Appendix J


1/24/17

SENATE COMMITTEE ON ADMISSIONS, RECORDS, SCHEDULING, AND STUDENT AID

Endowed Scholarships

(Advisory/Consultative)

Implementation: Upon Approval by the President

Introduction

This report to the Senate provides an overview of endowed scholarships at Penn State with data from the University Development Office and the Office of Student Aid. The importance of endowed scholarships at Penn State is best understood in the context of the overall financial aid available to Penn State undergraduates. In other words, how do students pay for the cost of attendance? Last year, 63,913 undergraduates received a total of $1 billion from all funding sources tracked through the Office of Student Aid. Not included in this figure are students who received Veterans benefits or students who received third-party payments to cover the cost of tuition. The chart below shows the sources of funding tracked through the student aid system at Penn State.

As described below: January 24, 2017 Agenda, Appendix J, Chart 1

It is important to note that 66 percent of all funding comes from state and federal government student aid programs. These funds are largely prescribed and not distributed in a discretionary manner. Penn State funds accounts for 17 percent of all assistance to students; and another 17 percent of funds are from private sources outside the University. These are scholarships and private (non-Federal) education loans that students secure independently.  Penn State does not select the student recipients; however, the Office of Student Aid and the University Bursar may be responsible for the certification and disbursement of these funds as required by the providers.

The chart below shows the forms of financial assistance received by undergraduates.

As described below: January 24, 2017 Agenda, Appendix J, Chart 2

As noted here, 62 percent of all financial aid is in the form of education loans, primarily federal student loans. Grants represent 25 percent and include programs such as the Federal Pell Grant and the Pennsylvania State Grant programs. These are need-based programs primarily determined by a need analysis formula. Thirteen percent of all funds are in the form of scholarships and less than one percent is from the Federal Work-Study program.

Federal and state student aid funding has not kept pace with increases in tuition and other related education costs at Penn State and at many peer institutions. The table in Appendix A shows the essential costs students are paying this year. The chart in Appendix B shows costs as a percent of median family incomes of Penn State students who applied for Financial Aid. This chart represents just one way to think about the issue of affordability. Appendix D provides a glossary of terms used in this report.

Discussion

History of Fundraising Campaigns at Penn State

As a public Land Grant institution, Penn State’s entry into private philanthropy is relatively recent compared to most private colleges and universities that are heavily dependent on tuition revenue. As state support in Pennsylvania began to deteriorate over the past two decades and tuition has necessarily increased, it has become essential for the University to seek private support. Here is a brief history of private fundraising at Penn State. As noted, the first campaign was early on; but the first major campaign did not occur until 60 years later.

1922 – Penn State’s first fundraising campaign: $1.7 million raised

Goal: to expand Penn State’s physical plant to accommodate the growing interest in students seeking to enroll. Together with state funding, this resulted in the construction of the ‘new’ Old Main, Rec Hall, and West Halls and added new classrooms and laboratories.

1984-1990 – The Campaign for Penn State:  $352 million raised

Goals: included scholarship support for students

1996-2014 – Two major campaigns:

Grand Destiny (1996-2003) Goal: $1 billion Raised: $1.371 billion

For the Future – The Campaign for Penn State Students (2007-2014) Goal: $2 billion Raised: $2.158 billion

Both of these campaigns focused on increasing scholarships for students. The table below shows the portion of total funding raised for each campaign – the amounts received as gifts to undergraduate scholarships and gifts received in the form of endowments.

Dollars RaisedGrand DestinyFor the Future
Total Raised$1.371 Billion$2.158 Billion
Total Gifts to Any Undergraduate Scholarships$327,939,100
(24% of total)
$530,847,110
(25% of total)
Total Giving to Endowed Undergrad Scholarships$217,829,591 $360,381,301

A Review of Current Endowments

The current value of Penn State’s active endowment is $1.6 billion. Of this total, 31 percent or $506 million is for undergraduate scholarships. The tables below provide detail about the scholarship endowments for the 2015-2016 year.

Scholarship Spending (Pay out)

Undergraduate Scholarship Endowment (Book Value): $506,673,900
Earnings on Endowment: 
$39,907,251

Amount Awarded to Students: $37,133,105
At University Park: $26,888,983
At Campuses: $10,244,122

Total Number Recipients: 12,966
At University Park: 7,526
At Campuses: 5,440

Number of Scholarships Awarded: 17,540
At University Park: 11,144
At Campuses: 6,396

The information above shows that Penn State disbursed 93 percent of available scholarship spending. This is due to spending allocations that become available late in the year; or available funding that it earmarked for program support. Some endowments permit departments to use funds for both student scholarship and program support to enhance student experience. Funds used for program support are not captured here.

