Endowed ScholarshipsFrequently Asked Questions |
Frequently asked questions
REGARDING ENDOWED SCHOLARSHIPS
Q: Where is the money invested?
The UVU Foundation currently uses a very traditional endowment investment model that consists of a 70%-30% split between equities and fixed income strategies. The portion of our portfolio that is in equities is managed with Merrill Lynch and KeyBank. Both investment groups strive to maintain a portfolio managed across a variety of public equities. These funds are benchmarked, and our performance is managed accordingly.
The fixed income portion of our portfolio consists of loans to the University. This allows the University to have access to funds without having to bond, while providing the Foundation a guaranteed revenue stream. This also fulfills the Foundation's mission to support the University. These rates are in the 5-6% range.
The Foundation anticipates further expanding our portfolio to better reflect those of our peers across the country. This would include the addition of assets in energy, commodities, and private equity fund of funds.
Q: How will you deal with inflation and zero interest rates?
As is the case for most university foundations, the UVU Foundation typically holds a payout rate of approximately 5%, even during periods of higher interest, in order to help build the corpus of an endowment. The UVU Foundation’s portfolio is currently bolstered by a significant portfolio of loans to the University, which are being paid at above 5%. The performance of the endowment and the yield of individual funds are regularly reviewed. If, during the annual review, it becomes clear that the agreed disbursement for an individual fund is no longer covering the cost of the donor’s intent, the Foundation will proceed as follows:
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- If the donor is still alive, the donor will be contacted to ascertain how to proceed.
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- If the donor has passed away, the funds will be held until they reach the level of disbursement previously chosen by the donor, such as full tuition, half tuition, tuition and books, etc.
Most endowments are established with the potential for inflation in mind and ensure that sufficient principle exists to lead inflation for the foreseeable future. However, during times of a low or zero interest rate, the Foundation may choose to freeze all endowment payouts, ensuring that the corpus is preserved. Once rates rise sufficiently to allow for the agreed-upon disbursements, the endowment resumes normal operation.
Q: Are there overhead costs associated with establishing an endowment at the UVU Foundation?
No. With the exception of real estate gifts used to create an endowment, the University and the Foundation pay all costs associated with administering and handling endowments.
Q: What does “needy student” or “high GPA mean”?
At UVU a student who qualifies for federal Pell Grants is considered needy. The federal formula determines a different cutoff amount for each student, depending on each student’s personal circumstances, such as parent’s income, student’s and student’s spouse’s income, children in the household, medical situation, assets, etc. If it is determined that students are at or below the poverty level, they qualify.
The University’s incoming students have averaged a higher GPA each of the past several years. Therefore, merit is determined on a sliding scale. Whether a freshman student qualifies for a merit scholarship is determined by a grid that changes each year. The grid balances both high school GPA and entrance exam scores. The grid can be reviewed at: http://www.uvu.edu/financialaid/scholarships/index.html .
When does a student declare a major?
All students declare majors at the time of their acceptance to UVU.
What is the typical cost for tuition and books?
Undergraduate tuition for fall 2012 amounts to $2,393 per semester for a full-time student. Books currently cost an estimated $700 per year. Tuition changes but can be reviewed at http://www.uvu.edu/tuition/tuitionFees12-13a.pdf.
How much money is required to fund one endowed scholarship in the current investment environment?
The current cost to endow a full-tuition scholarship is
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- With books $130,000
- Without books $100,000