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See this press release.  Lots of questions need to be answered still on this.  I hope that anyone who cares about the cost of college, and the price being paid will be more than interested to find out whether their local schools are engaging in this behavior.  

Come to StudentLoanJustice.org to find out more...

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                            For Immediate Release January 6, 2014

Astounding "Tuition Reserves" not limited to Wisconsin

Last year, it was reported that the University of Wisconsin had amassed between $400 million- $1 billion in funding, money taken from excess tuition income- most of which was supplied through the nation's federal student loan program.   This "reserve" was built during a time where the University raised it's tuition at a record pace and pointed to the national economic crisis as justification for these actions.

It has since been reported that this practice of siphoning tuition income was not limited to the University of Wisconsin.  In fact, it is becoming evident that most, if not all universities in this country have been engaging in similar practices. The following (courtesy of the University of Wisconsin) is a an incomplete snapshot showing the level of "tuition reserves" amassed by other, similarly sized universities over the past several years*.  
http://s3.amazonaws.com/...
These data, if accurate, point to a cumulative tuition "slush fund" of hundreds of billions of dollars, nationwide.  

These are not endowments.  These are not charitable funds collected via the altruisim of alumni, foundations, or other wealthy benefactors.  These are monies siphoned- at least in part- from the most vulnerable citizens at a time when the wealth disparity between the richest Americans, and these citizens has never been higher.

It is still unknown how much tuition income was used to build these reserves, It is also unknown how these reserves have grown over time.  These are questions that local media, state legislatures, university governing boards, citizen's groups, and other stakeholders should investigate thoroughly to find out precisely how deep and how wide this abuse of the citizenry goes.    

Make no mistake:  Under current law, student loans are the ONLY type of loan in our nation's history to be stripped of nearly all standard consumer protections, including bankruptcy, statutes of limitations, and many others.  This, generally, has caused serious lapses in oversight, perversions of financial motivations systemwide, and has encouraged flagrant wealth-making off the student's backs by the schools, lenders, and even the federal government.  

This is not a partisan issue.  This also should not be considered an opportunity for the federal government to exact a toll while doing nothing for the citizens who are being harmed (as has happened in the past).   The U.S. Congress should, and must return standard bankruptcy protections, as a first step towards addressing not only this issue, but a litany of other systemic failings that the absence of these protections has enabled

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Comment Preferences

  •  Tip Jar (4+ / 0-)

    Please support the StudentLoanJustice.Org PAC

    by studentloanjustice on Wed Jan 22, 2014 at 09:50:09 PM PST

  •  OK, wait... (4+ / 0-)

    Can you explain what "tuition reserves" are?

    You say this:

    Last year, it was reported that the University of Wisconsin had amassed between $400 million- $1 billion in funding, money taken from excess tuition income-
    and this:
    It has since been reported that this practice of siphoning tuition income was not limited to the University of Wisconsin.  In fact, it is becoming evident that most, if not all universities in this country have been engaging in similar practices.
    But you don't say how the siphoning is done.

    You even link to Matt Taibbi's excellent August 2013 article on "The College Loan Scandal", but I have searched "tuition reserves" in that text, and I don't see him using that phrase.

    Don't get me wrong--these "student loans" have been turned into a major-league racket, screwing over, as usual, everyone but the people running the racket.  And I really want to rec this diary. But it seems like there's something missing to that end in this diary. So I thought a definition of "tuition reserves" was a good place to start, cuz I am missing something...

    This all started with "what the Republicans did to language".

    by lunachickie on Wed Jan 22, 2014 at 10:27:32 PM PST

    •  (clarity) (0+ / 0-)

      (your link to Taibbi's article is on your website...)

      This all started with "what the Republicans did to language".

      by lunachickie on Wed Jan 22, 2014 at 10:28:59 PM PST

      [ Parent ]

    •  agree (1+ / 0-)
      Recommended by:
      Odysseus

      one thing missing for me is how much these numbers have changed over time.

      •  I looked into the numbers for University of (1+ / 0-)
        Recommended by:
        Farugia

        Washington since that's one of the two big public universities for my state.

