships and loans help students (and perhaps prospective students) understand how to actually apply for these scholarships/ loans (including sessions on how to complete forms such as the FAFSA form) compare the different types of loans in terms of costs and repayment options (this includes borrowing on credit cards or bank loans) explain how to plan for the repayment of loan debt depending upon one s starting salary assess the need and possibilities for loan deferments explore the implications of borrowing various amounts of money for one s future economic health If these sessions are routinely offered, but few students attend, the Financial Aid Office needs to rethink the structure of its programming. For example, must informational sessions take place in the Financial Aid Office, or can these sessions be held throughout the semester in different residence halls? Or, can some information be made available to students through library videos or online computer presentations? Should some sessions be required of all graduating seniors who have loans (e.g., sessions on repayment plans and/or deferment of repayments)? Colleges or universities need not run these sessions by themselves. Agencies such as ASA welcome the opportunity to help Financial Aid Offices educate undergraduate students about their loans to help reduce loan default rates. Alumni borrowers may serve as another resource for the Financial Aid Office. This research clearly attests to student misinformation about debt and the need for students to be better informed about the implications of loans when they incur that debt. Alumni borrowers may serve as mentors to undergraduate borrowers; this mentorship may enable student borrowers to really talk with someone who has been there and thereby gain advice from a successful borrower. In addition to the above, we recommend periodic assessments of students perceptions about the quality and range of services offered by the financial services office. Consequently, the Financial Aid Office must develop strategies that provide students with information and assistance related to availability, eligibility, and application procedures for loans and grants/scholarships. Moreover, it is crucial that Financial Aid Offices provide information using mechanisms that ensure that students hear the message on all aspects of debt including how debt influences student financial well-being after graduation. The Career Planning and Placement Office This research indicates that alumni giving is related to graduates salaries and satisfaction with the services offered by their alma mater s Career Planning/Placement Office. Therefore, it is in the interest of both students and their college or university to help students attain jobs/internships that provide them with discretionary income, income that could be donated to the college or university because of their positive experiences with the Career Planning/Placement Office. 8 Report on Student Debt and Alumni Giving

11 Based on these data, Career Planning/Placement Offices need programs that reach students in all disciplines. Reaching out requires the Career Planning/Placement Office to actively work with all the academic departments on their campus. Career Planning/Placement Offices need to know (or learn) and constantly update the skills and talents acquired by the different majors and/or minors on their campus how those skills and talents link to the skills and talents desired by employers currently recruiting on-campus how to attract new recruiters to campus to employ students based on the talents/skills of current majors the successes of alumni in the various majors and their career trajectories/outlets This means that Career Planning/Placement Offices need to become active advocates for all the academic majors in order to pair students with a diverse set of employers (e.g., businesses/corporations, private/public foundations, community interest groups). This also means that Career Planning/Placement Offices need to educate potential employers. For example, social science majors with strong research skills could and should be interviewed for some positions previously defined as business majors only need apply. Since alumni giving is tied to satisfaction with career planning and placement services, Career Planning/Placement Offices need to be able to answer the following types of questions: Who does the Career Planning/Placement Office serve? Does the Career Planning/Placement Office currently serve all majors, or does it focus on only a few marketable majors? Are departments (e.g., departmental chairs and/or their designees, undergraduate advisors, departmental club advisors/leaders) aware of the resources available at the Career Planning/Placement Office? Are there regular communications between the Career Planning/Placement Office and departments to update this office on the skills and talents acquired by majors? What types of programs help students find their first job? How does the Career Planning/Placement Office communicate with students and is that form of communication the most effective for working with students? Are students periodically surveyed (both the users and non-users of this office s services) to learn about their awareness and use of the resources/services provided by the Career Planning/Placement Office? How satisfied are users and what services/resources would improve their level of satisfaction? What services/resources do faculty and alumni suggest need inclusion in the Career Planning/Placement Office? Office of Student Life This