Two years ago, Lou Pepper watched the bank he once managed become the largest bank failure in U.S. history.
Pepper, a former Washington State University regent, had retired from Washington Mutual in the early 1990s when the bank was sound. But then a pattern of rapid growth and risky lending led to the collapse.
The former CEO felt helpless as each day brought more negative news. “People had been building this bank for 115 years, damn good people,” says Pepper, leaning forward in his chair in the small first-floor office of his home on Skagit Bay. And many of them were losing their savings, their jobs, and their means to pay for their children to attend college.
But then his wife Mollie had an idea. “Mollie suggested that maybe we might do something positive,” says Pepper. He talked to his WaMu colleagues and 18 days later they had a website offering scholarships to dependents of Washington Mutual employees affected by the bank’s collapse. “Early on, we raised about $180,000 in contributions, mostly from former Washington Mutual employees and directors,” says Pepper.
Soon more money came in from the defunct bank’s political action committee fund and later from the bank’s foundation—bringing the resource to nearly $750,000. The fund pays annual scholarships of $5,000 to dependents of displaced Washington Mutual employees as well as support for the employees themselves who may seek training in another field. Of the 14 students receiving the scholarship this year, four attend WSU.
The Washington Mutual Alumni Scholarship comes at the front of a new wave of need, says Chio Flores, WSU’s director of Financial Aid and Scholarships. The changing economy has caused many families to change the way they’re approaching paying for college.
“Last year and this year there are more applications and more appeals,” she says. “We have students and parents reaching out because they’ve lost positions, lost income. We see a much needier student.”
At WSU there has been a 20 percent increase in Pell Grant qualifications, which is a measure of economic need, says Flores. “Parents who have never applied before are now applying,” she says. “They are like first generation [students’] parents in the sense that they have never gone through this process before.”
Last September a survey of 500 college and university financial aid offices showed a pronounced increase in need-based aid applications. The survey performed last year by the National Association of Student Financial Aid Administrators, found that more than 60 percent of the schools reported a large increase in financial aid applications as well as aid appeals. The schools generally suggested the reasons for the increase as the economic downturn, the Obama administration’s encouragement to unemployed workers to apply for and appeal aid awards, and rising enrollments.
There are some resources to help in this time of greater need, says Flores. WSU students have access to state, university, and private scholarships. Among the private offerings are those maintained by outside entities—like the Washington Mutual Alumni Fund—and those made by private donors and offered through WSU. According to the most recent numbers, WSU has awarded $12 million in scholarships to 5,000 students in the past year.
Some scholarships are offered through a specific school, major, or department. Others are more general and are based on merit with a need component, says Flores.
A few scholarships, though, are more restrictive and specific. Flores points to one that’s only for students earning between a 2.5 and 2.75 GPA. That student is out there, and he or she is probably working a job while going to school, she notes. “But you really should be pushing for a three-point or higher,” she advises. “It just opens the doors to more scholarships.”
One scholarship donor wanted to just support students who graduated from Omak High School, but in the end agreed to open the candidate pool to the entire county. Another, set up by an alumnus, goes to members of the Gender Identity/Expression and Sexual Orientation Resource Center. And one scholarship is directed to athletes who pledge in the Greek system.
There are some older scholarships, too. “In our endowed scholarships sometimes you find old language, like words that speak to good character,” says Flores. And how do you determine that? “We just assume everyone here has a good and moral character. That goes with being a Coug.”
WSU’s first scholarships go back to the first days of the school. Until the 1920s, tuition was free to any student from the state of Washington, but there was financial support for room and board. According to the 1895 course catalog, the Board of Regents provided a scholarship for one student from each county for free rent, including heat and light, and exemption from all college fees. At the time, a year’s housing amounted to $20 and a total estimate of expenses was around $120.
Today, the financial aid office estimates, tuition and fees as well as books, housing, transportation, and miscellany, could amount to $23,630 a year.
Without the Washington Mutual Alumni scholarship, Teresa Randecker ’75 wouldn’t be able to send her sons Richard and Marc to school. “My one goal for them when they were young was to give them a good education,” she says. As an employee she invested in Washington Mutual stock, and even had a portion of her 401K in the bank. “Washington Mutual was a fantastic company,” she says. “I really didn’t think it could go under.”
But then it did. “I had one son in college and the other starting in a year,” she says. “The bank collapsed and I was devastated. Of course I lost all my stock that I bought in the employee investment plan.”
At the same time, her husband was out of work and she saw her 10 years with the company come to an end. Then she read about the WaMu Alumni Scholarship in the newspaper. “We really pursued it,” she says.
Richard, her older son, is now majoring in mechanical engineering. And Marc is studying computer science. “If it wasn’t for the kindness of the alumni group, my kids wouldn’t be in school,” she says. “Hopefully, when they graduate, they will find good jobs, be able to support themselves and their families, and someday maybe give back to their communities.”