        Unrestricted Assets
        2007   961,000,000
        2008  1,023,000,000
        2009    930,000,000
        2010  1,163,000,000
        2011  1,366,000,000
        2012  1,351,000,000
        2013  1,599,000,000
        I think that's an increase of about 66% since 2007.

        Revenue from tuition and fees
        2007  397,000,000
        2008  420,000,000
        2009  458,000,000
        2010  528,000,000
        2011  595,000,000
        2012  681,000,000
        2013  808,000,000
        I think that's an increase of about 104% since 2007.

        Fortunately tuition was frozen for this year and that is the plan for next year too.

        Here's the most recent financial report. Financial Report 2013

  •  This would be a major issue for me but I (4+ / 0-)

    am not sure about the accuracy of your report and why this has not really been caught before.

  •  I am not at all sure the the chart references... (4+ / 0-)

    ...the issue you're talking about.  

    It's not the side effects of the cocaine/I'm thinking that it must be love

    by Rich in PA on Thu Jan 23, 2014 at 03:48:53 AM PST

  •  I'm not saying that colleges should be (2+ / 0-)
    Recommended by:
    wilderness voice, FG

    stockpiling away reserves by the billions, but some stockpiling is an unfortunate but real necessity in a scenario where state support is dwindling to nothingness.

    In the good old days, if you needed a chemistry building, the state built you one, and paid for it.  Now you pay for it yourself.  Which means a bond issue.  You'll get a crummy rate (which of course will bite you in the ass but good and soon enough) if you can't demonstrate a high degree of financial soundness -- which means a big pile of reserves.

    Similarly, some states expect and even demand that colleges pile up reserves in order to demonstrate the soundness of institutions to voters . . . and as an implied warning to the institutions that they'd better have their financial houses in order because further funding cuts will be inevitable.

    Dogs from the street can have all the desirable qualities that one could want from pet dogs. Most adopted stray dogs are usually humble and exceptionally faithful to their owners as if they are grateful for this kindness. -- H.M. Bhumibol Adulyadej

    by corvo on Thu Jan 23, 2014 at 06:10:17 AM PST

    •  I guess I think of it in terms of our local school (0+ / 0-)

      district which competes with the state universities for state funding. School districts also rely on bonds for capital projects so they need to keep reserves to be on sound financial footing. My kids' district has a policy that reserves will be 3-4% of the annual operating budget.

      The district had to spend it down a little over these last few years because of the economic crisis and were only able to begin raising it this past year. It just seems strange to me that public universities find it appropriate to increase their reserves during the same challenging economic times.

      In the reading I did after seeing this diary, I learned that University of Wisconsin doesn't even have a policy identifying an appropriate level of reserves. (From the looks of the chart I wouldn't be surprised if there were other universities without policies concerning reserves.) It's sounds like University of Wisconsin has realized they need to develop one.

      •  fiscal health is measured in many ways. (0+ / 0-)

        Increasingly, public universities have only reserves as a measurement that makes them look good, i.e., counterblanaces the bad metrics.

        I'm so happy, I really am, that you compared universities to public K-12s.  Delighted, actually.  Because it helps prove my point.  Both receive state funding in every state of the union I know of (except perhaps Vermont, where public colleges and universities receive virtually no state support -- thanks, Howard Dean!) (btw the "virtually" can probably be deleted; I'm just hedging my bets).  In at least one state I'm familiar with -- Colorado -- K-12s receive a fixed (and increasing!) portion of the budget; this is per constitutional amendment and the legislature can do nothing about it.  No state has any similar requirement regarding postsecondary funding, which makes such appropriations particularly easy to cut.  

        What's more, K-12s universally receive property tax revenues.  Postsecondary instutions universally do not receive property tax revenues, with the usual exception of local two-year institutions.

        Thanks!

        Dogs from the street can have all the desirable qualities that one could want from pet dogs. Most adopted stray dogs are usually humble and exceptionally faithful to their owners as if they are grateful for this kindness. -- H.M. Bhumibol Adulyadej

        by corvo on Thu Jan 23, 2014 at 07:34:25 AM PST

        [ Parent ]

    •  And then states grab those reserves (0+ / 0-)

      when they run budget deficits. Florida did it a couple of years ago, for example. There is also an issue of startup accounts. A professor comes in and is promised some money to get started. Could be anywhere from 50k to 1-2 mln. Usually around 0.5-1 mln. Since this money is supposed to last for a few years, a lot of it remains in the account for a while and is counted as reserves.