research indicates that successful involvement with one s alma mater as an undergraduate significantly influences alumni giving. Students who develop feelings of belonging and who feel a sense of community and pride in their college or university are more likely to participate in college or university programs/activities as undergraduates and in alumni associations when they graduate. These alumni are more likely to contribute to their alma mater. Therefore, the Office of Student Life needs to continually examine the types of activities/programs available at their institution and the best mechanisms for engaging students in these programs. An organization/activity fair at the beginning of the academic year may not be the most useful point of entry as first year students struggle to acclimate to college life. Perhaps a beginning and mid-semester fair would do more to encourage participation as students negotiate the semester and learn about their free time. Alumni Affairs Office The task of fundraising is often left to the Alumni Affairs Office. This research indicates that alumni giving is more likely to occur when alumni are involved with their alma mater. Consequently, this office may best serve the college or university by trying to increase alumni participation in reunions and alumni club memberships. Alumni could be randomly called (so that one is not simply relying on the already active alumni) to join and/or attend reunions. Support should be given to faculty to attend these city reunions to cultivate alumni activities and giving. Successful alumni from the various majors could be invited to talk about their experiences with current students in a showing off our alumni day. Key in all of these recommendations is the involvement of alumni with their undergraduate institution; involved alumni are more likely to contribute than uninvolved alumni. American Student Assistance 9

12 Overview This research indicates that many alumni feel burdened by their student loan repayment and believe that whatever I could contribute to my alma mater seems insignificant. Colleges and universities need to educate their alumni about the importance of all contributions, regardless of size. Colleges or universities that send blanket forms to all alumni requesting gifts may alienate recent graduates and/or lower salaried graduates if the form contains giving categories (e.g., $50, $100, $150). The categorization scheme may send an unintended message to alumni; if you cannot give at least $50, do not send anything. Perhaps fundraising with recent graduates or graduates of departments who tend to have lower salaries should omit all categories and contain letters that clearly indicate the importance of even $10. Faculty: An Overlooked Resource in Alumni Fundraising Faculty could and should be viewed as a major, often untapped, resource for increasing alumni participation. Faculty could routinely draft letters to alumni updating them about on-campus events including program changes, upcoming reunions, or lectures of interest to the particular alumni. Academic departments can be asked for the names of the students who assumed leadership roles in departmental clubs or research. These alumni could be invited to campus to attend reunions with special invitations from the faculty with whom they worked. In addition, these alumni could be asked to give talks to departmental clubs about life after college. 10 Report on Student Debt and Alumni Giving

13 Appendices Research and Results Appendix A Appendix B American Student Assistance 11

14 Research Appendix A: Overview This study drew samples from two distinct databases and surveyed the members of the two samples via a mailed questionnaire. One database accessed alumni data from the files of ASA and the second data set drew alumni data from a medium-sized, public, Midwestern university (herein known as MWU) with approximately 16,000 undergraduates. We requested that both ASA and MWU select students who graduated with a bachelor s degree in the and the academic years. The survey was mailed to the selected samples during August/September 2006 and a second follow-up mailing was sent during October/ November Some General Comments It should be noted that statistical significance is more difficult to obtain with a small sample than with a large sample; small differences become significant with large samples, whereas larger differences may not attain significance with small samples. Thus, in the following analyses, tables are typically provided for statistically significant findings only (p.05). In several instances, however, we also discuss relationships that are close to significance, as these findings are suggestive of noteworthy patterns/trends in the data. 12 Report on Student Debt and Alumni Giving

15 Appendix B: Detailed Research Results This section of the report compares the ASA and MWU findings and links these findings to the literature. Demographics of Givers The two samples demonstrate similar levels of alumni giving (24.4% of ASA and 21.2% of MWU). Year of graduation influences alumni giving; those who graduate earlier are more likely to donate to their alma mater than more recent graduates. In addition, engineering and business MWU alumni are more likely to give than their counterparts in either education and allied professions or arts and sciences. Both findings are consistent with past research that suggests that alumni giving increases with length of time since graduation (Clotfelter, 2001) and major (Marr, Mullin and Siegfried, 2005). Perceptions About Debt Borrowing for a college degree has become normative (Choy and Li, 2005). Borrowing and plans for repayment rest on the assumption that the student will graduate and secure employment at a salary that allows for debt repayment. Table 2 presents respondents perceptions about their debt and the consequences of that debt. Almost all respondents (97.1%) agreed with the statement Students who borrow money for college should receive financial counseling. Sixty-seven percent agreed with the statement: When I borrowed money to complete my undergraduate degree, I had only a vague idea about the amount of debt I was incurring. American Student Assistance 13

