A Tech Billionaire’s Foundation Gives Big To Stem the College “Dropout Epidemic”
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A few months back, a Rockefeller Philanthropy Advisors and TIAA Institute study cited foundations’ support for “low-income students and students of color to begin and complete a postsecondary degree” as “the dominant trend in private philanthropy” for higher education. Foundations that provide scholarships also mentioned that “financial support alone is often not sufficient for low-income students.”
That view is behind an ambitious new partnership that aims to complement financial aid with comprehensive support services.
The Michael & Susan Dell Foundation announced a $100 million commitment to the University of Texas (UT) Austin to expand individualized support services for students and every Pell Grant recipient on campus—about 8,000 students per year, or 20 percent of the student body. The partnership, which will build on the foundation’s successful Dell Scholars program, will include real-time customized tutoring, advising, mentorship and counseling, and financial planning services, along with other support like textbook and technology assistance.
“When Michael and I opened the doors of our family foundation in 1999, one of the first big initiatives we launched was the Dell Scholars program,” said Susan Dell, co-founder and chairman of the board of the Michael & Susan Dell Foundation. “From the very beginning, it has been incredibly important to us that students from all backgrounds have the opportunity to graduate from college—and that mission continues to this day.”
The $100 million commitment, which will be granted over 10 years, is the largest donation UT Austin has ever received that will go directly to students.
A Comprehensive Approach
When Michael Bloomberg gave $1.8 billion in financial aid to Johns Hopkins University in 2018, some commentators noted while that while free or discounted tuition for low-income students is a good thing, it doesn’t address the stubborn fact that Pell Grant recipients graduate at a rate of 18 percentage points lower than non-Pell recipients.
“It’s easy to assume that it’s money that keeps students from graduating from college,” Dell Foundation executive director Janet Mountain said. “We know that it’s often other personal challenges—challenges that are mostly solvable with the right support at the right time—that derail students from achieving a degree.”
A growing number of funders understand this problem and we’ve reported often on support for college completion initiatives, efforts that have drawn in a range of well-known grantmakers, including the Gates, Kresge, and Lumina foundations, as well as individual donors like Reed Hastings. Funder-backed partnerships in this space include the University Innovation Alliance and Strong Start to Finish.
Still, the new Dell Foundation commitment stands out for both its size and focus on a single institution.
Beginning in the fall of 2020, incoming Pell-eligible UT Austin freshmen will become part of the Dell Scholars program, which has achieved graduation rates for low-income students at four times the national average. UT attributes this success to its comprehensive suite of support services, which includes financial aid coaching and financial literacy training, a laptop computer, peer advising support, internship and career planning, and connections to university resources and programming. UT will raise additional funds to maintain these services after 10 years.
“One of the reasons we’re so excited about this partnership is because UT Austin has also already demonstrated a clear commitment to these types of students,” Mountain said. “It’s not about incremental progress—it’s about changing the game and changing how students get help.” The Dell Foundation doesn’t plan on being a passive bystander. The partnership calls for the funder to integrate its staff with their UT peers providing student support.
Pell Grant recipients with the most serious financial needs will also receive $20,000 that can be applied to the cost of attendance, including room and board, transportation, supplies and other expenses. Strengthened by the Dell Foundation’s infusion, UT’s goal is for 90 percent of Pell Grant students at UT Austin to graduate in six years.
Curbing the “Dropout Epidemic”
In a Houston Chronicle opinion piece titled “Financial Aid Alone is Not Enough,” Mountain and UT Austin President Gregory L. Fenves wrote that if the university can meet its “aggressive” yet “achievable” graduation goals, “it can provide true ‘proof of concept.’ It will show universities in Texas and around the country an excellent way to support students from low-income families. It can help stem the dropout epidemic.” Given foundations’ nearly unanimous support for helping low-income students, university fundraisers would be wise to keep tabs on the UT model and its progress.
Nor do Austin and Fenves let state legislators and alumni off the hook. “To be clear,” they wrote, “it takes resources—federal, state, private and nonprofit—to fund ambitious student support programs like this one.” They noted that the partnership was made possible because of UT Austin’s Texas Advance Commitment, which provides tuition assistance for UT students.
Last July, UT announced that starting in 2020, the commitment will provide need-based aid to Texas students with family adjusted gross incomes (AGI) up to $125,000. Tuition will be completely covered for families with AGI up to $65,000. Funding for the commitment comes from a recurring $5 million from the Available University Fund, approved by the UT System Board of Regents.
Mamie Voight, vice president of policy research at the Institute for Higher Education Policy, found the Dell Foundation’s expanded support for low-income students to be “promising.” That said, she argued that the foundation’s impact could have been even greater. Echoing a line of criticism aimed at Bloomberg’s Johns Hopkins gift, Voight told Inside Higher Ed that UT Austin is relatively well resourced compared to institutions like community colleges or historically black colleges and universities. These schools could benefit at scale from such a large investment since they serve far more low-income Texas students than the state’s flagship school.
A Growing Focus on Social Entrepreneurship
Michael Dell, whose net worth currently stands at approximately $30 billion, dropped out of UT before starting the computer company Dell Inc. in 1984. In 1999, the couple established the Michael & Susan Dell Foundation, which focuses on urban education, childhood health and family economic stability. A year later, Dell officially became a billionaire.
In 2006, the foundation provided $50 million in grants to three health-related organizations associated with the University of Texas: the Michael & Susan Dell Center for Advancement of Healthy Living, the Dell Pediatric Research Institute to complement the Dell Children’s Medical Center, as well as funding for a new computer science building at the UT Austin campus. Seven years later, the foundation contributed $50 million toward a building that became the Dell Medical School at UT in Austin.
Dell pledged $36 million in 2016 to for Houston recovery efforts following extensive flooding and damage caused by Hurricane Harvey.
In early 2017, the Dell Foundation endowment was spent down to around $646 million. A few months later, Dell refreshed it to the tune of $1 billion to “accelerate the impact that the foundation is having.” Susan said the funding would be earmarked for causes like social entrepreneurship in India, data-driven education across the U.S. and South Africa, and college success for low-income students.
The foundation simultaneously published a report titled “A Philanthropist’s Guide to the Future,” which articulated how fellow philanthropists could better fund societal change. “A lot of people are afraid to take risks because in philanthropy, money only follows success,” Susan said. The couple hoped that funders would consider riskier bets on social entrepreneurs to generate greater impact. Examples include the foundation’s support for two initiatives based in India—Ujjivan, a service for the unbanked, and iMerit, a company providing tech training and jobs to the less educated.
Dell’s 2017 endowment infusion seems to have made its intended impact. Earlier this year, Business Insider reported that Dell donated 8.9 percent of his 2018 net worth of $22.7 billion, making him the world’s second most generous billionaire tech donor. No.1 was Bill Gates.
