Swarthmore, under pressure to divest from fossil fuels, puts the price tag at about $200 million over 10 years, saying removing its investments would require a fundamental shift in how the college manages its endowment.
Individuals unhappy with Cooper Union's recent decision to end its 111-year practice of providing a full-tuition scholarship to all students issued a fake press release Tuesday as MetLife, which lent the university $175 million in 2006 to finance construction of a new academic building, promising to forgive the loan on the condition that the university remain free.
THE FAKE PRESS RELEASE:
METLIFE FORGIVES $175 MILLION LOAN TO COOPER UNION, KEEPS TUITION “FREE AS AIR AND WATER.”
NEW YORK - May 14, 2013 - MetLife, Inc. (NYSE: MET) announced today that it will conditionally forgive a $175 million loan made in 2006 to the Cooper Union, a treasured New York institution currently consumed by a financial crisis.
Cooper’s interest-only payments to date, which amount to approximately 72 million dollars, will be applied to the total, netting a total forgiveness of $103 million dollars. MetLife’s decision will allow the Cooper Union to preserve its 154 year meritocratic tradition of tuition free education. “Cooper occupies a special place in the soul of New York City, the city which MetLife calls home.” said MetLife CEO Steven Kandarian, “We had to do something.”
“The actions of the Free Cooper Union students who have occupied President Jamshed Bharucha’s office have inspired us to reject the inevitability of this situation. MetLife believes in the transformational power of capital to catalyze growth and increase opportunity. And we take that responsibility seriously; we see ourselves as stewards, in a sense, of our investments. So, though we don’t take lightly the moral hazard which today’s action represents, we didn’t feel we had any choice but to protect the legacy of empowerment Cooper Union embodies.”
“The institution is simply too big to fail,” Kandarian continued, “metaphorically speaking, of course.”
The Cooper Union for the Advancement of Science and Art was founded by industrialist Peter Cooper in 1859. It’s mission reflects it’s founder’s fundamental belief that an education “equal to the best” should be accessible to those who qualify, independent of their race, religion, sex, wealth or social status, and should be “open and free to all”.
In recent years the board of trustees has pursued an expansionist agenda of which the ill-advised 2006 loan is a part. The loan, taken in part to fund an exorbitant new, $111.6 million “landmark” building by Thom Mayne of Morphosis Architecture which a capital campaign had failed to adequately fund, requires annual interest-only payments of approximately $10.3 million, the majority of Cooper’s operating budget shortfall. In addition, a majority of Cooper’s managed endowment assets were recklessly invested in hedge funds which have diminished the endowment substantially since 2006. In light of these facts, in April 2013 Board of Trustees Chairman Mark Epstein announced that the Board had approved a plan to reduce the full tuition scholarship by half, ending a 154 year tradition and effectively abandoning the Cooper Union’s founding principles.
“In retrospect,” said Kandarian, “when we were offered Cooper’s ‘golden goose’ as collateral for a risky loan, we should have passed.”
MetLife’s actions are intended to stabilize the institution and allow it to continue offering a top quality education which is “as free as water and air,” however they should not be mistaken for a panacea. “These are drastic measures,” said Kandarian, “and as such they are conditional on Cooper’s continued status as a top quality tuition free college. The tuition free model is an essential part of the character of the institution and it’s stakeholders understand that without it the school will be unable to count on the high quality student body to which it is accustomed. The Free Cooper Union students and their faculty and alumni supporters are fighting for this unique, and uniquely American, institution.”
“My concern,” continued Kandarian, “ is that the current President [Jamshed Bharucha] and Board of Trustees do not appear to share in this vision. If Cooper is truly to emerge from this mess, they will need some new faces.”
MetLife continues to be the largest portfolio lender in the insurance industry with $43.1 billion in commercial mortgages outstanding at year end 2012.
“MetLife was a very active lender domestically and internationally in 2012, as we continued to focus on top quality properties in major markets,” said Robert Merck, global head of MetLife Real Estate Investors. “Our strategy for growth is based on prudent risk management and a long-term approach that enables us to execute quickly, process large transactions and provide our customers with world-class service.”
St. Mary's College of Maryland, a public liberal arts college, is likely to face a budget shortfall of about $3.5 million after commitments from incoming freshmen came in short of what the college expected, The Washington Post reported. Aiming for a class of about 470, the university has received commitments from only about 360 students so far. Administrators said the college is trying to attract more applicants and enroll students off the waitlist, as well as figure out how to cope with the lost tuition revenue. Administrators said they are not yet sure why the college saw a decrease in commitments after receiving a 14 percent increase in applications, but are looking into it.
Saint Augustine's College, in North Carolina, announced Friday that its leaders do not believe that it should proceed with the idea of acquiring Saint Paul's College, in Virginia. Both are historically black colleges founded by the Episcopal Church and Saint Augustine's agreed to explore taking over Saint Paul's after the latter lost its accreditation, effectively endangering its survival. A statement issued Friday by Saint Augustine's said, "After careful due diligence and much deliberation, Saint Augustine’s University has decided that to pursue the acquisition is not a fiscally responsible option." The statement added, however: "At the request of Saint Paul’s College officials, the Saint Augustine’s University Board of Trustees will allow Saint Paul’s to present a plan to the Saint Augustine’s University Board by May 31, 2013 in hopes of reversing this decision."
Students at Cooper Union took over the office of President Jamshed Bharucha on Wednesday, while he was not there. Students say that they are angry not only at the move to start charging tuition, but their sense that they have been left out of decision-making at the university. A spokeswoman for Cooper Union said that the protest was "a peaceful non-violent action and we continue discussions with students."
Here is a video made by students in the protest outlining their views:
The students are also documenting the protest on Twitter.
WASHINGTON -- At a hearing Wednesday afternoon on the Internal Revenue Service's recently issued wide-ranging report on tax compliance at colleges and universities, lawmakers said they were disturbed that the report found a high degree of noncompliance on unrelated business income, revenue earned by nonprofit organizations in ways that are not directly related to their missions. The IRS told lawmakers on the House of Representatives Ways and Means committee's oversight subcommittee that the 34 colleges -- half public, half nonprofit private -- examined most closely during the audit shouldn't be considered a representative sample, and that there are plans to continue looking into how unrelated business income is handled across the sector.
Wealthy American universities are cutting way back on their endowments' holdings in U.S. debt,Financial Times reported. In some cases, Treasury securities represented as much as 30 percent of endowment holdings in 2008-9 and that figure is now down to zero in some cases, or very small percentages in others.
Syracuse University has decided to leave the Big East Conference for the Atlantic Coast Conference, which has large payout for members. But Syracuse is bound by its contract with the Big East to pay a $7.5 million exit fee. The university is planning to allocate that bill across the institution, arguing that all parts will benefit from the eventual greater revenues from the ACC. But The Syracuse Post-Standard reported that both student and faculty groups are asking why the athletics department shouldn't pay the $7.5 million, and spare other departments cuts. A petition says: "In light of the fact that the Athletic Department is expected to receive an annual increase from the ACC in excess of $10 million per year, we endorse the resolution of the University Senate and Senate Budget Committee recommending that the $7.5 million Big East exit fee be paid fully by the Athletic Department and not out of student tuition."