16 Results Table 1: Perceptions About Debt Variable ASA MWU Understanding debt Students who borrow money should receive financial counseling College students should receive more information about loan repayments I had only a vague idea about the amount of debt I was incurring 97.1%** 89.1% NS 66.7% who disagreed 22.5% who agreed 87.9% NS 83.6% NS 67.3% NS 63.0% NS Index of debt understanding NS NS Was it worth it? The amount borrowed was well worth the intellectual growth The amount borrowed was well worth the personal growth Obtaining a college degree is worth any amount borrowed I believe you should attend the best school that accepts you regardless of cost Feelings of burden My loan repayments cause me more hardship than I anticipated I feel financially overburdened because of repaying my college loans I experience a great deal of discomfort because of repaying my college loans 72.8% *** 29.3% who agreed 10.7% who disagreed 72.8% *** 13.4% who agreed 0.0% who disagreed 68% NS 71.7% *** 13.6% who agreed 0.0% who disagreed 38.5% NS 38.0% NS 27.6% NS 35.8% NS 59.3% NS 49.0% ** 15.2% who disagreed 4.4% who agreed 56.4% NS 43.5% *** 16.0% who disagreed 2.5% who agreed 43.6% NS 31.5% Index of burden NS NS If I had it to do all over again, I would borrow less than I did 59.4% NS 40.3% NS I would borrow the same amount 54.6% NS 58.7% NS I would choose a less expensive college 35.6% NS 22.9% ** 13.4% who disagreed 0.0% who agreed Index NS NS *** the variable had a statistically significant effect on alumni giving ** the variable approached a statistically significant effect on alumni giving NS the variable did not significantly influence alumni giving 14 Report on Student Debt and Alumni Giving

17 In accordance with Baum and O Malley (2003), we found that most ASA and MWU respondents did not alter their plans for marriage or children because of their debt. That said, a moderate percentage (25% to 40%) of borrowers reported changing graduate school and/or career plans because of their loans. Findings about undergraduate debt and feelings about this debt demonstrated a vague awareness about the debt being incurred. Alumni in both samples indicate the need for the financial counseling of student borrowers. ASA and MWU respondents agreed their education was worth the financial hardship of borrowing money. This was true even among alumni who assumed complete responsibility for the repayment of their own debt (see Table 1). In looking at the worth of it, we found a difference between the way graduates think about borrowing and the worth of their own education versus borrowing and the worth of education more generally. Whereas students who borrowed money tended to appreciate the intellectual and personal growth that their college experience provided them, they did not think that generally speaking a college degree was worth any amount borrowed. These alumni seem to suggest that students should not choose a college regardless of cost. A number of items asked about the respondent s perception of debt. The questions in this section can be categorized into the following: 1) the impact of debt on life plans (for example, marriage and career); 2) understanding of student loans and incurred debt; 3) an assessment of debt amount compared to the worth of a college education; and 4) the experience of hardship due to incurred debt for one s undergraduate education. Life Plans: ASA Sample Alumni were asked if their college loans altered their plans for marriage, children, graduate school, or career. Twofifths (40.4%) of the ASA respondents said they postponed graduate school because of my undergraduate loans. Approximately one-fourth (25.9%) of the alumni said they changed their career plans due to their college loans. Professional plans (graduate school and career) were more likely to be altered than personal plans, like marriage and children. Fewer than one-fifth (15.2%) postponed having children and 10.6% delayed marriage because of my college loans. None of the altered plans influenced alumni giving. People who delayed marriage or children or changed career or plans for graduate school were not statistically different in alumni giving than were those who said they had not changed plans due to repaying their school debts. An Index of Plans: We constructed an index based on the number of plans a respondent reported changed because of debt. The index ranged from 0 (for those who altered no plans) to 4 (respondents who reported changed plans for marriage, children, graduate school and career). More than one-half (53.5%) of respondents had not altered any of their plans because of their undergraduate debt. Only 10 (6.9%) altered 3 or 4 life choices because of their loans. The index was not linked to alumni giving. Alumni who were personally responsible for repaying some or all of their loans were asked a series of questions about their perceptions about that