By Senior Analyst, Rachel Smooke
As student loan debt climbs to $1.2 trillion dollars, enrollment management offices have honed a number of techniques—from better communicating the ROI of their college’s degrees to raising their discount rate—to minimize the impact on recruitment and retention efforts. While the consequences of student debt are well understood during the student lifecycle, there has not been much analysis of their impact on alumni giving.
Eduventures’ Alumni Pulse survey of over 60,000 alumni across the country allows us to identify a statistical link between debt and giving. In this analysis, we’ve identified the tipping point at which debt loads become particularly burdensome.
The Tipping Point
In an earlier Eduventures Wake-Up Call, Loyalty Giving Isn’t Enough for Alumni, we identified college debt as one of the factors contributing to decreased alumni giving rates. While graduating with any debt is associated with lower levels of giving, the amount of debt is also important: alumni are significantly less likely to be current donors when debt loads climb into the $20,000 to $30,000 range (see Figure). This is significant in the current environment because the average college loan debt has now surpassed $29,000. We have reached the tipping point.
What does this mean for you?
Institutional cost containment and financial aid strategy haven’t typically been the bailiwick of advancement leaders; however, when revenue falls short in other areas of the institution, more pressure is put on Development to make up the difference. Given this pressure, Eduventures recommends that Advancement leaders become part of the conversation on student debt. The close connections that advancement leaders have with external constituencies, including alumni, foundations, and corporations, make them well-positioned to contribute to this conversation. We recommend that Advancement leaders take a strong position on the following:
- Containing student debt levels. As stated above, financial aid doesn’t just impact initial enrollment and retention. It also impacts alumni giving significantly.Understanding the tipping point for debt and giving can help you make the case for the need to implement institution-wide strategies for containing cost and debt.
- Clearly defining and communicating your ROI. Alumni who graduate with debt are more likely to agree that the cost of their education exceeded the value. This negative perception jumps significantly for alumni who incurred $30,000 or more in debt. To effectively communicate value, the institution needs to first define an authentic value proposition that is truly unique. This exercise will not only help with alumni, but across all external constituents.
- Defining cross-institution partnerships to engage alumni post-graduation. Alumni with high levels of debt are more likely to want to engage with their alma mater through career-related activities, another sign of this population’s interest in ROI and outcomes. Working with academic and career services to provide career-related activities helps strengthen post-graduation experiences for alumni, and also provides an opportunity to connect alumni with current students.
To better understand debt among your alumni population and what you can do about it, contact a member of our team today.