In October 2021, the Johnson Center’s Tory Martin asked, “Is Philanthropy Paying Attention to the Student Debt Crisis?” Rising college costs are saddling graduating students with historic levels of debt, preventing the economic mobility that should come with a degree. Researchers (Perry & Barr, 2021) say an unpredictable job market combined with soaring college costs and the challenging environment of the pandemic have many students reconsidering or abandoning plans for pursuing a college degree.
Michigan is among the many states grappling with both a workforce skills gap and an opportunity gap threatening its economic future. We currently face an economy where jobs increasingly require more education, skilled workers are needed in a number of trades, and underserved and marginalized communities continue to face barriers to unlocking emerging economic opportunities.
Increasing the educational attainment and skills training of Michigan’s residents is, therefore, a shared priority for philanthropic, government, and business sectors as we collectively work to increase the state’s economic competitiveness and secure a future of economic prosperity for all.
Education is Michigan philanthropy’s top-funded area and has been a cornerstone for collaboration and strategic cross-sector partnerships for many of our members at the Council of Michigan Foundations (CMF).
Throughout the years, CMF members have seeded and supported new and innovative strategies to ensure students have certainty, security, and confidence about the financial resources that will be available for their post-secondary education. Place-based promise programs, Children’s Savings Accounts (CSAs), and post-graduation scholarships are among the many programs that our members support.
“Place-based promise programs, Children’s Savings Accounts (CSAs), and post-graduation scholarships are among the many programs that our members support.”
Foundations in Michigan have also deeply examined issues — such as scholarship displacement (Council of Michigan Foundations, 2021a) — to ensure students have access to the most financial resources possible for post-secondary education without having to incur large amounts of debt or tax burdens.
In this blog, I highlight key examples of the importance and impact of Michigan philanthropy’s contributions, including thought leadership, advocacy, and funding, to address the student debt crisis, and its ongoing commitment to ensuring that all future graduates have equitable opportunities to economic prosperity.
The Community Foundation of St. Clair County, with thought partnership from surrounding community foundations, launched the Come Home Award post-graduation scholarship program in 2016. The award was intended to promote talent retention in the community by providing student loan forgiveness to college students who move back to St. Clair County after graduation.
Audrey Sochor, program officer with the Community Foundation, told me that the program has granted out nearly $169,000 to 21 individuals to date. A recent assessment of the program showed that the Come Home Award has already created meaningful impact for recipients and the community. One award recipient, Alessandra Baker, shared the following reflection with Audrey:
Learning about the Come Home Award program a few years ago is really what helped push me and my husband towards renewing our Michigan teacher certificates and considering moving back to the area. Our student loan debt has always been a huge hurdle for us, so having the opportunity to receive some loan assistance is indescribable. We finally feel like we can settle down, purchase a home, and plan for our futures.
The Come Home Award was the first program of its kind in the country and has since caught the attention of lawmakers as an innovative model. But there’s a catch. The U.S. Department of the Treasury has not provided regulations that recognize this type of post-graduation scholarship award as charitable activity. Because these awards are not treated as traditional scholarships, the college-degreed individual who receives a post-graduation scholarship from a foundation is penalized: the award is treated as traditional income and taxed accordingly.
After several years of advocacy efforts led by Randy Maiers, president and CEO of the Community Foundation of St. Clair County, the Council on Foundations (COF) and CMF, Senator Gary Peters (MI) introduced the Workforce Development Through Post-Graduation Scholarship Act (S.2191 / H.R. 4095). If passed, this legislation would define post-graduation scholarship grants as charitable activity, making post-graduation scholarships non-taxable and providing guidelines for ensuring the program is benefiting communities most in need.
The passage of this bill would remove an added tax burden on graduates receiving the award, and create greater incentives to foundations that are considering creating post-graduation scholarship programs to serve graduates and help meet economic needs in their communities. More advocacy will be needed to get the bill passed.
In 2019, Wayne State University, in partnership with the Detroit Regional Chamber, Oakland University, and Henry Ford College, launched a regional debt forgiveness program (Wayne State University, 2019) that would forgive any debt owed to participating educational institutions for students who have some college credits but haven’t completed their degree because of their debt burden.
