While Students Carry Debt, a Gilded Age for Profs
NYU Lavishes Vacation Homes on the University’s Elite
What do administrators do for their salaries? What could make a diploma affordable? This 2013 excerpt is from AlterNet, June 17.
by Pam Martens & Russ MartensNew York University is financing luxury Manhattan brownstones and high rise condos for its faculty and administrators out of its nonprofit coffers and has also been secretly financing country homes for a select group.
For example, NYU President John Sexton has a home on Fire Island that has been financed since 1994 by several million dollars in loans from the NYU School of Law Foundation and NYU itself. He also has the use of two well appointed apartments owned by NYU in Manhattan.
Sexton is set to receive a length of service bonus of $2.5 million in 2015 and an annual pension of $800,000 when he retires.
Richard Tsien, Director of the NYU Neuroscience Institute, bought a house for $1,125,000 with $500,000 in financing from NYU.
Numerous other NYU professors have country homes financed by the NYU School of Law Foundation or NYU. The university has acknowledged 168 loans.
The university purchased a $6.15 million condo to house Robert Grossman, Dean of the NYU Medical Center. Grossman’s combined compensation at NYU as of the fiscal year ending August 31, 2011 was $3,488,960. Five other doctors at the Medical Center receive a combined total of $10.5 million in compensation.
Jack Lew, President Obama’s pick for Treasury Secretary, as NYU’s Chief Operating Officer received a partially forgivable mortgage loan for $1.4 million to buy a luxury home in Riverdale and “severance pay” of $685,000 –- even though he had voluntarily left to join Citigroup. NYU provided Lew with an annual payment equal to the interest paid on his mortgage.
NYU is the second largest real estate owner in New York City, with $3.3 billion in residential and commercial holdings according to its 2010 federal tax return. Sexton plans vast construction projects earmarked that would cost the university billions of dollars.
The problems at NYU are emblematic of an insular institution whose Board is heavily dominated by the same Wall Street people who heaped disgrace upon their own institutions.
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JJS: So a lot of university revenue goes to real estate -- those million dollar homes -- and a lot of the revenue comes from real estate -- the apartments near campus and presumably, though not mentioned, student housing. The biggest part of those real estate values are not the building on the land but the location itself, especially in and around New York. It’s funny how the profitability of land can have its fingerprints all over a story yet the modern educated mind simply can not see the power in the land.
Besides overpaying a few elite faculty members, another article found that most of a university’s tuition income did not go to professors so much as to staff, i.e., fundraisers, and to campus construction. The new buildings increase the prestige of the university, enabling the institution to charge higher tuition. Further, the new buildings have to be built, typically by local contractors, which puts the university squarely in the camp of the local growth machine, and smooths over any town vs. gown contentious points, such as the “nonprofit” being exempt from the local property tax.
Why are students willing to pay outrageous tuitions? Not for knowledge. People can learn from books and online and find many experts happy to discuss their expertise. No, the value of the diploma is not knowledge but the “seal of approval” -- the student has proof of their ability to conform to social norms that rule in a business setting. Plus, the student from a prestigious university likely made valuable connections during their university experience, as Zuckerberg could not have created FaceBook without first plugging in the address book of a pair of popular students whom he’d met at Harvard.
Another reason students pay more is that they can. A few have rich parents and the rest have government loans. Governments can afford to lend because they enjoy the power to tax, they can borrow themselves and go deeply into debt, and they can fix the law so that student loans can never be forgiven by declaring bankruptcy. And parents who are rich generally are not inventors of a better mousetrap or in some other way making life better for others but instead occupy a niche that captures a lot of unearned income, such as the trillions floating around in real estate, in medical services, in lawyering, in hoarding patents, and in high government posts.
What’s to be done? Stop concentrating wealth. Stop corporate welfare. Make insider connections irrelevant, so business won’t pay higher salaries to those with prestigious degrees. Abolish the discretionary spending power of politicians so they can’t continue student loans; instead pay everyone a Citizens’ Dividend so they can invest in any learning or healing that suits them. To fund the CD, recover all the rents that people pay for land and resources and privileges like patents so that there’d no longer be a vast and deep fund of wealth available for grasping lawyers, doctors, teachers, CEOs, and the rest. It’s a reform that works but it’s not taught at any university and it’s not known by many well-meaning reformers.
Editor Jeffery J. Smith runs the Forum on Geonomics and helped prepare a course for the UN on geonomics. To take the “Land Rights” course, click here .
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