Wall Street continues to eye higher education investments as a new way to increase their bottom line. As college costs increase and students go further into debt, Wall Street has made a killing on profits from higher education spending while students and taxpayers foot the bill. Below are some shocking ways that Wall Street has corporatized higher education across the country.

1. Wall Street rakes in $45 billion on average per year through higher education spending.[i] The three core components Wall Street uses to create profits off higher education are student loans, for-profit colleges and the institutional debt of colleges and universities. In 2012, Wall Street made $34 billion on interest charged on student loans, more than $500 million from for-profit colleges, and $10.5 billion in interest paid by colleges on their institutions’ debt. As recently as 2011, one in every 10 dollars spent on higher education was absorbed by Wall Street through these and other profit-driven schemes.
2. Working families paid $34 billion in interest on student loans in 2012.[ii] As Pell Grants and other need-based financial aid programs shrink to their smallest size since their formation, state spending per student has also reached an all-time low, forcing students to take out student loans to finance their education. Throughout the 2000s, interest rates for private loans increased rapidly, reaching 13 percent in 2006, despite much lower interest rates for the banks borrowing from the federal government.[iii] Following the 2013 federal student loan interest rate compromise, interest rates are now fixed to the 10-year Treasury note,[iv] meaning that the amount paid on interest will increase over time as interest rates rise.
3. In 2013, the Wall Street-traded student loan giant Sallie Mae generated more than $1 billion in profits.[v] While under investigation by three federal government entities[vi] and facing probes from multiple state attorneys general,[vii] Sallie Mae continued to be the most profitable private student lender, whose shareholders include large Wall Street hedge funds and private equity firms. In May 2014, Sallie Mae was fined $97 million by the Department of Justice and the FDIC for overcharging active-duty servicemembers and engaging in discriminatory lending practices.[viii] Despite these findings and mounting pressure from all sides, the company continues to profit from taxpayer dollars through its lucrative debt servicing contract with the Department of Education and its management of state 529 savings plans.[ix]
   
4. The Department of Education paid private debt collectors $1 billion in 2013 while tens of thousands of borrowers were incorrectly left in default status by those collectors.[x] The Department of Education actually grants a larger commission to collection agencies that “perform” best, meaning they effectively squeeze the most money out of struggling borrowers.[xi] Although many of the debt-collecting agencies are privately held companies, several are owned by publicly traded corporations. For example, Pioneer Credit Recovery Inc. is owned by Sallie Mae[xii], and NCO Debt Recovery is owned by the private investment arm of JP Morgan Chase.[xiii] In 2013, the Department of Education paid Pioneer Credit Recovery over $144 million – on top of the $104.5 million it paid Sallie Mae to service federal student loans.[xiv]
5. Eighty-six percent of the revenue that funds publicly traded for-profit schools comes from federal student aid programs.[xv] The Senate Committee on Health, Education, Labor and Pensions conducted a federal investigation between 2008 and 2010 that found that federal taxpayers invested $32 billion in for-profit colleges.[xvi] Although for-profit colleges only enroll 10 to 13 percent of all students attending college in the United States, they receive 25 percent of all federal financial aid dollars.[xvii] In fact, Pell Grants to for-profit college students increased by 581 percent from 2002 to 2012.[xviii] So while the $32 billion only reflects funding from the Pell Grant, taxpayers also fund for-profit universities through the G.I. Bill, as well as other federal and state grants and loans because military tuition assistance through the G.I. Bill is not counted as “federal student aid.” Twenty for-profit colleges received over $500 million in veterans’ benefits from the Department of Defense in 2010, accounting for one-third of the benefits from the G.I. Bill.[xix]
6. In 2011, 75 percent of students at for-profit colleges were enrolled at institutions owned by publicly traded companies or private equity firms.[xx] Recently, for-profit colleges have been bankrolled by Wall Street to better capitalize on higher education funding. The priorities of these institutions are clear when reviewing their spending habits: 17.2 percent of revenue went to instruction while they claimed 19.4 percent for profits.[xxi] And big banks have taken over individual for-profit higher education institutions. In 2006, the Education Management Corporation (EDMC) was taken over by Goldman Sachs, which shifted priorities – and resources – from instruction to marketing and recruitment. Enrolling over 150,000 students, EDMC alone received $486 million in Pell Grant funding and made $501 million in profits in 2011.[xxii]
7. Credit card companies paid colleges and universities $270 million from 2009 to 2012.[xxiii] Universities and colleges have signed contracts with financial institutions to issue and promote specific bank credit cards, regardless of the other, better financial options available for students on campus. These contracts grant banks access to over one million students every year, leading them to take on even more debt.
8. More than 850 colleges and universities are paid by banks to promote debit cards, prepaid cards and other banking products to students on campus while details of these agreements are not disclosed.[xxiv] According to a report by the Government Accountability Office, 852 colleges and universities – which account for 40 percent of country’s college enrollment – have financial agreements to provide debit or prepaid card services to their students, the details of which are often not made public to students. As Consumer Financial Protection Bureau Director Richard Cordray stated, “Students and their families should know if their school, whether well-intentioned or not, is being compensated to encourage students to use a specific account or card product. When financial institutions secretly give kickbacks to schools, they are engaging in risky practices.”[xxv]
9. One in four private colleges had board of trustee members with a financial conflict of interest in 2010.[xxvi] The Chronicle of Higher Education found that one in four trustees at private colleges and universities had a business relationship with the higher education institution on whose board they served. These connections vary in scale from multimillion-dollar contracts to a few thousand dollars’ worth of business, involving insurance agencies, banks, law firms and construction companies. Aside from mandatory tax documents, the details of these relationships are rarely disclosed. The number of institutions that allow business relationships with trustees has risen from 46 percent in 2008 to 58 percent in 2010.[xxvii]
10. The billionaire Koch brothers have invested millions to effectively “buy off” university economics departments to promote the Wall Street agenda.[xxviii] In return for the Charles G. Koch Charitable Foundation’s pledge of $1.5 million to the Florida State University economics department, foundation staff and representatives were given the power to approve any department hires for a new program promoting “political economy and free enterprise.”[xxix] Similar agreements have been negotiated at George Mason University, West Virginia University and Clemson University. Banks have also found a way to influence curriculum: a grant from BB&T funds a course on ethics and economics at Florida State University in which Ayn Rand’s Atlas Shrugged is required reading.[xxx]