This program was the first of its kind and has served as a model for helping returning students pay down debt owed to their institutions. Caroline Altman Smith, deputy director of The Kresge Foundation’s education program and CMF trustee noted that:
Improving postsecondary attainment rates can have a transformative effect in our region and throughout our state… This debt forgiveness program will remove one of the most significant hurdles to completion and make it clear to adults in the Detroit region that there is a pathway for them to head back to college to finish what they started. (Kresge Foundation, 2019)
Recently, The Kresge Foundation, Joyce Foundation (both CMF members), and the Lumina Foundation (based in Indiana) supported an institutional debt forgiveness program in Ohio modeled after the Detroit regional debt-forgiveness program. With the support of these foundations (Kurzweil, 2021), Ithaka S+R, a college-access-focused nonprofit, will be working with public colleges and universities in northern Ohio on a new compact.
Ithaka S+R’s agreement will bring institutions together to settle institutional debt and release the transcripts of students who wish to return to school or transfer schools to finish their degree or credential. Their goal is to see an increase in the number of returning adult students finishing school and expanding their economic and career opportunities.
By guaranteeing tuition-free education opportunities to students as early as kindergarten, everyday people are infused with a “college-going identity” that empowers them to consider post-secondary education without fear of economic hardship or debt.
This was the premise of the Kalamazoo Promise, the first philanthropic effort in Michigan to guarantee full-tuition scholarships to all students graduating from a particular school system — in this case, Kalamazoo Public Schools. This place-based program launched in 2005 and was fully funded by anonymous donors in the city (Kalamazoo Promise).
This model inspired similar programs across the state and the nation. Shortly after the creation of The Kalamazoo Promise, then-Michigan Governor Jennifer Granholm called for the establishment of “Promise Zones” in Michigan, particularly in underserved and economically distressed communities.
Across the state, foundations now serve as integral partners in many of the Promise Zones (Council of Michigan Foundations, 2017). These promise programs not only help reduce college costs for students but have been shown to create a “college-going culture” in communities that activates schools in sharing information with students about college at a young age, cultivates shared learning among families, students, and community members about pathways to college, and reinforces the expectation and affirmation that all students can and will succeed in their post-secondary endeavors.
As noted before, an important part of getting students to buy in to a college-going culture and adopt a college-going identity is making sure they know that they will have the financial resources to support their post-secondary education. Students who know they will have some money available for their college education are more likely to attend and graduate from college (Elliott et al., 2013).
“[A]n important part of getting students to buy in to a college-going culture and adopt a college-going identity is making sure they know that they will have the financial resources to support their post-secondary education.”
Some foundations have worked to provide students with confidence in their financial resources for college by setting up or managing Children’s Savings Accounts (CSAs). CSAs are accounts created for young children to build savings throughout their childhood to attend college. A 2018 report from the Asset Funders Network found that nationally, foundations are the most common type of funding support for CSAs (Council of Michigan Foundations, 2018), with nearly 71% of CSAs receiving foundation funding in 2016.
In Michigan, nearly all existing CSA programs are managed or supported by a foundation; many of them are CMF members like the Barry Community Foundation, the Fremont Area Community Foundation, the Michigan Gateway Community Foundation, Sanilac County Community Foundation, and others. The Charles Stewart Mott Foundation, based in Flint, Michigan, is noted in the Asset Funders Network report as one of the major funders supporting three or more CSAs in Michigan. The success of CSA programs in Michigan recently led the state to include in the 2021-22 state budget a $2 million public investment in CSAs across the state.
According to the National College Access Network, private and employer funds — including scholarships — make up 13% of a student’s financial aid for college, and students whose families make $106,000 a year or more tend to earn 13% of all private scholarships, while students whose families make less than $30,000 a year only earn 9%.
The Ann Arbor Area Community Foundation’s (AAACF) Community Scholarship Program is one example of how foundations in Michigan are bridging the gap in access to private scholarships (Council of Michigan Foundations, 2021b), addressing barriers that students may face when applying for scholarships, and deploying new strategies in the scholarship selection process and criteria to ensure students most in need are getting the resources they need through these programs.
Established in 2016, the Community Scholarship Program is a partnership between AAACF, local school districts, and local colleges and universities to not only provide scholarship funds (a maximum of $20,000 dispersed over up to five years) but also emergency financial aid and funding if needed and a college success coach to ensure first-generation college students and students of color have the resources needed for academic success.
In some cases when students receive financial support from multiple sources, higher education financial offices look at the combined resources from various parties and enact policies that can end up counteracting or canceling out the benefits of one another of the supports when applied to their overall financial aid package. This practice is called scholarship displacement.
