Billionaire Chicagoan Ken Griffin donates $150 million to Harvard

Gift is largest to university's undergraduate program

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Billionaire Chicagoan and hedge fund manager Ken Griffin is giving $150 million to Harvard University, all but $10 million of which will be dedicated to financial aid for undergraduate students, the university announced late Wednesday.

The gift is the largest in the history of Harvard College, the school's undergraduate program. Griffin is a self-made billionaire, having started his first stock trading operation by installing a satellite dish on the roof of his Harvard dorm. He is the founder and chief executive of the hedge fund Citadel.

"Yes, I feel this," Griffin said, referring to the size of the donation, which represents about 3.5 percent of his estimated net worth of $4.4 billion.

"Harvard has always been a part of my will. And you say to yourself at some point, 'Why I am waiting until I die to give them this money?' So, I'd rather see these children have this opportunity in my lifetime than, hopefully, reflect upon it from heaven."

Harvard, he said, would receive the donation in a series of payments during the next few years.

For decades, Harvard has practiced need-blind admissions, meaning a family's lack of wealth is not a factor. But with the astronomical rise in college costs, especially at elite institutions, that policy has "not been enough," and Harvard has pushed since 2004 to make an undergraduate degree "affordable in a more substantial way," including requiring no parental contribution for students whose families earn less than $65,000 a year, Harvard President Drew Gilpin Faust said.

That $65,000-and-less group represents 20 percent of undergraduate families at Harvard, according to a school news release.

"Although you were need-blind admitted, for a lot of families it was still quite a stretch financially for the student to go to the university," Griffin said. "And you would have some very unfortunate situations where certain parents just didn't feel in a position to stretch for the benefit of their children."

The billed costs for the 2013-14 academic year at Harvard College were $56,407, up from $54,496 the previous year, according to the school's website.

"Student loan debt is the only form of consumer debt that has grown since the peak of consumer debt in 2008," according to data released by the New York Federal Reserve in March. "Balances of student loans have eclipsed both auto loans and credit cards, making student loan debt the largest form of consumer debt outside of mortgages."

The Fed's data as of the fourth quarter of 2012 showed that the average student loan balance for all age groups was $24,803 and doesn't taper off until creditors are in their 50s. More recent data from the second half of 2013 showed that student loan debt had the highest 90-day-plus delinquency rate of any form of household debt, including credit cards.

Griffin graduated from Harvard in 1989 with a degree in economics. His grandmother, who was a savvy Libertyville businesswoman, paid for the vast majority of his schooling, leaving him with no student loans.

Griffin's gift was a bit surprising, given his libertarian political leanings. He generally believes subsidies distort economic outcomes. That theory, as applied to this scenario, would mean that increasing grants and loans to students could encourage tuition increases.

"What we have here is a trade-off between a little less discipline in cost balanced against (the fact that) I adamantly believe America's finest university should be open to every single child in our country who has the academic and interpersonal and other demonstrated hallmarks of potential future success," he said.

"So, if you grew up in the South Side of Chicago in the worst neighborhood, but through just incredible hard work had good grades, played on the varsity soccer team, ran for student council — but you get into Harvard, I want you to be able to go there.

"Because as a libertarian, I really believe that our country needs to fight for equality of opportunity. And in my own small way, in making this gift, I'm part of that fight."

Stock sell-offs

Groupon co-founder and former CEO Andrew Mason made some news last week after public filings revealed he had sold more than half his stake in the tech company since being fired.

But of all of the company's earliest investors, Mason hasn't been the biggest seller; a venture capital firm has.

New Enterprise Associates, run by Chicago native Peter Barris, has sold 33 million Class A shares, compared with Mason's approximately 27.6 million. Before Groupon's initial public offering, the venture capital firm, which first invested $4.8 million in Groupon's predecessor, ThePoint, in February 2008, owned 14.5 percent of the company's Class A shares. It now owns 8 percent.

Mason's Class A holdings in the company now represent 2.9 percent of outstanding shares, down from a pre-IPO peak of 7.6 percent.

Two other recent IPOs from the local tech sector — in-flight Wi-Fi provider Gogo and software-maker Textura Corp. — also experienced big sell-offs.

One of Gogo's largest shareholders, private equity firm Ripplewood Holdings, ended its stake in the company after post-IPO restrictions on the sale of stock expired. New York-based Ripplewood distributed all 27.6 million shares to its investors.

Gogo's stock plunged 15.6 percent the day of Ripplewood's sale announcement. But, unlike Groupon, it is trading above its June debut price of $16. Its shares closed at $20.56 Wednesday.

Sticking with Gogo is early investor Oakleigh Thorne IV, who sold his family's business, Riverwoods-based CCH, formerly Commerce Clearing House, to Wolters Kluwer for $1.9 billion in early 1996.

At Textura, which makes software for the construction industry, large shareholders First Midwest Bancorp and Aon Risk Services Cos. sold all or nearly all their stakes in a secondary offering in September. Meanwhile, Toronto-based private equity firm Northwater Capital Inc. has stuck around, and Steven A. Cohen's SAC Capital Advisors — that's the same firm caught up in an insider-trading scandal — disclosed ownership of nearly 1.25 million shares in January.

That was shortly after Deerfield-based Textura came under assault from short seller Citron Research. Textura's share price had soared post-IPO, reaching more than $47. The stock debuted at $24 per share. It closed Wednesday at $26.52.

Melissa Harris can be reached at mmharris@tribune.com or 312-222-4582.

Twitter @chiconfidential

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