The data above paints a troubling picture about the priorities of higher education in the United States. Students cannot afford to leave decision-making power in the hands of the reckless 1%, who continue to target higher education as their next business conquest. The crisis is real: we must stop Wall Street from raking in billions of dollars on the backs of students.

By Anabel Correa, University of Central Florida SLAP Treasurer-Elect

Orlando — On April 9, the Student Labor Action Project at the University of Central Florida demanded answers about justice for students and workers on campus from President John Hitt at an open forum. Rather than working with students to make positive change at UCF, President Hitt dodged questions and left important issues, like investing in private prisons and student debt, unacknowledged.[dropshadowbox align=”right” effect=”lifted-both” width=”250px” height=”” background_color=”#ffffff” border_width=”1″ border_color=”#dddddd” ]Tweet: Join @studentlabor in telling President Hitt that @Aramark workers at @UCF need fair campus labor standards.[/dropshadowbox]

We are most concerned about the non-existent labor standards for contractors, particularly Aramark, the major food distributor on campus and the third largest contract food service provider in the country. Aramark has a history of using scare tactics against its workers when they organize. In 2012, an Aramark Regional Director cut hours and threatened to fire workers who tried to unionize at Western Washington University.[1] Aramark has retaliated against its employees as well when they fired two workers at a Boston convention center for union activity in 2008.[2] In addition to worker intimidation, Aramark has a history of being a bad employer. In fact, workers in Philadelphia filed lawsuits against Aramark for wage theft and alleged the Aramark purposely made pay stubs complex so that workers would not know what they were owed.[3]

When UCF SLAP President-Elect Ofelia Sanchez and Treasurer-Elect Anabel Correa pointed to instances of the company’s wage theft, worker retaliation, and union-busting, President Hitt responded that he has no role in telling Aramark how to run its business.  The Vice President of Administration and Finance, William Merck, stated that this behavior is typical from these national companies and added that he is “pleased with the service that we’ve gotten from Aramark.”

Although students pay as much as $1,875 per semester for individual meal plans, and hundreds of community members and students work for ARAMARK, UCF administrators do not believe that they are responsible for upholding fair labor standards on campus. SLAP is organizing students and workers to pressure President Hitt to make campus a better work environment and to bring the student voice into making substantive improvements in UCF’s  labor standards.

Eugene, Oregon -Have you ever been in a space where everyone felt drained? Like there was no control over what your life would be like because someone or some institution made the rules and you were reaching for any opportunity you had to make it better? Well, if you have you know that it sucks. It is the kind of feeling that undergraduate college students have been feeling for a very long time.

I used to sit in those rooms and be frustrated with my fellow peers. Now, I sit in rooms with groups, including my own, the University of Oregon Student Labor Action Project (SLAP), where we push back.

The University of Oregon is in a relatively liberal school in a liberal state. We are not an anti-worker state. We still have work to do on same-sex marriage, marijuana legalization, and of course, corporate tax loopholes, but we are making some strides in those areas. What UO does have though, is high union density. Our campus has three unions that represent faculty (including adjunct), classified staff, and graduate teaching assistants. The United Academics, SEIU, and Graduate Teaching Fellows Federation (GTFF) have all been tremendous powerhouses in their fight for better working conditions at the University of Oregon.

