Is the Campaign for Students
It was great to read some of the early details about the upcoming $500M Campaign for Students that were revealed by the Chancellor in the January/February Faculty Newsletter. Raising additional resources for attracting and retaining the very best students at MIT is an overarching need for all departments at the Institute. However, I am a little concerned about the initial proposed distribution of the $500M; which includes $200M for undergraduate scholarship support, $100M for graduate fellowships, $100M for curriculum development and international study programs, $100M for living/learning communities and campus facilities. Arguably the bulk, if not all, of the latter two categories are focused on undergraduate students, so that we are only aiming to use 20% of the $500M total to help support graduate students. If we are exceedingly generous and say that some of the $200M in the latter categories is actually intended for graduate students, and is distributed at the same 1:2 ratio as the fellowship totals, then we are still only aiming to use 1/3 of the total funds raised in this campaign for the needs of graduate students at MIT.
Graduate students make up 59% of the enrolled students at the Institute now and the ratio continues to increase slowly. We presently enroll almost exactly twice as many graduate students per year (1,980 in 2007) as we do undergraduates (1,002 in 2007). Yet in the presently stated fundraising goals, we are choosing to clearly deemphasize their needs and exactly reverse these ratios.
When we further incorporate the fact that a much higher percentage of graduate students are from overseas – and therefore explicitly excluded from many government grants/scholarships – the fiscal picture for graduate students becomes even worse. The impact of insufficient graduate fellowship support is felt in almost every department and by every faculty member across the Institute. Many of the top research universities we compete with for the top applicants know this and in fact use it explicitly in their entreaties to visiting graduate students each spring. A number of these universities also are now offering multiyear fellowships to the very top students, especially those in under-represented categories. I would really like to see the Campaign for Students recognize and respond aggressively to some of these market factors. Why not target $200M for graduate students and $100M for undergraduates? As the text of the Chancellor’s article noted, this is apparently viewed as a “similar support” level when comparing graduate/undergraduate totals, and is certainly far better skewed to our current student composition.
$100M is a lot of money, of course, but it is really insufficient to address the Institute’s needs at the graduate level. Assuming, for simplicity, a 5% disbursement on the endowment plus a cost of $50K for a nine-month fellowship and stipend, $100M generates $5M in income and only gives us ca. 100 new fellowships per year, i.e., the ability to help the top 5% of our admitted students in each admitted graduate class. This is a start, but nowhere near the bold stroke needed to really address the problem.
I would like to propose that we think a little more “out of the box” about our endowment as we approach this Campaign for Students and the Institute’s sesquicentennial in 2011. Firstly, it should be recognized that raising new endowment funds for graduate student fellowships is particularly challenging, and not as attractive to prospective donors as naming new buildings or endowing Professorships. The fact that we need to have a Campaign for Students at all is, in part, a direct reflection that fundraising targets were not reached in these categories during the last Institute capital campaign!
What can be done to make giving to the upcoming Campaign more attractive? One thought is to set up a new separate financial pool specifically for the new endowed funds that are raised in this campaign, and which returns more endowment income than the present paltry 4.5 – 5% per year.
The MIT Endowment continues to generate much larger returns than 5% (e.g., 22.1% in 2007, and an annualized rate of return of 15.6% over the last 10 years; even including the disastrous 2000-2002 years!). Even if we pay out on newly endowed funds at, say, 10% per annum, the original capital raised in the Campaign for Students – plus the additional residual retained interest beyond the 10% annual payout – should compound sufficiently fast to match the Institute’s tuition rate increases (which, although reined in to 4.2% annual growth, of course still continue to outstrip inflation and cost-of-living increases).
The argument is sometimes made that we can’t be creative with the endowment income we get at present because it is distributed amongst 2000+ separate funds all with restrictions. Another thought might be for the Institute to offer to match unrestricted alumni/ae donations to this new pool (during the Campaign for Students only) on a dollar-for-dollar basis. This financial matching could be done using gifts from leading donors or using some of the extra interest beyond the usual 4.5 – 5% rate of income on the unrestricted fraction of the existing $10B in endowment funds. The new unified graduate fellowship pool generated by this process would then be unrestricted and flexible to adapt and respond to future needs.
Such “limited time” offers might very well make the Campaign for Students far more attractive to graduate alumni, who will see a chance to leverage their donations to a cause that directly affected them during their residence at MIT. It also would give MIT a chance to claim the moral “high ground” on the issue – never a bad thing with increased congressional interest in the size, management, and usage of the top university endowments. The counter-argument that is always made about “past returns not guaranteeing future performance” should not be a show-stopper here; unlike committing to a new building or a new program, the number of fellowships awarded each year for newly admitted students can be rapidly and readily adjusted annually based on market performance (of course, if the Endowment does not return at least 10% in a hypothetical future year, we will have bigger problems to worry about than reducing the number of new graduate student fellowships!).
If the final numbers then became, say, a $200M target for Graduate Fellowships and a 10% disbursement on funds per year, we would be able to offer 400 new graduate fellowships each year and reach 20% of our incoming class – which really would change the landscape for graduate admissions in many departments at the Institute.