End The College Tuition Extortion Racket—Require Student Loan Give-Backs!
[Previously by Paul Streitz: Can Chris Shays Win “Blue”-State Connecticut On The Immigration Issue? (VDARE.com answer: he didn’t even try).
Higher education in the United States is a gigantic extortion racket. It’s time to do something about it. Colleges and universities should be forced to lower tuition—and to eliminate all outstanding student loans, with student loan give-backs.
Colleges and universities are not “non-profit.” They grab as much money as possible from every source, spend every cent and then cry poverty. Tuition at private schools would be about $9,000 per year, not $44,000, at the rate of inflation since 1960.
Tuition is not determined by “costs.” It is determined by revenue. The more money schools have, the more money they spend. In effect, college “loans” make the poorest students indentured servants of colleges.
The IRS has strict guidelines as what is permissible for other non-profit organizations: only a certain percentage of revenue can be used for fund raising and administration.
But there appear to be no such guidelines for colleges and universities. So there are art museums, squash courts, luxury dorms, climbing walls, million dollar college presidents, multi-million dollar loans to administrators, diversity deans, sustainability deans, bloated salaries, excessive staff, minimal teaching hours (six hours of teaching class per week).
Congress should require the IRS to create and enforce such guidelines on colleges and universities. This would give them a choice: either colleges economize and reduce tuition, or lose their non-profit status and be taxed by federal, state and local authorities.
At my alma mater, Hamilton College, A.J. Lafley was the Chairman of the Board of Trustees of from 2008 to 2013. He is the President and CEO of Procter and Gamble and attended Harvard Business School. You would think he could run a cost-efficient organization. Not the case.
On Lafley’s watch, tuition was raised from $38,600 to $44,346. That is a cumulative increase of $42,418,614 over five years.
Where did this $42 million dollars go? Lafley paid President Joan Hinde Stewart $470,028 (2008), $481,459 (2009 +2.4%), $722,496 (2010 +50.0%, which included a $202,900 bonus). [Hamilton College Salary Data (PDF)]
Lafley was equally generous to administrators: Karen Leach, VP Admin and Finance, $273,047; Richard Tantillo, VP Communications and Development, $308,802; Peter Tonetti, Chief Investment Officer, $374,912.
Lafley was also generous to the faculty: David C. Paris, Professor of Government, $220,874, Derek Jones, Professor of Economics, $170,959; Hong Gang Jin, Professor of East Asian Languages, $182,025; Maurice Isserman, Professor of American History, $202,320.
Lafley presided over building a $45 million dollar art facility, a $10 million art museum and ten squash courts for $6 million.
Lafley has allowed the growth of the administrative staff. There are at last count 738 employees including faculty, administration and staff both full and part time, excluding the book store. In other words, for every 2.6 students, there is one Hamilton employee.
Hamilton as an all-male school of six hundred in 1961, when I was a freshman, had Sidney Wertimer as the Dean of Students, with one secretary. As a co-ed school of nineteen hundred, Hamilton now has a Dean of Students, a Senior Associate Dean of Students, an Associate Dean of Students for Multicultural Affairs, an Associate Dean of Students for Health and Safety, an Associate Dean of Students for Academics, and three staff assistants.
Hamilton’s tuition in 1961 was $1,100 or 19.6% of the median U.S. family income ($5,620). In 2011, tuition was $42,640 or 84.4% of the U.S. median family income ($50,502).
After charging $200,000 for four years—counting in room and board—Hamilton College has the audacity to run a Senior Student Gift Campaign. Hamilton seniors contributed $19,000 one year, which is about 2.7% of President Stewart’s salary.
There is no end to the greed of A.J. Lafley and crew.
The “need-blind admissions policy” is a scam to send the poorest students into decades of debt. Thirty-nine percent of Hamilton students have a student loan. The average student loan is $18,568.
Thus, a graduating class of 475 has a student loan debt totalling approximately $3.4 million.
One-fifth of the student debt is equivalent to President Stewart’s salary.
One student that I know of left Hamilton College $41,500 in debt. She has two payment options. A ten year payment plan at 6.8% interest, a usurious credit card rate, would be monthly payments of $477.58 and a total payback of $57,309. A twenty-five year plan at 6.8% interest would be $288.04 per month and a total payback of $93,589.59.
She will be working for years, if not decades, as an indentured servant to Lafley and Dr. Stewart.
Hamilton’s total functional expenses listed on its 2010 tax return were $146,215,194. Reducing those expenses by 4.75% would yield $6,945,222. This would be enough to eliminate the annual increase in student loans ($3.4 million per year, see above) and have a fund to begin paying back all previous accumulated student loans.
A.J. Lafley and his kleptocrats on the board of trustees do not represent the interests of the Hamilton community of some 20,000 students, parents and alumni. Instead, these trustees are the handmaidens of the faculty. They have made millionaires out of many.
I have a particular interest in Hamilton, but it’s just one example.
We can expect the salaries to be higher for Harvard University: President Drew Gilpin Faust, $875,331; Katherine Lapp, Executive VP, $603,692; Jay O. Light, Dean, $1,284,363; Mark W. Kirschner, Professor of Biology, $1,607,073.[ Harvard University Salary Data (PDF)]
Harvard University has its loan program to “interested persons:” Julio Frank, $1,163,000, Steven Hyman, $750,000 and Homi Bhabha, $375,000 for purchases of homes; Mark Kirschner, $347,000, and Robert Merton, $353,923 for dependents’ educations.
But Harvard falls woefully short compared to New York University (titles are not listed on 2010 tax forms): John E. Sexton, $1,476,625; Robert Grossman, $1,744,480; Nicole Noyes, $1,920,516; Alan G. Berkeley $1,915,335; Ralph G. Mosca $1,824,530. Most startling: the loan to Richard Revesz, law professor and dean emeritus —$5,738,909 to purchase an apartment. [NYU Salary Data (PDF)]
There are two ways of ending this tuition racket:
- First, the Education Committees in both the U.S. House and Senate, which have the responsibility for federal education policy, should hold hearings to set IRS guidelines for colleges and universities.
Congress should require the IRS to remove the tax-exempt status from any college or university that
1) fails to lower tuition in 2014-15 and each year thereafter;
2) has one student graduate one dollar in debt;
3) fails to reimburse students for outstanding student loans; or
4) fails to have three parents and three students as voting members on the board of trustees. Putting both parents and students on the board of trustees will be a step to insure that the college is run for the best interests of the students, not the faculty.
- Second, create effective student and parent organizations capable of collectively bargaining tuition.
Students are able to rally in a minute to stop fracking or protect the African aardvarks, but they are passive when it comes to protecting their own financial interests. So they are exploited, and end up leaving college tens of thousands in debt.
Students—and their parents—must organize, to refuse to pay any increases, demand lower tuition, and demand student loan give-backs.
If students and parents do not protect their own interests through organizing and collective bargaining, no one will—least of all college trustees.
Paul Streitz is the founder and director of the College Parent Association. Among other books, plays and movies, he is the author of The Great American Tuition Rip-off and Oxford: Son of Queen Elizabeth I He has a BA in English literature from Hamilton College and an MBA from the University of Chicago. The College Parent Association’s petition to the U.S. Congress can be found here.