Student power has been key to ensuring they have momentum in the bargaining fights. The UO Student Labor Action Project is a direct action organizing student group that works on economic justice campaigns. We are not a union but we are representing ourselves and our peers. Our solidarity work with the unions on our campus has been pivotal to our growth as well as theirs. Whether they want to admit it or not, administrators get concerned and nervous when undergraduate students who do not seem to have a direct stake in what happens show up at rallies and bargaining sessions for our faculty and staff. And, they should. Because it means that we are all talking to each other.

The importance of a work sector being organized is unparalleled but what really counts is when it creates a ripple effect on the surrounding sectors. You will find students, faculty, and workers at a rally for graduate teaching assistants. We support each other because we know that if we are in it together then we can win all of our fights. These cross-connections make us stronger and are necessary to our victories.

These victories can be as small as helping a union by just being there, or can be as big as escalating tactics that a union doesn’t have the resources to do, but a student group might.

When SEIU almost went on strike on the UO campus last fall, SLAP was going to do a rolling sit-in at the chancellor’s office. We understand the importance of the student voice in worker struggles and were willing to do whatever we needed to ensure that our staff, as well as the other six public universities’ staff, got the fair contract they deserved.

These are the types of tactics we can do together to reach our greater goal. Unions are a positive influence on our campus for the workers and students. It is essential to the labor movement and student movement that unions and students work together. We are doing that at the University of Oregon and we have control.

Joanna Stewart is co-chair of the Student Labor Action Project at the University of Oregon. Originally published in People’s World.

Follow @SLAPUO and @joannalynns on Twitter!

President Gottfredson,

We are writing to call on you to publicly disclose all partnerships and agreements University of Oregon has with financial institutions to market debit and prepaid cards, preferred private student loans, deposit accounts, financial aid disbursement, and other products to students.

Currently, the University of Oregon is only required to make these disclosures about college credit cards under the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act, but we believe the University of Oregon’s administration needs to take a step further in being responsible and transparent to prospective, current, and past students, and the larger community built around our school.

A report released by the U.S. Government Accountability Office on February 13, 2014 titled, “College Debit Card: Actions Needed to Address ATM Access, Student Choice, and Transparency” details consumer concerns related to fees passed onto students, a lack of free ATM access, and a host of other issues summarized in the report’s findings, which read, in part: “Schools or card providers appeared to encourage students to enroll in a college card rather than present neutral information about payment options.” The report recommends that debit and prepaid card providers be required to file their college financial agreements with the Consumer Financial Protection Bureau for public review. This reflects the need for transparency to ensure that members of our campus community can make financial decisions with unbiased information.

On December 17, 2013, the Director of the Consumer Financial Protection Bureau, Richard Cordray, called upon financial institutions to disclose these partnerships and agreements. As Director Cordray stated: “Students and their families should know if their school, whether well-intentioned or not, is being compensated to encourage students to use a specific account or card product. When financial institutions secretly give kickbacks to schools, they are engaging in risky practices.” We agree with him wholeheartedly, which is why students and professors on our campus are echoing their call for public disclosure.

It is our belief that making these agreements public and available for all students and their families on the University of Oregon website would signify your commitment to the well-being of our campus, and to the transparency standards to which other organizations are routinely held. Failing to disclose these partnerships will continue potential consumer risks for students and reflect poorly upon our university.

Sincerely,

University of Oregon Student Labor Action Project

League of Educators and Students Slashing Tuition

Alumni Petition President Hitt to give UCF Faculty a More Than 1 percent raise

UCF alumni will present UCF President Hitt a petition urging him to grant UCF Faculty a More Than 1 percent raise at the annual UCF Board of Trustees (BOT) Meeting, Thursday, January 23^rd, at the Live Oak Event Center from 1:00-4:00.

The petition was created by a UCF alumna and has gathered overwhelming support from UCF alumni, UCF faculty, and Orlando community members at large. The petition addresses UCF Faculty’s yearly decline of take home pay, UCF faculty’s right to a fair wage increase, and the outcome of November’s Impasse hearing.

UCF Faculty supporters shared their reasons for signing the petition and supporting the More Than 1 percent raise, in the comments section of the petition.

Below are a few comments by UCF alumni and faculty supporters:

“My faculty take good care of me and my university and they deserve a #morethan1 percent raise!”

“As a former student at FTU (now UCF) and now a faculty member at FSU, I know the competition you’re under to retain the best and brightest. Do the right thing and support your faculty at a level well beyond the insult of 0.5%.”

“Many of my friends, co-workers and teachers are very diligent in their work and deserve to be compensated appropriately. If they aren’t, their drive to do well will slowly diminish and overall quality of the different offices and educators will reflect this downward trend.”

