This post could easily have been posted in the “That’s
Unbelievable” Blog, but it is also relevant to the issue of access, so I posted
it here.
Cooper Union has not charged students tuition since
1902. (How did I miss that key point
when I was looking at which undergraduate engineering school to attend? Ah, but I digress…) In fact, every student who is admitted is
provided with a full scholarship which, as of 2010, was valued at approximately
$140,000 according to Ask.com’s wiki on the school. The school has a substantial endowment (of
approximately $600 million as of 2009) that includes ownership of the land
beneath the Chrysler Building. Real
estate property tax on the Chrysler building is paid to Cooper Union rather than
the State of New York. In 2006, the
leaseholder of the Chrysler Building signed a 150 year lease obligating it to pay rent of approximately $32.5 million
by 2018, escalating to $50 million per
year by 2038. And in 2009, when the
world’s financial markets were imploding, the Wall Street Journal reported that
Cooper Union’s endowment was actually holding steady or gaining value. That same year, the school finished a $150
million dollar, LEED rated (that means that it is energy efficient) classroom,
lab, and studio facility at 41 Cooper Square (see photos).
On Halloween 2011, the façade of success started to
crack. It turns out that last year’s operating
budget deficit was about $16.5 million out of a $60 million total budget. That is approximately 27%, which is unsustainable,
to say the least. The university’s
president, who has only been in his position for about four months, faced with
the unpleasant task of meeting with faculty and students to explain the school’s
dire financial status. He even discussed
the “T” word: tuition! He went on to explain that the college has
already disposed of as many assets as it can to cover previous budget
shortfalls. Selling the land underneath
the Chrysler Building would cost the school nearly a half-billion dollars in
lost revenue over the life of the current lease, so that does not make
sense. So, the only viable options
appear to be to find other effective fundraising mechanisms or to start
charging tuition for the first time in more than a century.
It seems to me that a Cooper Union education is
highly valuable. While I agree with the
concept that all students, regardless of wealth, should have access to the very
best education, I am strongly inclined to believe that people value commodities
based on what they pay for them. $60
million per year is a lot of money to spend on a school with 1,000
students. In fact, quick calculations
show that the school is spending approximately $60,000 per year per student to
provide them with an excellent education.
Obviously, these funds are not going directly to individual students,
but they are costs directly related to the education of those individuals so I’m
simplifying the situation here.
My question is this: Should we be concerned that a free, top-notch
college may begin charging even minimal tuition or is it simply time that
Cooper Union faced the fact that an organization can run in deficit for only so
long before it has to make radical changes in its financial model? I certainly do not envy their new president.
As I read the article a number of questions arise. Such as... what was the rationale for building such an expensive building (a cost of $150,000 per student)? or Was the previous president ousted for pursuing this project? or Is there an issue of mismanagement/embezzling in the past?
ReplyDeleteRobyn, I agree with you about not envying the new president. To maintain the integrity of their endowment the university will have to cut costs and raise revenue. Tuition, of course, is the main way to increase revenue however it may not hit the students as hard as initially perceived ($16,500 per student a year to make up short falls).
The school will most likely start with increasing it's efforts to bring in donations from alumni and put together to formula in which the students apply for financial aid and grants.
I think we should be concerned with how this has developed and the outcomes as many institutions feel the push to grow and be on the cutting edge in an attempt to maintain relevance and justify funding.