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.”
Opinions on Inside Higher Ed
Inside Higher Ed’s Blog U
What Others Are Reading