As Student Debt Transforms the Middle Class, a Donor Provides Relief

UCLA. Photo: Michael Gordon/shutterstock

Scan Inside Philanthropy’s Higher Ed vertical and you’ll often find alumni cutting big checks to elite schools whose students predominantly come from affluent families. But you’ll also notice a growing body of equity-minded donors ramping up support for low-income students. And you’ll even come across donors looking to abolish tuition entirely. What’s less common are gifts earmarked for the “middle-income” families on the hook for a majority of a student debt load that currently stands at $1.5 trillion.

All of which makes a recent gift from film and television producer Steve Tisch to the University of California, Los Angeles (UCLA) particularly refreshing. The $10 million commitment will establish undergraduate scholarships focused on “students from middle-income families.” Half of the Tisch Fund will be distributed over the next five years to provide four-year scholarships beginning with students entering UCLA in the fall of 2020. The other half creates an endowed fund to ensure Tisch scholarships will continue in perpetuity and challenge other donors to create similar scholarship funds.

Tisch’s gift is a timely one. Recent articles in Time, NPR, and the Wall Street Journal have shown that the student debt crisis, facilitated by politicians, private lenders, university administrators, and unwitting donors, is another factor hollowing out America’s middle class.

Average tuition at public four-year colleges rose 549 percent, not adjusted for inflation, from 1987 to 2017, according to data from the College Board. Wealthy students can afford to pay, while poor students benefit from Pell Grants and other forms of financial support. Middle-class families, however, make too much money to qualify for grants, but not enough to cover full educational costs.

As a result, they become part of what Caitlin Zaloom, author of “Indebted: How Families Make College Work at Any Cost,” calls the “student finance complex,” resigned to a future of crushing and seemingly insurmountable debt. As Zaloom told Inside Higher Ed, middle-class families, raised on the assumption that they ought to be able to afford higher education, now “have no choice but to use debt and investment in the attempt to achieve their aspirations.”

A Focus on ‘Middle-Income” Families

In a review of Zaloom’s book, the New Yorker’s Hua Hsu writes, “Middle-class families might not seem like the most sympathetic characters when we’re discussing the college-finance conundrum. Poor students, working-class students, and students of color face more pronounced disadvantages, from the difficulty of navigating financial-aid applications and loan packages to the lack of a safety net.”

Higher ed funders implicitly agree with Hsu’s thesis. According to Rockefeller Philanthropy Advisors and the TIAA Institute, support of low-income students is the “dominant” trend across the institutional higher ed fundraising space. And while a 2018 Council for Advancement and Support Education (CASE) found that alumni donors preferred gifts earmarked for “academic divisions” and “athletics” over “student financial aid,” a spate of recent gifts points to a growing interest in boosting access for low-income students.

The CASE study also found that American universities raised over $19 billion for capital purposes in 2018, an 8.6 percent increase over the previous year. “Much of the growth in alumni giving,” the report concluded, “has been in the form of capital-purpose gifts.” These gifts, as frequently noted, can inflate tuition—an inescapable economic reality further corroborated by Zaloom, who attributes rising tuition to “plush facilities” as well as “fancy meal plans [and] the expansion of administration and student services.”

And so, if we’re to believe CASE’s findings, we’re faced with a Kafkaesque fundraising landscape in which alumni are ramping up support for projects that drive up tuition while failing to help students paying for rising tuition. Given this reality, it’s easy to see why the notoriously data-driven Michael Bloomberg, upon announcing his $1.8 billion gift to Johns Hopkins last year, said, “We need more graduates to direct their alumni giving to financial aid.”

Tisch, meanwhile, set his sights on debt relief for middle-income families, defined by UCLA as those whose income “is too high to qualify for grant aid, but not enough to cover full educational costs.” According to UCLA’s release, while a California student from a middle-income family might typically receive a scholarship from the state of $1,300 to $5,200 each year, that accounts for only 3 to 15 percent of the annual cost of attending college. (For reference, the total cost of attendance for a California resident attending UCLA and living on campus is $35,791 per academic year.)

A Diverse Giving Portfolio

With a net worth of approximately $1.1 billion, Tisch, who directs his giving through the Steve Tisch Family Foundation, also supports youth, health and human services, Jewish causes, and the arts and media. Recipient organizations include the Met, the Whitney Museum, the American Film Institute, Child Success Foundation, Manhattan Youth Football, NY/NJ Snowflake Youth Foundation, and the Elton John AIDS Foundation. Tisch also co-owns and serves as chairman of the NFL’s New York Giants.

He has given to UCLA for nearly 25 years, including a $10 million gift in 2014 to establish the UCLA Steve Tisch BrainSPORT Program, the leader in concussion care and education. Both that gift and his latest contribution are part of the Centennial Campaign for UCLA, which is scheduled to conclude in December.

UCLA blew past its $4.2 billion goal last summer. At the time, however, the school only raised $438 million of its $1 billion student support (e.g., scholarship) goal. Melanie Burzynski, executive director of the Office of Scholarships and Student Support Initiatives, said that “shifting concerns” contributed to the gap. “New initiatives will come up as new deans come on, but student support is No. 1,” Burzynski said. “But some of the deans… might shift the focus to other areas while talking to donors.”

Commenting on donors’ lackluster support for scholarships, Jay Manzano, financial support commissioner for the Undergraduate Students Association Council, underscored the importance of supporting “students who are middle-income and might not readily qualify for any sort of grants or aid. These scholarships then become so helpful for those students who have to balance not necessarily any form of aid from the government or the university in the form of grants.”

A little over a year later, Tisch answered the call. “We know a college education provides individuals with long-term financial benefits, as well as making them more well-rounded and engaged in their communities,” he said. “But as the cost of college continues to climb, it is becoming more difficult for many hard-working middle-class families to attain. It is an honor for me to help provide opportunities for young women and men to access the value and experience of a UCLA education and positively impact the trajectory of their lives.”