VICE: New York’s Attorney General Wants to Know Why This College Isn’t Free Anymore

Career College Central Summary:

  • For over 150 years, Cooper Union in Manhattan's East Village existed as something of an enigma. The renowned art, architecture, and engineering college was located in one of the country's most expensive cities, yet even as students of neighboring private universities saw their tuition bills blow past 50 grand a year, Cooper Union remained free.
  • That all changed two years ago, when Cooper Union's board of trustees made moves to start charging tuition to incoming undergraduate students for the first time. Overnight, the school went from free to costing nearly $40,000 a year—kicking off student-led protests that continue to flare to this day.
  • Some current and former students argue that Cooper Union has grown corrupt and is ruled by a board more concerned with pleasing its own members—who often hail from the city's powerful real estate interests and Wall Street—than advancing their own education. These critics say the school is governed by a group of businessmen who are both nepotistic and externally unaccountable—and who didn't have to charge tuition, but did so anyway in order to pocket profits for their friends and themselves.
  • The accusations of foul play gained a sheen of legitimacy late last month when news broke that New York State Attorney General Eric Schneiderman's office had launched a probe into the financial decisions made by the Cooper Union board. The investigation could shed light on what went wrong—and whether there's a future for not-for-profit higher education in our modern gilded age.
  • The Cooper Union for the Advancement of Art and Science was established by millionaire philanthropist Peter Cooper in 1859. At the time, Cooper argued with his good friend, Andrew Carnegie, over the values of higher education and how it should be paid for. Cooper believed college should be a beacon of public education—free, and for the masses—while Carnegie, true to his capitalist philosophy, thought quality should be bought, not just given away. Cooper started Cooper Union and Carnegie founded Carnegie-Mellon in Pittsburgh.
  • To keep his dream alive, Cooper bought real estate all over Manhattan, and the college's endowment was bolstered by a never-ending stream of rent checks. These properties included the land beneath the Chrysler Building, which the school owns under special privileges of tax exemption due to its nonprofit status, as well as buildings along Astor Place, near the university. In a sense, Cooper was a real estate visionary who realized that if you own enough property in Manhattan, it's pretty easy to make money.
  • For over a century, this worked: The endowment was replenished by income from the properties, and the school was able to pay students' fees. But in recent years, that balancing act fell to pieces. Debts soared, and the trustees sought to improve Cooper Union's portfolio via common Wall Street protocols: downsizing, and investment in trustees' hedge funds. As Felix Salmon described in his in-depth analysis of the Cooper Union troubles for Reuters, this backfired.
  • "With more than $100 million in hedge fund investments in 2008, Cooper was paying more than $2 million a year in hedge fund management fees alone, never mind performance fees," Salmon wrote. "That's the kind of money the college desperately needs for operational expenses."
  • For a while, Cooper Union kept itself afloat by leasing out its properties, even if they were going for below market price—a strategy, Salmon wrote, that was "clearly unsustainable." The most recent example was the $97 million, 99-year-long lease of 51 Astor Place, a Cooper Union–owned property that was auctioned off at a discount to millionaire developer Edward Minskoff, who students say happened to be a friend of the board of trustees. The developer found it difficult to immediately start construction and find tenants—both of which were necessary to pay Cooper the rent it desperately needed. But according to a petition filed by the Committee to Save Cooper Union, Minskoff was granted consecutive delays on rent commitments by the school. Now the black monolith that was erected on Cooper Union's property houses more classes for St. John's University students than it does for Cooper kids.
  • The Cooper Union charter mandates that the board of trustees be personally responsible for closing the school's deficits. That might explain the sales and investments—these were seen as viable options for the board to save face, albeit temporary ones. But it doesn't explain why the board took out a $175 million loan in 2006 to build the New Academic Building, a towering glass complex smack dab in the middle of Cooper Square.

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VICE

 

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