debt and the effect that debt had on some of their life choices. Approximately one-fourth (24.4%) of MWU alumni indicated that they had assumed responsibility for the monthly repayment of some portion of their undergraduate student loans. The findings described in this section are based on the analyses of these 92 alumni. Life Plans: MWU Sample Alumni who assumed responsibility for repaying their college debt were asked whether their college loans altered their marriage plans, their career plans, their graduate schools plans, and/or their decision to have children. Two-fifths (40%) said they postponed graduate school because of their student loans; almost one-fourth (24.1%) said they postponed having children because of student loans;16.9% said they changed career plans because of student loans; and 11.5% said they delayed marriage because of student loans. None of these altered plans influenced alumni giving. For example, people who postponed graduate school were not statistically different in their giving behavior than were those who said that their loans had not altered their graduate school plans. Only five respondents (5.4%) said that three or four of their life plans were altered because of their loans. This index, number of altered life events, had no statistically significant effect on alumni giving; graduates who changed two plans, for example, were no more likely to contribute to MWU than those who said they changed no plans because of loans. Understanding One s Loan: ASA Sample Three questions asked about the respondent s understanding of student debts. Almost all respondents (97.1%) agreed with the statement Students who borrow money for college should receive financial counseling. More than four-fifths (87.9%) agreed with the statement College students should receive more information about loan repayments. When asked, When I borrowed money to complete my undergraduate degree, I had only a vague idea about the amount of debt I was incurring, 67.3% answered affirmatively. American Student Assistance 15

18 Results In general, the data support the respondent s belief about the need for greater information and counseling about loans and repayment based on the confusion they experienced when they borrowed money to complete their undergraduate degree. The relationship between believing that students need financial counseling and alumni giving approached statistical significance (p =.077). Two-thirds (66.7%) of those who disagreed with the need for financial counseling contributed to their alma mater as opposed to less than one-fourth (22.5%) who thought counseling was necessary. Similarly, alumni who said students needed more information about loans and debt repayment were less likely to give than alumni who said no additional information was necessary (20.2% versus 38.5%, respectively). However, this relationship was not statistically significant. There was no significant relationship between understanding the debt one was incurring and alumni giving. An Index of Debt Understanding: We constructed an index of debt understanding using the three previously described variables. The index scores ranged from 3 (the respondent strongly agreed that he/she did not understand his/her own debt, strongly agreed that students need financial help, and strongly agreed with the need for financial counseling) to 12 (students understood their own debt, and did not agree with the need for more information or for financial counseling). More than half (53.6%) of those answering the question scored 5 or less, which indicates some confusion about one s loan debt. The highest score was 9. The lack of scores from 10 through 12 indicates that nobody totally understood their loan debt. This frequency distribution strongly suggests that alumni were not clear about their educational loans at the time they incurred their debt. Moreover, they believe that students need both financial counseling and information about loan repayments. Understanding One s Loans: MWU Sample Three questions were asked to examine alumni s understanding of their loans. Almost all (89.1%) of the alumni responsible for repaying some or all of the loans agreed with the statement Students who borrow money for college should receive financial counseling. An overwhelming majority (83.6%) agreed with the statement College students should receive more information about loan repayments. Approximately two-thirds (63%) of those responsible for repaying some or all of their undergraduate debt agreed with the statement When I borrowed money to complete my undergraduate degree I had only a vague idea about the amount of debt I was incurring. Thus, alumni were unclear about the amount of debt that they were incurring and they believe that students need help in understanding loans and loan repayment. These factors did not, however, significantly influence alumni giving. MWU alumni tend to be confused about the meaning and implications of their debt; half of the graduates scored at 5 or below on the Index of Debt Understanding. This distribution indicates that no alumni felt completely in control of their debt. However, this index of alumni understanding of debt was not associated with alumni giving. Was It Worth It?: ASA Sample Alumni were asked whether the amount they borrowed to finance their education was worth it in terms of their personal and intellectual growth. They were also asked more generally about the worth of a college education in reference to student loans. Almost three-fourths (72.8%) of the alumni said The amount I borrowed for my