  •  Here's a good article that explains this (4+ / 0-)

    The article is from Inside Higher Ed. Basically, colleges need to keep some money on hand because it's going to ongoing projects, and to have a reserve to pay expenses before the next semester's tuition comes in. As far as I can tell, this is just accounting issues, not some vast pile of wealth that administrators jump into for fun.

    The Most Dangerous Man in America: Rush Limbaugh's Assault on Reason (www.limbaughbook.com).

    by JohnKWilson on Thu Jan 23, 2014 at 06:33:42 AM PST

    •  You mean like the diarist implies? (1+ / 0-)
      Recommended by:
      Rich in PA

      Seriously, have you checked out the website? Amateur Hour. They threw up some left leaning magazine articles, posted a bunch of inflammatory crap, and tried to sell it here. I'd almost bet next weeks paycheck that Freedom Works or something similar is actually behind it, it's that bad.

      I'm tempted to drop a donut on this post, but it got no traction anyway, so I won't bother. But I'm keeping an eye out for the future. I find this particular concept as presented worrisome more than anything. Now that the loan bubble is close to bursting, the bullshit is going to start flying even thicker, to obscure various bits of ugly truth about what the "student loan business" has become in this country.

      This all started with "what the Republicans did to language".

      by lunachickie on Thu Jan 23, 2014 at 10:35:49 AM PST

      [ Parent ]

      •  It's not trollery, it's just bad advocacy. (0+ / 0-)

        The diarist has a track record of thinking public universities are living high on the hog, which certainly isn't anything I've witnessed.

        It's not the side effects of the cocaine/I'm thinking that it must be love

        by Rich in PA on Thu Jan 23, 2014 at 02:09:41 PM PST

        [ Parent ]

        •  I think the diarist's point is that some (0+ / 0-)

          universities have access to money that they're not using and are instead accumulating as reserves. I don't think he's saying they're living high on the hog. In order for it to look like they're living high on the hog, the money would have to be spent. Maybe I'm misunderstanding, but I thought that was what the diarist was suggesting.

  •  Yikes, I worked on a comment but then blew it (0+ / 0-)

    while trying to check to see if my links worked.

    I'm not gonna try to recreate it but wanted to say thanks for posting on this topic. This was very informative and spurred me to look into the state of things where I live and I learned a lot and I would say I'm disillusioned. I can't see a reasonable justification for sitting on this much cash while they insist they must raise tuition dramatically.

    You're right about this not being a partisan issue. It's not fair and it's not good for our economy for young people to have to start their lives saddled with high debt.

  •  Another thing I found interesting from the chart (0+ / 0-)

    was the negative balance for unrestricted assets for the University of California system. I remember how hard the students pushed back and protested against tuition increases in 2009 and 2011. The tuition increases still happened but at least it looks like they weren't used to build up reserves.

  •  Tags fixed. (0+ / 0-)
    Separate multiple keywords with commas.

    -7.75 -4.67

    "Freedom's just another word for nothing left to lose."

    There are no Christians in foxholes.

    by Odysseus on Thu Jan 23, 2014 at 09:40:13 AM PST

  •  SCANDAL, SCANDAL, SCANDAL!!!!! whatever... (0+ / 0-)

    These numbers are all reported without any context of the overall budget of these gigantic university systems.

    In Wisconsin, this "surplus" reserve balance provided an opportunity for republican legislators to demonize public institutions yet again...and gave an excuse for their desire to slash budgets again.

    I had a wide-ranging discussion with my WI State Rep a couple of weeks ago.  He commented on this faux scandal...

    Yeah, the UW System had a reserve that supposedly surprised my Republican Colleagues.  They were outraged and determined to set a reasonable percentage for reserve funds -- one that is "comparable" to private businesses.  The result...a percentage for reserves that is HIGHER than what caused the firestorm last spring.  But, the cuts still stand...student debt issue is unresolved, and morale in public institutions continues to decline -- that is the real scandal.

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