Scope of Endowed Funds

Undergraduate Scholarship Endowment (Book Value): $506,673,900
Total Number of Endowed Funds: 4,347
Number of Funds across all Academic Colleges: 2,150
Number of Funds across all Commonwealth Campuses: 1,060
Number of Funds in other University Units – not academic colleges: 1,137
Largest Single Donor Endowed Scholarship: $9.6M

Growth in Scholarship Support for Students

In addition to Penn State’s success with fundraising for student scholarships, the university’s own commitment of funding has grown over the years. The graph below shows growth in endowed scholarships and annual gifts from $33.9 million to $48.3 million  since the start of the “For the Future Campaign” in 2007 through the end of that campaign in 2014. The blue bar in this graph shows Penn State’s increasing commitment to student assistance during this same period from $59.5 million in 2007 to $112.8 million in 2014. The green line is simply to show the trajectory of increases in resident tuition from about $13,000 in 2007 to just under $18,000 in 2014. Clearly, Penn State’s commitment of central funds, and that of private gifts is helping to narrow the gap between cost and the needs of students.

As described above: January 24, 2017 Agenda, Appendix J, Chart 3

Penn State centrally funded assistance includes programs such as tuition waivers, grants such as tuition assistance grants, scholarships, such as Provost and Chancellor awards, and Bunton-Waller scholarships and Fellowships.

Benchmarks

A comparison of total endowments across the Big Ten universities was not immediately available for this report. However, a survey of our peers is shown in the following table. Scholarships that are awarded from endowments at each institution are compared to undergraduate enrollments. Available scholarships per student show the relationship of scholarships funds to student enrollments.

Endowed Scholarship Spending – Big 10 Comparisons
 
SchoolScholarship
Endowment
Spending
Undergraduate
Enrollment
Available
Scholarships
per student
Indiana-36419-
Illinois*$28.8M32659882
Iowa---
Maryland*$8.1M28472284
Michigan$39M289831346
Michigan State*$9.2M39143235
Minnesota*-34351-
Nebraska*$13M19979651
Northwestern$31M--
Ohio State*$11.6M52349222
Penn State*$39.9M77922512
Purdue*$14.1M30043469
Rutgers*$21.3M34544617
Wisconsin*-30684-

Note: above amounts are most recent available to report as of November 2016 and may include amounts for 2014-2015 or 2015-2016. A blank in the table represents no data available. * = land grant universities

The Trustee Matching Scholarship Program

The Trustee Matching Scholarship Program, launched in 2002, has proved to be a most successful fundraising tool leveraging institutional funds. This ‘campaign within the campaign’ exceeded its initial goal of $100 million in endowments and raised $120 million since first introduced in 2002. This program helps fund some of Penn State’s students with the greatest financial need. Appendix C provides an overview of this successful program and the table below provides details of the success of this initiative.

Trustee Matching Scholarship Program
2015-2016 Financial Summary

Number of Endowments activated by June 30, 2016: 1,333
Income and Matching dollars available for awarding: $15,867,729

Donor Endowed Funds – College Endowments: 811
Donor Endowed Funds – Campus Endowments: 353

Donor Endowed Funds – Administrative Unit Endowments: 84
Donor Endowed University-wide Funds – Student Aid: 85

Largest Commitment (Pledge): $7,000,000
Median Commitment (Pledge): $50,000

Recommended Award Value: $1,250-$4,000
Average Award Value: $2,870

Recommendations:

  • ARSSA recommends the University continue with the fundraising strategies for student scholarship support comparable to the success of the last two campaigns.
  • ARSSA recommends the University continue to increase the percentage of students receiving endowed scholarships without diluting the overall size of the award.
  • The past two campaigns raised scholarship funds represented 24 percent and 25 percent, respectively, of the total endowment for each campaign. ARSSA recommends the University set as a goal for the next campaign, the portion of scholarship fundraising to be at least 25 percent.

SENATE COMMITTEE ON ADMISSIONS, RECORDS, SCHEDULING, AND STUDENT AID

  • Charles Abdalla
  • Steven Andelin
  • Martha Aynardi
  • Daniel Beaver
  • Clark Brigger
  • Wei-fan Chen
  • Maura Ellsworth
  • Galen Grimes
  • Anna Griswold
  • Michel Haigh, Chair
  • Harold Hayford, Vice Chair
  • Robert Kubat
  • Themis Matsoukas
  • George Samuel
  • Frederic Weber
  • Douglas Wolfe

*Prepared with assistance from the Office of Student Aid


Appendix A

This table shows Penn State costs for Tuition, Fees, Room and Board for first year students in 2016-17. As shown, the total of these essential costs for resident students at University Park is $29,130 and for non-residents, $46,612. Resident students at the Commonwealth Campuses pay $24,842 and non-residents, $31,722.

