After months of hints and statements, New York University made it official Friday: It will no longer deal with the United Auto Workers union that represents teaching assistants.

NYU -- the only private university ever to have a union for TA's -- said that collective bargaining interfered with academic decision making and was not needed to protect the interests of graduate students. "We believe that it is of the utmost importance to respect the principle that students are students and not employees," said a letter sent by NYU administrators to students and faculty members, announcing the decision.

Graduate students immediately denounced the university's decision and said that it might lead to a strike. "We have no choice but to escalate pressure," said Michael Palm, a Ph.D. student in American studies and a leader in the union. "A strike is certainly a possibility. It's a last resort, but all indications are that NYU is going to give us no choice," he said.

NYU recognized the union in 2002, following a National Labor Relations Board ruling that graduate students at private universities were employees. Last year, however, the NLRB reversed itself in another case and gave private universities the right to block unions. The latest ruling didn’t bar collective bargaining, but it gave NYU the option it now plans to exercise -- to just walk away from the union.

In June, the university announced a tentative plan to stop dealing with the UAW, but to provide significant improvements in teaching assistants' stipends. But at that time, university officials said that they still wanted more input from students and faculty members. NYU accepted letters of advice and held an open meeting at which almost all of the speakers urged the university to keep the union. But Friday's announcement, characterized by the university as a "final" decision, ended the possibility that NYU might continue to recognize the union.

The dispute at NYU has implications far beyond the university. Many public universities outside the South have TA unions. But as the only private university with a union, NYU was seen as a testing ground for expanding collective bargaining in private higher education.

Friday's announcement followed an offer by NYU last week to keep the union -- but in a much more narrow role. The university told the UAW it could continue on as a union to negotiate stipend and benefit levels, but that grievances and arbitration would have to cease, with the provost empowered to settle all disputes that might have gone to arbitration under the old contract.

In NYU's letter to the university, this offer was described as "compatible with the principle that our graduate assistants are in essence students (not 'workers') and that the primacy of the university's academic rights cannot be assailed."

NYU said that this offer would have created a "new paradigm of union representation of graduate students," but union officials called it an insulting "all or nothing" offer that would have forced the graduate students to lose important rights. The union said that the university should negotiate, not set certain areas as off limits. UAW officials have also said that while the university repeatedly complains about union grievances creating academic difficulties, it has not supplied concrete examples -- except in cases where graduate students' employment rights were being trampled upon.

In rejecting the union, the university announced a series of new and continued policies on TA stipends and benefits. Doctoral students will receive $1,000 increases in the base stipend rate (currently $18,000) in each of the next three years. In addition, NYU pledged to announce planned stipend increases three years ahead of time so that graduate students could plan, much as they would under a three-year union contract. Many of the benefits covered by the UAW contract -- such as having the university pay 100 percent of costs under the student health insurance plan -- will continue.

The stipend plan was announced in June, but the university also announced Friday that it would take steps to legally bind itself to the stipend plan, and would create a $200,000 emergency fund to help graduate students facing medical emergencies.

NYU officials, who have acknowledged that the union significantly improved graduate students' economic well being, have said that they believe these benefits show the university's commitment to treating graduate students well. Skeptics have said that NYU is trying to buy off graduate students so that they will not support any strikes or protests organized by the UAW.

Palm, the graduate student who is a union organizer, said it was true that graduate students are happier today than they were before the UAW gained collective bargaining rights. "But it insults the intelligence of students," he said, to assume that a decent raise will make them abandon the union.

"Students understand that the reason they are not being as abused and exploited is because of the union," Palm said. "Without constant pressure, the university will resort to the same things that led to a union in the first place."