The university is a racket

Discussing conflicts of interest on my school's Board of Trustees and some forms that all non-profit institutions are required to keep on their premises and that you can request!

Submitted by Soapy on December 30, 2012

About two months ago, a professor at my university gave a talk sponsored by the student union entitled, “The University as a Racket.” The talk dealt with major conflicts of interest going on inside the upper echelons of university decision-making. At our school, the Board of Trustees (BOT) makes all major decisions. The BOT is primarily made up of financial executives. Most notably high-ranking executives from Goldman Sachs, Chase Bank, and Bank of America. The BOT contains one student member, handpicked by the university, who is not allowed to disclose the details of BOT meetings. So, essentially our school is run by financial executives. The same ones who caused the 2008 financial crisis and then used taxpayer money to give themselves bonuses. Now, when the BOT decides to increase the tuition who profits? Well, when the tuition is increased students take out loans, and the financial institutions that the BOT members belong to make a killing off of speculation on these loans. What an amazing conflict of interest!

Not only is there this egregious conflict of interest at play, but the BOT does something else quite nefarious that I’m sure most people don’t realize. The BOT takes our tuition money and puts it up as collateral on loans from banks, the same banks that have executives on the BOT. The higher the tuition, the larger the loans that get taken out. Now, with these loans of course comes interest. If students had even the slightest access to the university’s budget we would know the details of these loans and how much is being spent on paying off the interest on these loans, but of course we don’t have any access to the budget so we don’t know, right? Wrong. There is a form. A form that every non-profit institution is required by federal law to keep in hard copy on their premises at all times and is to made available to any and all who request it. It is entitled the Bond Prospectus. The Bond Prospectus will tell you how much money the university spends on paying off the interest on its loans. Now, in violation of federal law our university did not have the Bond Prospectus in hard copy, we are still waiting on the details for it, but no doubt they will come forth soon or else legal action will be taken.

The talk also touched on another major problem contributing to tuition increases and that is a rise in administrative costs. The Wall Street Journal reports, “The number of employees hired by colleges and universities to manage or administer people, programs and regulations increased 50% faster than the number of instructors between 2001 and 2011, the U.S. Department of Education says. It’s part of the reason that tuition, according o the Bureau of Labor Statistics, has risen even faster than health-care costs.” In fact, since the 1970s, the, “number of administrative staffers has increased by 235 percent while the number of faculty and students has increased by only about 50 percent.” What are these administrative jobs? They are jobs intended to keep the university “ahead of the competition.” This is capitalism, and schools are not there to help their students learn, they are there to make money. The university is hiring people so that it can market itself better. Whether this means that it is straight up hiring people into its marketing bureaucracy, or it is adding people to its research departments, the hiring is done to keep the university “ahead of the competition.”

Yes, while you and your friends go into debt and work full time jobs outside of school to make ends meet, your school is taking your money and creating completely unnecessary jobs. Not only that, but the people in charge of this all are giving themselves big fat raises. Our school president is making bank, and gets a $30,000 raise every year. Now, we know how much money the university president makes, but up until a month ago we did not know how much other top paying administrators make. Well, without access to the budget how could we know? There is a form. A form that federal law requires non-profit institutions to keep on premises at all times. It is entitled Form 990. Members of the student union walked into the main office of the university and demanded the form. The form was obtained and the information from it was sent to the school newspaper which ran a giant front page article displaying the findings.

Now, there is one more way that my university is a racket. My school, like most every school, takes tuition money and expands as much as it can. Again, the university is not there to help you learn, it is there to make money, and expansion is the name of the game. Well, aside from financial executives there are real estate executives sitting on the BOT. I have not tried to find out yet, but it is not inconceivable that the real estate executives sitting on the BOT are the ones who received the contracts for the campus expansion plans. If not them then probably their friends.

I’m sure if you’re a student at a U.S. university this information is similar to what you are experiencing at your school. If your university is a certified 501(c)(3) non-profit institution go ahead and demand that you be granted access to Form 990 and the Bond Prospectus.


Chilli Sauce

11 years 6 months ago

In reply to by

Submitted by Chilli Sauce on December 31, 2012

Hey Soapy, just to say that I'm glad to see you back round on libcom.

a talk sponsored by the student union entitled

A student union in the US? I didn't think they existed even in name. I've seen student "assembly", "goverment", "senate", and even "legislature" but never student union.

Could you give us a bit more background to how it functions and how it's run?

your school is taking your money and creating completely unnecessary jobs.

While I agree with your critique--these are marketing jobs not educational ones--I'd be careful how you phrase the conflict. You don't want to alienate administrative staff when your critique is with the market logic of modern university education.

I mean, a huge percentage of jobs created by modern capitalism (especially in the major capitalist economies) are unneccesary and unproductive. We don't want to get rid of them now as it would be a loss of livelihood for a shit-ton of working class people. In a post capitalist future, of course, all that unproductive labor would be eliminated.

There's an amazing history of a group of workers and their union who, in 1970s Britain, demanded their munitions factory be re-tooled for productive purposes. I can't find a link at the moment (perhaps another libcommer will be able to provide one), but I think anytime we're talking about the wasteful labor created by capitalism our propaganda (and hopefully our demands!) should be that those jobs be redirected towards work with some social utility--with a guarantee of re-employment for the workers currently in those positions.


11 years 6 months ago

In reply to by

Submitted by Steven. on December 31, 2012

Chilli Sauce

There's an amazing history of a group of workers and their union who, in 1970s Britain, demanded their munitions factory be re-tooled for productive purposes. I can't find a link at the moment (perhaps another libcommer will be able to provide one)


11 years 6 months ago

In reply to by

Submitted by Soapy on January 2, 2013

Well essentially what happened is about 20 or so students including myself got together and started holding student assemblies and calling ourselves the student union. We're not a union in the sense where you pay dues and such, in fact right now we get funding from the university as a registered student club (although we are always on the edge of having our charter revoked because of our actions), but we attempt to serve the same purpose.

I mention it a bit in my previous blog post, but in terms of how we run we have weekly "student assemblies" that occur every Sunday. All major decisions of the union are made at these assemblies. These assemblies are advertised to the public and any students are welcome to come. The assembly is run strictly by consensus process and last around 2-3 hours each time. To be honest it is usually that around only 15 people show up each time, and these 15 are almost all already involved with the student union but every now and then we get a new member who stays for good. The assemblies can only do so much, we have about 4 committees and working groups which meet during the week to plan our upcoming events, make fliers, sort out our finances etc. Right now we are currently demanding a two year freeze on the increase of tuition and collective bargaining rights for students.

Aye, I see your point bout not alienating the administrative staff.

Also, I made a mistake saying that student loan debt is speculated on in the market, this is actually illegal by US law. What does happen however is that students pay very high interest on debt to the banks that the BOT members are executives at.

Also, some comrades have been poring over the recently released Bond Prospectus and have found that the university is remarkably in debt. So in debt that the recent 60 million dollar loan it just took out was simply used to pay off on a loan from 1982. These debts are most certainly speculated on in the financial markets where corporations like Goldman Sachs make a killing.

Also good to be back! Never thought I'd find a place for so much rational discussion about Anarchism.

Chilli Sauce

11 years 6 months ago

In reply to by

Submitted by Chilli Sauce on January 2, 2013

Ah, that clears things up. All sounds very exciting, please do keep us posted on how it's going.

In the UK, the National Union of Students is an institutionalised part university life--with local and international officers, ties to the TUC, and consultative role within individuals universities and on a national poltical level as well. They're also, practically, as stepping stone for leftist careerists to get into the positions within the Labour Party.