Several years ago, CEOs and staff from CMF’s community foundation members noticed that scholarships granted by their foundations were causing students to lose out on other scholarships that their school had previously offered to them. The problem? When colleges and universities reviewed successful student resource gathering, the schools’ financial aid programs would reduce or eliminate their original projected offer for institutional scholarships to a student.
The CMF Government Relations and Public Policy Team has been tracking a federal scholarship displacement bill called the Helping Students Plan for College Act. The bill was introduced in September 2021 and would
CMF has signed on to be a supporting organization for the bill. If the bill passes, it may give students planning for college and parents more clarity on schools that would best meet their needs and honor all the various forms of aid a student may plan to use.
This bill would also create more robust data on scholarship displacement than currently available, allowing foundations and students affected by the practices to launch advocacy campaigns to urge lawmakers and schools to put an end to the practice.
Michigan philanthropy is leading the way in some of the most transformative public/private partnerships to improve college access and address the student debt crisis. As the public policy fellow at CMF, I’ve been exploring a number of ways that foundations, where legally permissible, and interested community members can advocate for policies that enhance philanthropy’s ability to serve students through scholarships and debt forgiveness programs.
“We encourage the entire philanthropic community … to reach out to lawmakers to share examples of the work being done to improve college access and … express support.”
Currently, at CMF, we’re advancing advocacy efforts around the Workforce Development Through Post-Graduation Scholarships Act and the Helping Students Plan for College Act to enhance the scale and impact of philanthropy’s investments addressing college affordability and student debt. We encourage the entire philanthropic community who are interested in these efforts to reach out to lawmakers to share examples of the work being done to improve college access and where legally permissible, express support for the Workforce Development Through Post-Graduation Scholarships Act and the Helping Students Plan for College Act.
Reach out to CMF for more information on our advocacy efforts in support of philanthropy’s work on educational attainment, scholarships, and student debt. Contact Kyra Hudson at firstname.lastname@example.org.
Asset Funders Network. (2018, February). Children’s savings account survey of private funding 2015-2016. https://assetfunders.org/wp-content/uploads/AFN_2017_ChildrensSavingSurvey_Feb2018.pdf
Council of Michigan Foundations. (2017, July 31). Creating pathways to college in the early years. https://www.michiganfoundations.org/news/july-31-2017
Council of Michigan Foundations. (2018, January 29). The growth of children’s savings accounts. https://www.michiganfoundations.org/news/january-29-2018
Council of Michigan Foundations. (2021a, May 17). Unpacking scholarship displacement: supporting mi students in retaining scholarship dollars. https://www.michiganfoundations.org/news/may-17-2021
Council of Michigan Foundations. (2021b, August 23). Embedding equity in scholarship programs. https://www.michiganfoundations.org/news/august-23-2021
Elliott, W., Song, H., & Nam, I. (2013, March). Relationships between college savings and enrollment, graduation, and student loan debt. Washington University in St. Louis. CSD Publication NO. 13-09. https://openscholarship.wustl.edu/cgi/viewcontent.cgi?article=1322&context=csd_research
Kalamazoo Promise. https://www.kalamazoopromise.com/
Kresge Foundation. (2019, April 30. Detroit-area colleges announce debt forgiveness program for returning students. https://kresge.org/news-views/detroit-area-colleges-announce-debt-forgiveness-program-for-returning-students/
Kurzweil, M. (2021, December 8). A sustainable solution to settle students’ debt and release stranded credits: Ithaka S+R and eight Ohio public institutions announce promising new pilot. Ithaka S+R. https://sr.ithaka.org/blog/a-sustainable-solution-to-settle-students-debt-and-release-stranded-credits/
Perry, A., & Barr, A. (2021, March 15). Michigan wants to increase residents’ college enrollment, but student debt is holding them back. Brookings. https://www.brookings.edu/blog/the-avenue/2021/03/15/michigan-wants-to-increase-residents-college-enrollment-but-student-debt-is-holding-them-back/
St. Clair County Community Foundation. (2021). Come Home Award. https://www.stclairfoundation.org/come-home-award/
Wayne State University. (2019, April 30). Wayne State, partners create regional debt-forgiveness program to help returning students earn degrees. https://today.wayne.edu/news/2019/04/30/wayne-state-partners-create-regional-debt-forgiveness-program-to-help-returning-students-earn-degrees-31629