undergraduate education was well worth the intellectual growth I achieved during my years in college. More than two-thirds (68.0%) agreed with the statement, The amount I borrowed for my undergraduate education was well worth the personal growth I achieved during my years in college. Fewer alumni (38.5%) agreed with the more general statement, Obtaining a college degree is worth any amount of money a student has to borrow. Slightly over one-quarter (27.6%) agreed with the item I believe that you should attend the best school that accepts you regardless of cost. Responses to these items reveal that alumni believe they got their money s worth and are satisfied with the personal and intellectual growth they acquired. On the other hand, graduates are reluctant to allege that a college degree is so valuable that any amount of debt is reasonable to attain it or that cost should be disregarded in choosing a school. In addition, the four items measure different aspects of worth; two of the items relate to the respondent s own sense of growth, while the two items with the lowest levels of agreement relate to their perceptions about a college education in general. 16 Report on Student Debt and Alumni Giving

19 There is a statistically significant relationship between alumni giving and agreement with the statement The amount I borrowed for my undergraduate education was well worth the intellectual growth I achieved during my years in college. Alumni who felt their debt was worth the intellectual growth they achieved in college were almost three times as likely to contribute to their alma mater than were graduates who did not agree (29.3% versus 10.7%, respectively). There were no statistically significant associations between the other three items and alumni giving (nor did they approach statistical significance). Nevertheless, the results provide some interesting trends between beliefs about the worth of education and alumni giving. For example, alumni who believed that their personal growth was worth the debt they incurred were more likely to contribute to their school than were those who disagreed with that statement (26.5% versus 15.6% contributed). Similarly, those who agreed with the statement, Obtaining a college degree is worth any amount of money a student has to borrow were more likely to donate than were those who disagreed (28.6% versus 19.4%, respectively). In contrast, alumni who disagreed with the statement I believe that you should attend the best school that accepts you regardless of cost were almost twice as likely to contribute to their alma mater as were those who agreed with the statement (28.2% versus 14.8%, respectively). Was It Worth It?: MWU Sample Most graduates (72.8%) agreed with the statement The amount I borrowed for my undergraduate education was well worth the intellectual growth I achieved during my years in college. Similarly, most graduates (71.7%) agreed with the statement The amount I borrowed for my undergraduate education was well worth the personal growth I achieved during my years in college. When phrased more generally, approximately one-third (38%) of the alumni agreed with the statement Obtaining a college degree is worth any amount of money a student has to borrow. Similarly, approximately one-third (35.8%) agreed with the statement I believe that you should attend the best school that accepts you regardless of cost. It seems that MWU alumni perceived their growth as worth the debt they incurred and were less certain that an undergraduate education, in general, was worth any amount of debt. Attitudes about intellectual growth influenced alumni giving. Only alumni who agreed with the statement The amount I borrowed for my undergraduate education was well worth the intellectual growth I achieved during my years in college contributed to MWU (13.4% of those who agreed versus 0% for those who disagreed). Thus, there is a relationship between alumni giving and agreement with the statement The amount I borrowed was well worth the intellectual growth among alumni who assume responsibility for repaying some or all of their loan debt. Feelings of Burden: ASA Sample Three statements were used to examine respondents feelings about their debt and how those feelings influenced alumni giving. The statements were: 1) My loan repayments cause me more hardship than I anticipated ; 2) I feel financially overburdened because of repaying my undergraduate college loans ; and 3) I experience a great deal of discomfort because of having to repay my undergraduate debt. More than half agreed with the first and second statements (59.3% and 56.4%, respectively). A somewhat lower percentage (43.6%) agreed with the final statement. Responses to these statements were not associated with alumni giving. Index of Burden: We constructed an index of burden using the three previously described items. Index scores could range from 0 (they did not agree with any item) to 3 (they agreed with all three of the burden items). Almost half the respondents (44.8%) scored 2 or 3 on the index of burden, demonstrating that they agreed with at least two of the burden statements. A similar percentage (42.5%) received a score of 0 indicating that they did not agree with any of the burden statements. The index did not influence alumni contributions. Amount Borrowed: Respondents were asked their feelings about the amount of money they had borrowed for their undergraduate education via the following three statements: 1) If I were to apply for undergraduate loans today, I would borrow less than I did ; 