BBC News

How US universities spent surprise anonymous millions

By Taylor Kate Brown
BBC News, Washington

image copyrightAP

Five years ago, 20 US universities got a huge surprise - anonymous cheques for several million dollars. What did the universities do with the money?

The universities were scattered across the United States. They were not well-known institutions, but many were high-enrolment universities where students were first in their families to attend college.

With one exception, they were all public universities.

And they were all run by women.

One-by-one, they received an anonymous gift - one cheque for scholarships for women and minorities, one for whatever the university needed. Four schools that received similar donations in 2008 realised they were part of a larger trend.

The cheques were given on the condition the recipients make no effort to identify the donor, but that didn't stop others from speculating. Was it Oprah? A group of high-earning women? But nobody ever found out and no-one ever stepped forward.

media captionA new Pew Research Center report analyses how the amount of debt new university graduates carry will shape the financial lives ahead of them

All told, the anonymous donor, or donors, gave more than $100m (£60m) dollars.

The donations came at a hard time for American universities. The market crash had damaged endowments. Public institutions were hurt by state budget cuts. And as job losses grew, families with students mid-way through four years of college were hit with job losses and foreclosures.

University costs in the US are at an all-time high and the student debt taken on to pay them has surpassed $1tn. Many students, especially those on the cusp of deciding whether or not to go to university, are deterred by rising costs and the fear of heavy debt loads.

A sum of $100m is a drop in the ocean in terms of the nationwide debate over university costs, but it was a lifeline to a few universities and their students during the trough of a recession.

So what did these universities do with the unexpected money? The BBC followed up with many of the schools in time for graduation day.

1. Raise more money

The University of Colorado, Colorado Springs (UCCS) has grown quickly since Chancellor Pamela Shockley-Zalabak took over in 2001. Most of its alumni have graduated in the past 10 years. Within the same period, the state government's contribution has dropped to 8% of the UCCS budget from 20%.

"This was happening when my budget was down and my needs were going up," Ms Shockley-Zalabak said. The anonymous $5.5m gift to UCCS "energised" her.

So she went to private individuals in the college's town, Colorado Springs, and asked if they would match the gift. They did.

"Every dollar," Ms Shockley-Zalabak said.

The matching gift allowed the university to "jump up a level" in how it could give. The endowed money has created scholarships for at least 2,000 students since 2009.

The scholarships fund single parents returning to school, as well as students with high potential who worked while attending university.

One of the scholarship recipients, Kim Warren, will be graduating this May with a degree in health care sciences.

image copyrightOther
image captionIn 2009, 23% of university presidents were women, making it very unlikely all 20 universities had female leaders by chance

Ms Warren said having fewer money concerns kept her going.

"There had been several times during my time here where I thought about dropping out," she said, "because being a single mom and working, trying to study and going to school is hard.

"I honestly feel so relieved now to know I don't owe $100,000."

2. Cover students' living expenses

In Alaska, higher education is a tougher sell. Young people with a high school degree can easily make a strong starting salary working for oil companies in the state.

And the cost of living, especially housing, is high. The in-state annual tuition at University of Alaska-Anchorage (UAA) is relatively low - about $5,000 a year. But it is the smaller portion of student expenses. The university estimates the total cost for a full-time student is $20,000.

"The concern over college costs in Alaska is as great as anywhere across the nation," said Eric Pederson, associate vice-chancellor for enrolment.

UAA used part of its $7m gift to fund the Seawolf Opportunity Scholarship. The award can be used for tuition, but also for living expenses, childcare while attending university, and subsidised student meal plans. A total of 113 awards have been made.

Linda Roe says getting the scholarship made all the difference to her. She went back to school after her husband died in a road accident. She moved her entire family, including four children, to Anchorage to enrol in the university's nursing programme.

Ms Roe says the Seawolf and other scholarships allowed her to focus on school and being a mother while three of her own children were attending university at the same time as her.

"If I had to work, I would have never seen my kids," she said. "A job is really important, but if you blow it with your kids you never get a second chance."

She graduated in 2012 and now works as a nurse in Alaska's largest hospital.

3. Take the place of state budget cuts

Michigan high school students with certain test scores used to receive grants if they attended university in the state, including private schools. It was called the "Michigan Promise".

Then in 2009, Michigan was one of the worst hit states by the recession, and the programme was cut.

That's when Kalamazoo College received a $2m cheque from the anonymous donor.

Students at the college were facing both the loss of scholarships and their parents losing jobs, says Marian Stowers, director of financial aid.

image captionThe universities who received anonymous donations (1 - Hunter College 2 - Temple University 3 - Penn State Harrisburg 4 - Montclair State University - UAA and UH-Hilo not pictured)

"Thank you" letters from the students who received the scholarships reflect the sudden shock to the state's economy - lost jobs, furloughs, and cut hours.

"I began to worry about how I was going to come up with an extra thousand dollars... This award covered the absence of the 'Promise' and even more so," a 2013 Kalamazoo graduate wrote.

Jeff Palmer, associate director of communications, said the donor's wishes played a "big part" in how they used the gift.

A letter that came with the donation said the money was given "in the hope that the gift will make a difference to your students at this difficult time".

With this in mind, Kalamazoo's financial aid department looked for sudden shifts in student's ability to pay but also asked them to come forward if their family's finances had changed.

"The board decided to help the students who were already here," Ms Stowers said.

4. Bring in students from the surrounding city

"What I recall is... utter shock," said Harlan Sands, a vice-provost at the University of Alabama Birmingham (UAB), referring to the moment when the gift arrived.

In the last decade, Birmingham's city school district has seen "precipitous" declines in enrolment, Mr Sands said.

So when they received the $5m cheque, they looked locally.

"We're an urban school, we're 88 city blocks... what we mean to the city and the state, you can't describe it," he said.

"Any effort we can make to keep folks here to make our local schools successful, to give them opportunities locally, and to improve the overall quality of education is a high priority for us."

UAB created a new scholarship for students from the city's high schools who were taking advanced classes but had fewer scholarship opportunities.

media caption'I'll be paying my student loans until my son's in college," says Michael Nealis of the $64,000 debt he built up at university

That scholarship, combined with other programmes, are "going to lead to more students staying here and making their homes here in Birmingham," Mr Sands said.

Now the university is using the money for even younger students - offering "micro scholarships" of $50 to high school students who enrol in more challenging math classes and earn high grades.

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  • United States

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