Essential Costs 2016-17 – First-Year Students

As described above: January 24, 2017 Agenda, Appendix J, Table 2


Appendix B

The need for institutional support is great if Penn State is to remain affordable. This chart shows the essential costs as a percent of median family income of resident and non-resident students at University Park and the Commonwealth Campuses. At University Park, essential costs for resident students requires 31 percent of median family income without come financial assistance; for non-resident students at University Park, costs require 41 percent of median income of applicants. At the Commonwealth Campuses, resident student costs require 40 percent of median family income and non-resident students at the campuses requires 52 percent of median incomes.

Affordability: Cost vs. Median Incomes

As described above: January 24, 2017 Agenda, Appendix J, Chart 4


Appendix C

Trustee Matching Scholarship Program
Annual Status Report
2015-2016

FUNDRAISING STATUS

On July 11, 2002, the Board of Trustees approved the creation of the Trustee Matching Scholarship Program, a $100 million matching scholarship endowment program to assist Penn State’s most financially needy students. A unique feature of the Trustee Matching Scholarship Program is the use of institutional funds to match the private funds raised in support of qualified Penn State students who need financial assistance to support their educational goals.

From 2002-2003 to 2011-2012, the University committed a total of $6 million to the matching program.  Matching funds allow 5 percent of the value of individual donors’ gifts to be available for immediate awarding to students. The University match literally doubles the amount of funds available to assist students with demonstrated financial need. Trustee Scholarship endowments differ from traditional scholarship endowments in that interest from realized gifts moves immediately into the spending account; University matching funds also move immediately into the spending account; and spending occurs as soon as the University receives a donor pledge form and signed guidelines. With a traditional endowment, interest returns to the principal of a gift until the gift itself reaches an endowment level sufficient for scholarship awarding.

In 2012-2013, the University increased the Trustee Match Scholarship Program (TMS) goal from $100 million to $120 million. In addition, any TMS guidelines signed on or after March 1, 2013, through June 30, 2014, or until the goal of $120 million was reached, were matched at 10 percent. The University committed a total of $7 million in matching funds to support the $120 million goal and 10 percent match. In 2013-14, the University continued development efforts toward meeting the $120 million goal, which was ultimately well exceeded. As of July 1, 2014, the minimum financial commitment to establish a Trustee Scholarship endowment increased from $50,000 to $100,000 with a Trustee match of 5 percent.

From 2002-2003 to 2015-2016, the number of Trustee Scholarship endowments grew from 37 to 1,333.  Private commitments (pledges) increased from $5.3 million to well over $120 million, thus exceeding the original goal of $100M and the 2012-2013 increased goal of $120M. There are also approximately 1,100 different donors, many of whom have made their first major philanthropic gifts to Penn State. Over the last fourteen years, the Trustee Matching Scholarship Program has been a major fundraising focus, resulting in a noteworthy impact on undergraduate scholarship support.


Appendix D

Terms and Definitions

Grants:  A form of student financial assistance that does not have to be repaid by the student.

Grants are typically awarded on the basis of documented need of the student. Examples of grants include the Federal Pell Grant and the PA State Grant.

Scholarships:  Student assistance that does not have to be repaid. Scholarships are typically awarded on the basis of academic achievement or talent. Some scholarships may take in to consideration the student’s documented financial need. Examples include the Trustee Matching Scholarship Program which requires that the student have documented financial need and the Academic Excellence Scholarship which is based on merit.

Endowed Scholarships: Scholarships that are made possible from earnings on the investment of a donor’s gift to the University. The minimum scholarship endowment   is $50,000 at Penn State. The gift is given under a contractual agreement between donor and the University.

Loans:  A form of financial assistance available to students and parents of students. The largest

loan program is the Federal Direct Loans. All students are eligible to receive this loan. For students with documented financial need, the loan is interest free which the student is enrolled. For students without documented need, interest accrues which the student is enrolled. Loans must be repaid with repayment beginning six months following a student’s graduation or when enrollment ceases. Most loans are low interest with several difference repayment options. For students who return to schools for further study, at least half-time, monthly repayments on the loan may be deferred. Loans are also deferred for military service and for medical and hardship events that a student borrower may encounter.