2) If I had to do it again, I would borrow the same amount in order to pursue my degree ; and 3) If I had to do it all again, I would choose a less expensive college. Results indicate that more than half (59.4%) agreed with the first statement, a similar amount (54.6%) agreed with the second statement, and approximately one-third (35.6%) of the alumni agreed with the third statement. None of the items significantly influenced alumni giving. However, those who said they would borrow the same amount of money to fund their undergraduate education were twice as likely to engage in alumni giving as those who would not borrow the same amount. We constructed a two-item index using the items referring to borrowing less and choosing a less expensive school. The index ranged from 0 to 2 where 0 indicated the respondent did not agree with either item and 2 indicated that he/she agreed with both items. There was no significant relationship between the index and alumni giving. American Student Assistance 17

20 Results Feelings of Burden: MWU Sample Alumni who assumed responsibility for paying some or all of their loan debt were asked about their agreement with three questions: 1) My loan repayments cause me more hardship than I anticipated ; 2) I feel financially overburdened because of repaying my undergraduate college loans ; and 3) I experience a great deal of discomfort because of having to repay my undergraduate loans. Almost half (49%) agreed with the first statement, slightly more than two-fifths (43.5%) agreed with the second statement, and less than one-third (31.5%) agreed with the third statement. Agreement with the statement I feel financially overburdened because of repaying my undergraduate college loans significantly influenced alumni giving. Alumni who felt overburdened were less likely to contribute to MWU than alumni who did not feel overburdened (2.5% versus 16% contributed, respectively). Although not quite statistically significant (p =.085), alumni who disagreed with the statement My loan repayments cause me more hardship than I anticipated were more than three times as likely to contribute to MWU than were alumni who agreed with the statement (15.2% versus 4.4%, respectively). An Index of Debt Burden: Responses on this index did not influence alumni giving. Amount Borrowed: Respondents were asked to indicate their agreement with three questions designed to examine their feelings about the amount of money that they had borrowed to fund their undergraduate degree. The three statements, with the percentages of respondents who agreed in parentheses, were: 1) If I had it to do again, I would borrow the same amount in order to pursue my degree (58.7%); 2) If I were to apply for undergraduate loans today, I would borrow less than I did (40.3%); and 3) If I had to do it all over again, I would choose a less expensive college (22.9%). Thus, it appears that most MWU alumni think they borrowed the right amount for a school that was not too expensive. Agreement with the statement, If I had to do it all over again, I would choose a less expensive college, was close to statistical significance in terms of influencing alumni giving. Nobody who agreed with this statement contributed to MWU whereas 13.4% of those who disagreed contributed. Current Finances The link between salary and alumni giving was clearly evidenced in the MWU data, and although not statistically significant, the same pattern is evidenced in the ASA data. Higher salaried graduates were more likely to contribute to their alma mater than lower salaried alumni. Attending graduate school reduced alumni giving, particularly for those who attended full time. This finding is not surprising considering the decrease in salary that frequently accompanies attending graduate school. Current Monthly Debt: ASA Sample We constructed a monthly debt variable that combined mortgage, rent, and other monthly bills. Monthly debt ranged from $0 to $6,000, (Mean = $1,235.26; Median = $1,024.50). We recategorized debt into low and high debt dividing at the median of $1,024.50, such that low debt was between $0 and $1, and high debt, over $1, The relationship between debt and alumni contributions was not statistically significant. Satisfaction with the financial aid office s helpfulness with respect to debt management information influenced alumni giving. Alumni who were either very satisfied or satisfied with the helpfulness of that office with respect to debt management information were more likely to contribute to their alma mater than were alumni who were dissatisfied, very dissatisfied, or undecided (19.4%, 13%, 6.7%, respectively). Current Monthly Debt: MWU Sample We constructed a current monthly debt variable that included such monthly payments as mortgage/rent, car payments, car insurance, and health insurance. This variable did not include monthly repayments for undergraduate loan debt. The amount of monthly debt (excluding undergraduate loan repayments) ranged from $0 to $4,790 (median debt = $950; median debt = $1,063.67). We split the distribution on current monthly debt into four equal parts and found no significant relationship between it and alumni giving (p =.204). The pattern that did emerge, however, suggests that alumni with higher monthly debt are more likely to contribute to MWU than alumni with less monthly debt. 18 Report on Student Debt and Alumni Giving

