The university is a racket

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.