In 1964, Michael Bloomberg graduated from Johns Hopkins University in Baltimore, Maryland. In 1965, he made his first gift to the university: $5.
Since then, the billionaire businessman and former mayor of New York — who is worth $45.4 billion, according to Forbes — has donated $1.5 billion to the school. On Monday, Bloomberg announced that he has given an additional $1.8 billion gift to his alma mater.
This combined contribution of over $3.35 billion is believed to be the largest philanthropic gift ever made to an American academic institution.
"My Hopkins diploma opened up doors that otherwise would have been closed, and allowed me to live the American dream," wrote Bloomberg in an op-ed for The New York Times, in which he said that the funds will be used to provide financial aid for "qualified low and middle-income students."
Bloomberg says that this gift will allow Hopkins to remain a need-blind institution, offer more generous financial aid, replace loans with grants and "make the campus more socioeconomically diverse."
In an email to the Johns Hopkins community, University President Ronald J. Daniels called the gift an "extraordinary blessing," saying the school will aim to "attract and support" a student body in which 20 percent or more of students qualify for federal Pell grants by 2023.
Currently, most students from families making less than $60,000 annually qualify for federal Pell grants, which are awarded based on factors such as family income, household size and tuition costs, and many students from families earning more than $60,000 qualify as well. Recent figures from the U.S. Census indicate that the median household income in the U.S. is $60,336.
"This historic gift reflects Mike Bloomberg's deep belief in the transformative power of higher education and his insistence that it be accessible to all qualified students, regardless of financial means," wrote Daniels. "It also affirms Mike's profound devotion to this university for the role that it played in enriching his life."
While the gift may be great news for Johns Hopkins, some are less optimistic about the long-term impact of Bloomberg's gift.
"What [Bloomberg] says is that this will make Hopkins accessible to people not based on family income but based only on their merit. I disagree that it will do that," Sara Goldrick-Rab, professor at Temple University, tells CNBC Make It. Goldrick-Rab is the author of "Paying the Price: College Costs, Financial Aid and the Betrayal of the American Dream, " and founder of the Hope Center for College, Community and Justice in Philadelphia.
"What he is calling 'merit,' and what he calls 'merit' in all of his initiatives, is primarily about high test scores, which are first and foremost a reflection of family money. High tests scores, high grades, taking rigorous high school courses are reflections of socioeconomic advantage more than anything else," says Goldrick-Rab.
Hopkins is already considered a need-blind institution, meaning that it maintains that a student's ability to pay is not taken into consideration during the admissions process. But undergraduate tuition at Johns Hopkins is about $53,740 a year, and nearly half of the university's students don't rely on scholarships or grants.
According to figures from the National Center for Education Statistics, about 52 percent of Hopkins students receive grants or scholarship aid. This is roughly the same at other similarly-ranked schools: At Northeastern, 54 percent of students receive grants or scholarship aid, at the University of Pennsylvania, 48 percent do.
And about 35 percent of Hopkins students take out loans. Goldrick-Rab says the data suggests that "need is not great [at Hopkins], because even middle class students take loans. You've got to be pretty wealthy to be looking at prices like this and not need loans."
Kestrel Linder, a Hopkins alum and CEO of GiveCampus, a company that provides fundraising software for 600 schools across the country — including many of the most prestigious institutions and four Ivy League Schools — called Bloomberg's donation "earth-shaking" and an "extraordinary moment in philanthropy."
"There are only a few dozen institutions that have a total endowment size that is larger than this single gift," he tells CNBC Make It. "There are, I think, only about 25, maybe 30 institutions in the whole country with endowments that are bigger than that."
Linder says the massive gift, while great news for Johns Hopkins, could also be cause for concern.
"In 2017, colleges and universities in the U.S. raised more money as a group than ever before, but that fact conceals a really dangerous set of trends," he explains. "One third of the money raised went to 20 schools. That's not bad news for those 20 schools, but that's less than 1 percent of all colleges and universities."
Not only are a small selection of prestigious institutions gaining access to these funds, but the philanthropic funds are increasingly controlled by a smaller and smaller group of extremely rich individuals.
"At most schools, an enormous share of the money donated is coming from a very small handful of super-wealthy, super generous, benefactors," says Linder. Relying on the generosity of billionaires who will eventually pass their wealth to their families is not a sustainable model for academic institutions or for promoting equitable access to higher education, Linder argues. He suggests that instead, schools should focus on developing the next generation of donors.
Goldrick-Rab says that if Bloomberg really wanted to increase the impact that his money could make, he should have invested his funds in a local community college that educates and graduates a high percentage of low-income students, such as Baltimore Community College or University of Maryland Baltimore County.
"He could have completely changed those institutions. He could have made sure they lasted forever ... He would have had a legacy for generations in that city," she says. "Twenty years from now, nobody is going to be able to see the effects of this investment. Nobody."
The role of philanthropy at prestigious colleges is hotly contested. In July, CNBC Make It asked journalist, author and host of Revisionist History Malcolm Gladwell about the worst investment he sees people make, he pointed to large gifts to elite colleges.
"The amount of money that's wasted on meaningless education in [the U.S.], it never ceases to amaze me," he said. Specifically, he argued that Americans need to rethink how they invest in education, and said that donating to prestigious schools with large endowments is a waste of resources.
"People who give money to wealthy schools like Ivy League schools basically should just burn their money instead," he said. "It's not the spending of money that's the problem, it's where we're spending the money that's the problem."
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