Bloomberg gift helps students avoid debt $21 million pledged to help Hopkins increase grants

November 16, 1998|By Michael Hill | Michael Hill,SUN STAFF

Freshmen who enter the Johns Hopkins University next fall will have their expected college debt cut an average $7,000, thanks to Michael Bloomberg.

When Bloomberg -- founder of the Bloomberg financial news service and chairman of Hopkins' board of trustees -- added $45 million to his previously announced gift of $55 million last month, he specified that $21 million go for undergraduate aid in the schools of engineering and arts and sciences.

University officials have decided to spend that money over the next 10 years by replacing loans with grants, starting with about $2 million for students who enter in 1999.

According to Robert T. Massa, the school's dean of enrollment, the grants from Hopkins for next year's entering freshmen would have totaled just under $6 million without the Bloomberg money; now they will be close to $8 million.

"There is very little change in the formula we use to calculate who is eligible for our need-based aid because of this additional money," Massa said, noting that the only adjustment to the formula will be eliminating money expected to be earned by the student from summer jobs.

"But those that are eligible will get more grants instead of loans," he said.

"We are particularly sensitive to this because so many of our graduates go on to graduate and professional school, where they are probably going to incur added debts," he said. A recent survey showed that more than 80 percent of Hopkins graduates went on to receive graduate or professional degrees.

According to Hopkins' figures, those graduating from the schools of engineering and arts and sciences owe an average of $16,000 in student loans. That was projected to grow to $21,000 for the class of 2002 before the Bloomberg gift; now it should decline to $14,000.

According to terms of the gift, the money will go only to future students; it will not increase aid for anyone currently enrolled.

The biggest benefit will be in larger grants for students in the freshman year, with the ratio of grants to loans declining in the following years.

The school will have more than $21 million to spend because as the money comes in from Bloomberg over the next five years it will be invested, increasing its value before it is spent over a decade.

Hopkins tuition is $22,680. With room and board, the yearly cost is more than $30,000. With the Bloomberg money, about 36 percent of Homewood campus undergraduates will receive direct grants from the university. Counting loans and scholarships from other sources, about 55 percent of undergraduates receive aid.

The additional money will also allow the school to stop reducing Hopkins grants by the amount of outside scholarship money received by a student from corporations, fraternal groups and the like. Instead, outside scholarship money will reduce the amount students need to borrow.

Massa said the ability to offer more attractive financial aid packages can help to attract better students to the campus, but it is rarely the deciding factor.

"Where it will help is with students who really want to come to Hopkins but are not sure they can afford it. This money might make the cost reach a level where it is affordable," he said. "But it is not the type of thing that is going to make a difference if we are not somebody's top choice. There are so many factors that go into choosing a college."

Robert Lindgren, Hopkins' vice president for development, said the challenge will be to raise enough additional endowment dedicated to student support to continue these levels of financial aid after the Bloomberg money has been spent in a decade.

"Replacing it could mean reaching a figure of $80 million in endowment" dedicated to undergraduate aid, Lindgren said. "I don't know if we can reach that. But we are making this kind of endowment a priority. We'll keep chipping away at it."

Pub Date: 11/16/98

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