March 29, 2012
Yes, alumni donations enrich our college experience
By Anderson Tuggle '14
The handwritten thank you note is an oft-forgotten token of gratitude in our era of universal Wi-Fi and smartphone e-mailing, a relic of the past that only reemerges in a grandmother’s birthday card. The effectiveness of a hand-written note cannot be denied—each letter is the result of manual labor—but who really has the time anymore? On Feb. 23, Hamilton took the thoughtful step of bringing back this bygone tradition. Students filed through the KJ atrium and sports teams gave a few minutes after practice to offer up a simple “thank you” to generous Hamilton alumni and friend donors. Or, in the campaign’s words, a reminder that “Starting today, others pay.”
Yet, while the STOP campaign’s means of saying thanks were novel and effective, it is even more important to remember why this campaign was started in the first place. We at Hamilton are extraordinarily lucky to have some of the most charitable alumni in the world—and I’m not speaking hyperbolically.
In quantitative terms, according to Hamilton’s website, over 50% of our alumni have donated to the Annual Fund for 30 consecutive years; only a dozen other schools share this distinction. How lucky does that make us? In 2012 alone, 5,466 persons donated over $4 million to the Annual Fund. In the 2010-11, the Annual Fund collected $6.25 million, which is equivalent to 35% of faculty salary and benefits and 27% of Physical Plant costs. The Alumni Relations webpage calls the Annual Fund, “The most important source of discretionary revenue for Hamilton.” This money pays for everything from scholarships to faculty recruitment and facilities maintenance.
Moreover, Hamilton has 900 endowed funds (collectively called the Endowment) that pay for a fifth of Hamilton’s budget and most of our financial aid. Our $728 million Endowment comes out of donated money that is subsequently invested. Together, income from the Endowment and the Annual Fund pay for one-third of Hamilton’s total operating budget. Hence STOP’s namesake—Starting Today, Others Pay—as our tuition and fees cannot fully finance the school’s budget.
Still, many of you may cry foul—particularly the half of us not on any financial aid—lamenting that $53,470 is an inordinate amount to spend annually on college and that we should focus more time on cutting our budget than on thanking our alumni. After all, donations haven’t stopped tuition from rising year after year. “I’m happy for the alumni and all,” you might say, “But the most serious thing we need to STOP is the school’s out-of-control expenses.”
For one, this criticism ignores the fact that rising tuition is not endemic to Hamilton. Educational inflation is a national phenomenon that has sprung from many factors, rising demand and competition for retaining top faculty chief among them. The more salient point, however, is that our budget is a moral document, a reflection of Hamilton’s values and priorities. For example, Hamilton made the courageous decision in 2010 to go “need-blind” in our admissions process, meaning that applicants are now being judged solely on merit instead of on ability to pay. This policy means a larger budget for financial aid—already a quarter of the school’s operating expenses with a $33,600 average package—but it also means a more talented and socioeconomically-diverse cadre of peers. Hamilton’s budget also allows us to have valuable priorities such as new arts facilities, summer internship and research funding and our coveted 9:1 student-faculty ratio. And this doesn’t even account for the money that subsidizes our 28 varsity teams and 100+ student activities and clubs. My larger point here is that it is easy to call for the budget to be cut in the abstract, but much more difficult to give specific programs the ax, especially when we realize how the direct the benefit is to us and our peers.
Thus, we should show gratitude that our tuition isn’t the true cost of the unparalleled Hamilton experience; that the Hill’s friends and alumni subsidize one-third of our four years here. One cannot emphasize enough that every donated dollar is one less dollar we have to pay for tuition. In return, though, it should be expected of us to continue this glorious tradition of giving.
So, while there are certainly criticisms one could make of the STOP campaign, particularly concerning the initial clarity of its name, the overriding consensus should be a positive one. As evidenced by its handwritten thank you notes, STOP asked us to do something that we know we should, but have been too busy to remember.
No, STOP campaign based on false pretenses
By Jeremy Adelman '13
The yearly cost of every tactile facet of a Hamilton education, from the salaries of professors and staff to the bagels in Commons, comes to just under $78,200,000, or about $43,150 per student per year. In nominal terms, that’s a lot of potatoes–after all, the US median household income is only $44,389. However, this total is a far cry from the $53,470 yearly tuition, say nothing of the $63,325 touted by the Starting Today, Others Pay (STOP) campaign. In order to see from whence this discrepancy arises, let us delve into the odd logic that is behind how STOP determines the cost of the Hamilton education.
The $63,325 figure of the STOP campaign comes from simply dividing the total Hamilton College operating budget ($114,746,000 for this year) by the number of students (1,812). However, such a simplistic approach fails to account for the fact that a surprisingly high percentage of the Hamilton budget isn’t actually spent on such necessities as staff salary and building maintenance.
This year, Hamilton will spend close to $28,150,000 on financial aid, accounting for almost exactly one quarter of her total expenditures. To consider this expense, which contributes nothing tactile to the Hamilton experience, is disingenuous at best, particularly because the benefit is not shared equally by the Hamilton community.
Unlike professor salaries and speaker fees, the half of Hamilton students not receiving financial aid gain nothing from these millions, other than a “more diverse” campus. However, as I pointed out in a previous article, Hamilton’s approach to diversity fails to efficiently benefit the student body, and certainly is not worth an additional $10,000. Furthermore, the entire concept of counting financial aid as an expense is dubious; by the STOP campaign’s accounting, if Hamilton were to raise the cost of tuition by $25,000 and immediately offer every student $25,000 in financial aid, the “real” cost of our Hamilton education would have gone up by $25,000 per student –be very thankful for those generous alumni, everyone! Subtract this $28 million, and the price per student drops to $47,800, in excess of $5,000 below the Hamilton sticker price; I must say, I admire the gall of the college telling the 50% of students paying full price that they should be thankful that alumni are subsidizing their education.
But the phony expenses don’t stop there; Hamilton will spend an additional $8.4 million (7.3% of the operating budget) servicing her outstanding debt. In some ways, this is indeed a tactile expense, since it represents the cost of previous investment in the College’s infrastructure. Nonetheless, it is difficult to justify counting the cost of interest as a student-covered expense, considering this college has made out like a bandit in terms of growing her endowment.
Since 1998, the College’s endowment has more than doubled in nominal terms, rising from $306,222,000 to $728,600,000. This growth is not the result of alumni donations, either (or at least not recent alumni donations); from 1998 to 2007, the College received a tidy $69 million in gifts, but dwarfed this haul by earning $553 million in interest–stop and thank whoever is managing our endowment, I say. Indeed, at the moment the college could retire all her outstanding debt ($139 million) and still have an endowment larger than in 2006. The reason why our college chooses to maintain a debt is because when she’s averaging over 13% interest on her endowment (as Hamilton did between 1998 and 2007, a period which included the tech-stock collapse and a recession) she can make far more money that way.
Thus, I contend that the STOP campaign’s inclusion of debt service costs in the price of the College to an individual student, without deducting the capital accrued by the endowment, is dishonest. Removing the price of debt service from the College budget results in the $43,150 figure which I maintain more closely represents the actual per-person cost of the Hamilton experience.
When the last year’s regular tuition increase was announced, Hamilton students were treated to the entertaining logic that their bills were going up to pay for more financial aid (which, of course, must keep pace with rising tuition); one wonders, however, whether this situation can continue ad infinitum. Eventually, the half of students paying $53,000 a year for a $43,000 education are going to question why they must subsidize the education of their peers. In the meantime, though, those of us on financial aid owe our thanks not to the alumni but to the current saps paying full price, whose “generosity” pays for our ride. Thank you very much.