21 Thus, for example, 26.3% of the graduates with the highest monthly debt contributed to MWU as compared to 14.3% with the lowest monthly debt. However, this relationship is not statistically significant. Current monthly debt is, however, highly correlated with current salary (spearman s rho =.534, p =.000). Those with higher salaries tend to have more monthly debt and as previously noted, current salary influences giving. Giving Behavior Table 2: Giving Behavior Variable ASA MWU Undergraduate experience with: Percentage who are very satisfied or satisfied Helpfulness of Financial Aid Office s 53.5% (112) NS 23.7% (177) NS Information Regarding Sources of Loans (PS) Helpfulness of Financial Aid Office s Financial Counseling 31.5% (108) NS 14.7% (177) NS Helpfulness of Financial Aid Office s Debt Management Information 20.8% *** (106) 50% very satisfied 55% satisfied 6.7% undecided 19.4% dissatisfied 13% very dissatisfied Work Study Program (PS) 58% (69) NS 35.6% (118) NS Helpfulness of Financial Aid Office s Explanation of Repayment Plans Helpfulness of Financial Aid Office s Explanation of Loans (PS) *** indicates a statistically significant difference in alumni giving ** indicates that the relationship is close to statistical significance in alumni giving (PS) indicates a programming/services item 14.7%** (177) 30.8% undecided 19.2% very satisfied/satisfied 13.2% dissatisfied/very dissatisfied 38.7% (111) NS 30.5% ** (177) 27.8% very satisfied/satisfied 25% undecided 10.9% dissatisfied/very dissatisfied 39.1% (110) NS 29.4% *** (177) 30.8% very satisfied/satisfied 22.9% undecided 9.4% very dissatisfied/dissatisfied American Student Assistance 19

22 Results Alumni were asked to evaluate the programs and services (items appear with a PS in Table 2) available at their alma mater. It should be noted that in both samples these items tended to receive lower satisfaction ratings than either the academic or the community/integration items. Although differences appear between the two samples in terms of the significance of the different factors on alumni giving, satisfaction with the helpfulness of Financial Aid with respect to debt management information influenced alumni giving in both samples. Although the general pattern of increased giving with increased satisfaction tends to hold, the MWU results demonstrate a violation of that pattern; the undecideds were more likely to contribute to MWU than even the alumni expressing satisfaction. The other statistically significant factors (services offered by the Career Planning/Placement Office, the helpfulness of the Financial Aid Office in reference to both an explanation of loan repayment plans and an explanation of loans themselves) reverted to the general pattern whereby MWU alumni were more likely to contribute when satisfaction with these services increased. Financing Education Work: ASA Sample The majority of ASA respondents (92.1%) reported working for pay as an undergraduate. Less than half (43.3%) had worked at their college or university at some point during their college years. More than three-quarters (76.4%) worked during the academic year. None of the work variables were significantly related to alumni giving. However, the relationship between working within their college or university and alumni giving approached statistical significance (p =.056); approximately one-third (32.7%) of those who had worked for their college or university contributed to their alma mater as compared to 18.1% who did not work for their college or university. Work: MWU Sample Most alumni (90.2%) reported that they worked as undergraduates either during the academic school year and/ or during the summer. Whether the alumni worked as an undergraduate had no effect on alumni giving. Similarly, whether the alumni worked for MWU (53.1% said they had worked for MWU) had no effect on alumni giving. Refining the work variable to include only work performed during the academic school year produced an almost statistically significant (p =.09) finding. Alumni who worked during the academic school year were slightly less likely to donate to MWU than were alumni who had not worked (27.1% of those who had not worked during the school year donated as compared to 19.2% for those who worked during the academic year). This difference may reflect the greater financial need of those who must work during the academic school year and not simply during the summers. Whereas more than one-fourth (29.2%) of those who did not borrow money and did not work contributed to MWU, only 16.0% of the graduates who had not borrowed money and did work contributed. However, there was no significant difference in contributions to MWU for those who borrowed money based on whether they worked during the school year. Note that those who did not borrow money and did not work during the academic school year were more likely to contribute than any other graduates (29.2% contributed), and those who worked during the school year and did not borrow money were the least likely to contribute (16% contributed). Borrowing/Loans: ASA Sample All ASA respondents were borrowers, and the vast majority (86.1%) borrowed Stafford loans. Additionally, two other sources, Perkins loans and credit cards, were used by more than 13% of the ASA alumni; 31.1% borrowed a Perkins loan and 20.3% borrowed on credit cards. Respondents tended to assume sole responsibility for loan repayments. In fact, only five respondents reported sharing their loan repayment responsibility with either parents or spouses. Loan amounts ranged from $300 to $200,000 (mean = $26,732.66, and median = $20,000). Using the median, loan amounts were divided into loans below 20 Report on Student Debt and Alumni Giving