We investigate how undergraduates’ financial aid packages affect their subsequent donative behavior as alumni. The empirical work is based upon a rich set of micro data on alumni giving at an anonymous research university, which we call Anon U. We focus on three types of financial aid, scholarships, loans, and campus jobs. A novel aspect of our modeling strategy is that, consistent with the view of some professional fundraisers, we allow the receipt of a given form of aid per se to affect alumni giving. At the same time, our model allows the amount of the support to affect giving behavior nonlinearly.
Our main findings are: 1) Individuals who took out student loans are less likely to make a gift, other things being the same. Further, individuals who take out large loans make smaller contributions as alumni, conditional on making a gift. This effect is unlikely to be due to the fact that repaying the loan reduces the alumnus’s capacity to give. We conjecture that, rather, it is caused by an “annoyance effect” — alumni resent the fact that they are burdened with loans. 2) Scholarship aid reduces the size of a gift, conditional on making a gift, but has little effect on the probability of making a donation. Students who received scholarships are also less likely to be in the top 10 percent of givers in their class in a given year. The negative effect of receiving a scholarship on the amount donated decreases in absolute value with the size of the scholarship. Again, we do not find any evidence of income effects, i.e., that scholarship recipients give less because they have relatively low incomes post graduation. 3) Aid in the form of campus jobs does not have a strong effect on donative behavior.