Scholarships try to keep U affordable

In the last five years, scholarships increased by 53.5 percent at the U.

Cati Vanden Breul

Mikhail Tikh got awards that will get him out of the door.

The first-year student said he can only afford to move out of his parents’ house thanks to $7,500 in scholarships he will annually receive during college. As soon as classes start in fall, he’s headed into an apartment.

Tikh will receive $2,500 per year from the University’s Institute of Technology, and $5,000 a year from the Bentson Scholarship, a scholarship created two years ago with a $10 million donation from alumni Larry Bentson and Nancy Bentson – the largest scholarship gift ever received by the University.

Larry Bentson said he and his wife offered the money to change students’ lives by attending the University. It’s been a rewarding experience, he said.

“There isn’t a day that goes by that I don’t have a talk with one of the students or hear them say thanks,” Larry Bentson said.

Tikh said his life would have been very different without the Bentsons’ gift.

“I will still have to work to make rent, but I can almost cover tuition this way,” he said. “Without the scholarships, I’d have had to take out a lot of loans and lived at home for four years.”

Tuition will increase another 7.5 percent this year as students continue facing annual increases to attend the University, making scholarships all the more helpful when trying to pay the bills while earning a degree.

But despite sharp increases in tuition during the last few years, University officials said they’re doing everything possible – including a massive scholarship campaign – to keep the University affordable.

During the last five years, the University has increased scholarships by 87 percent. That figure nearly matches how quickly tuition and fees have also increased during the same period, according to data from the University’s Office of Student Finance.

Funds for institutional grants and scholarships – those provided by the University to students, as opposed to the federal or state government – come from two different sources.

In the first, the University sets aside part of its budget for need- and merit-based grants and scholarships. It also uses donations from private or corporate donors to help students afford tuition and living expenses.

Need-based award packages are calculated based on a student’s family income and the number of government grants and by comparing the two with the University’s cost of attendance and what funds it can give, said Kris Wright, Office of Student Finance director.

The federal government uses the Free Application for Federal Student Aid to calculate aid packages to college students. Officials calculate how much families should contribute to students’ education by using a formula.

Students with an expected family contribution of $3,850 or less per year are eligible for federal Pell Grants and are considered to show significant need, Wright said.

Wright said normally students with families that earn more than $45,000 annually are not eligible for Pell Grants and will not receive as much University help.

The University matches Pell Grant funds up to $4,000, she said.

“We do a very good job for the neediest students,” she said.

Wright said the University is figuring out how to provide more aid for families with $30,000-$74,000 incomes, because they are expected to make a significant contribution.

Craig Swan, University vice provost for undergraduate education, said institutional aid increases have for the most part kept pace with the increases in tuition – at least for students with the most need. Schools around the country are struggling to help some students from middle-class families.

“It’s a struggle for all schools to figure out how to finance students from families whose income is just a little too high to qualify for federal and state programs, and who still show significant need,” Swan said.

First-year students get more merit-based aid

But luckily for some students, need-based aid is not the only funding the University offers. Students are also eligible for merit-based aid, which usually comes in the form of a scholarship.

A significant portion of this aid is used in recruiting new students and goes to incoming first-year students.

“Merit-based scholarships are anything that is not based on a student’s need,” Wright said.

Usually students have done something in the past that entitles them to the money, she said. For instance, the University will give merit-based aid to students who were valedictorians, had high grade point averages, have a special talent or skill, or international students who will bring diversity to campus, Wright said.

The most prospective students are automatically considered for merit-based aid, said Wayne Sigler, Office of Admissions director.

“The vast majority of first-year students are considered for scholarships just by filling out their admissions application,” Sigler said.

In the past, students had to fill out a separate application for scholarships, but because much of the requested information was the same on both forms, there is now only one to fill out, Sigler said.

As with need-based aid, funding for first-year scholarships comes from the University’s budget and private donations.

University funds go to students who will contribute to an “academically prepared and diverse” student body, Sigler said. “We want to keep talented students in Minnesota or attract them from out of state.”

Scholarships also help students succeed once at the University. Sigler said University data shows students with scholarships graduate in four years 35 percent more often than other students.

Typically, approximately 15 percent of first-year University students are given scholarships – one of the lowest percentages in the Big 10.

“We usually rank last in the percentage of students who receive merit-based scholarships,” Sigler said.

But unfortunately, because of a limited amount of funds, there is not enough money to help everyone, officials said.

“When state budgets have been slashed and when need- based aid is the focus, having merit-based scholarships has been extremely difficult,” Swan said.

Faced with a limited amount of funding, the University must make choices.

“The University, along with any organization where the demand exceeds the resources, has excruciatingly difficult choices to make,” Sigler said. “The base of awards has to go to the neediest students.

“Of course we are not proud of our standing for our first-year scholarships,” Sigler said.

But when the University must make up for lost funding, it does not raise costs for students first, Sigler said.

Faculty members have gone without raises and paid a greater percentage of their own health-care costs to keep tuition increases as low as possible, he said.

In another effort to increase the number of scholarships, the Founders Opportunity Scholarship, created in February, will pay the remainder of an incoming student’s tuition and fees if federal Pell Grants, state grants and work-study funds do not cover it.

“We have a ways to go, but the University is highly committed to this,” Sigler said. “Our hearts are in the right place on this.”

Half way home

Two years ago, University officials launched a $150 million scholarship drive to double the number of students with scholarships from private donors.

At the end of June, the University of Minnesota Foundation raised $75 million and awarded scholarships to 1,043 more students. The amount given to students from private gifts increased 58 percent in the last two years.

Jerry Fischer, president and chief executive officer of the foundation, said helping students cope with rising tuition was one of the major reasons for the drive.

“As a public university, we want to make sure any student who qualifies to come here can afford to,” Fischer said. “When we lighten the debt load and lighten the amount of hours a student has to work to help make their way here, we improve academic performance.”

Donors work with the foundation to develop a gift proposal before their scholarship becomes a reality. Most times, they specify where they want the money to go.

“Our primary objective, in terms of facilitating these gifts, is to listen to the donor and develop a proposal and gift agreement that reflects their wishes,” Fischer said.

Generally, the foundation recognizes donors who most often give back to make college more affordable or those who want their money to attract top students.

Alumnus Roy Wetterstrom and his wife Emily Wetterstrom wanted to do both.

As part of the scholarship drive, they created the Wetterstrom Family Scholarship for incoming first-year students at the Carlson School of Management with a $250,000 pledge.

“We wanted to give back to the University and help give other students an opportunity to enjoy the same experience I had at the University,” Roy Wetterstrom said.

Keeping the University competitive was also at the forefront of the Wetterstroms’ decision, they said.

“It’s important for the ‘U’ to stay competitive; we need to be able to attract the best and the brightest,” Roy Wetterstrom said.

Another factor that played into their decision was the President’s Scholarship Match program, which allows donors to double the impact of endowed gifts of $25,000 or more.

An endowed gift is invested by the University and will continue to fund more students each year when approximately 5 percent of the fund’s value is paid out for the scholarship. As part of the match program, the University will match the payout every year. For example, the annual payout on a $25,000 gift would be $1,250; with the University match, $2,500 would be available to students.

“The president’s match program was a very significant incentive to do something now and to do something larger,” Roy Wetterstrom said.

Giving students a chance to succeed is the University’s top fund-raising priority right now, officials said.

“And, it’s increasingly becoming priority for donors as well,” Fischer said.