In November, the UCF Board of Trustees Labor and Compensation Committee Chairman, Mr. Sprouls, announced he will recommended faculty receive a meager 0.5% raise to the full BOT. This announcement was accompanied by statements of regret, as Chairman Sprouls acknowledged “the faculty deserves more” and noted that UFF “had made a strong argument with regard to compensation.”

UCF alumni hope the full Board of Trustees will overturn the Labor and Compensation committee’s recommendation for a 0.5% raise and will do the right thing and grant faculty a More Than 1 percent raise. The average raise package for faculty at other Florida universities this year is over 2.5%.

Student Debt in the U.S. (Part 1)

As college costs spiral upwards, unpaid student debt has reached a record high of $1 trillion, slowing down economic growth and causing many young individuals to lose control of their finances. Many politicians, media outlets, and educators are focusing on cuts to state and federal subsidies as the reason behind these astronomical tuition hikes. But while this may be true in cases, it’s not that simple.

Paradoxically, many studies have found the opposite to be true: as federal and state subsidies increase, colleges and universities actually charge more for tuition, exacerbating the student debt crisis. Here we will trace the problem back two decades, examine funding trends and college costs to pinpoint what exactly is behind tuition increases.

Student Debt: The Last 20 Years

The rise in student debt is by no means a new phenomenon – borrowing has gone up every year since 1993. According to the National Center of Education Statistics, average debt began to creep up in 1993, making small jumps from an average of $10,000 per student until it had doubled to $20,000 twelve years later. Then it began to increase very sharply. By 2013, the average debt per borrower hit $30,000.

The rise in borrowing naturally correlates with increasing college costs. The average yearly tuition and room-and-board in 1990-1991 was $8,485 at a public 4-year institution. By 2010, that had leapt up 83%, reaching an average of $15,605 per year.

Concern over this upwards spiral is all over the news, as unpaid loans take a major toll on the economy. And many are worried this is just the beginning.

Tuition rates are predicted to rise over the next two decades, with costs hitting $41,228 per year for in-state public tuition and $92,869 for private colleges in 2029. This ridiculous level of debt could not be sustained by parents in stable careers, much less by students with poor financial history. So why is this happening?

Cuts to State Spending

Budget cuts brought on by the recent recession have taken their toll on the American education system, pushing more students and lenders to take up the slack. Incremental cuts have caused education allocations to drop since 2008, with thirty-six states decreasing funds by more than 20%. As a nationwide average, states cut their education spending by 28% from 2008 to 2013, according to the Center on Budget and Policy Priorities.

Some states have suffered deeper cut more than others. Washington and Florida now provide the lowest amounts of support for their public universities. Spending per student was just about $6,000 for these two states in 2010, barely over half the amount allotted to students in states like Hawaii, Connecticut or Arkansas that year, according to the Department of Education.

When states cut education budgets, where exactly does this money end up? The National Association of State Budget Officers (NASBO) has identified great leaps in Medicaid spending, growing from 22.2% of state expenditures in 2010 to 23.9 in 2012. During the same time period, education spending dropped from 20.4% to 19.8%. NASBO projects that funding will become even more difficult to allocate toward education in upcoming years, due to long-term healthcare demands and pensions.

State funding for education may eventually climb out of the recession pit, as legislators anticipate upcoming economic growth. The Chronicle of Higher Education describes how California governor Jerry Brown is trying to raise expenditures from 4% to 6% in the upcoming year, but it will probably be quite some time before students feel the effects. Moody’s Investors Service still sees massive cuts to key areas like research on the horizon, so wary colleges probably won’t be loosening their budgets any time soon.

Federal Subsidies for Student Tuition

Surprisingly, increases to government spending have also contributed in some real ways to the rising sticker price of a college education. The vast majority of college students who have filed a FAFSA know there is a range of grants and loans available to cover their bills. And of course, these funds are indispensable for the tens of thousands of students who need them in order to attend school. That said, increased funding availability does lead to an increase in price; the more students are given to help pay for college, the more they are willing to spend, and consequently, the more colleges can charge.

A 2012 report by the College Board makes it very easy to see how dramatic rises in tuition mirror sharp increases in federal student aid. The government awarded just around $17 billion in total federal grants (including Pell, LEAP, military, and several others) in 2001. This amount exploded up to $49 billion by 2011. This makes for a 185% increase within a ten-year span.

A very similar trend occurred with federal loans, which jumped from a yearly total of around $47.8 billion to $105 billion over the same period. While enrollment in college-level degree programs rose during this time, graduation rates fell. And unsurprisingly, the number of for-profit secondary institutions also multiplied.

This is a tricky situation. We all agree that deserving students should be granted more, not less, access to higher education and no one wants schools to have to reduce their enrollments or the quality of the educations they offer due to falling budgets. But if we want to lower the burdens on students, schools and taxpayers, we need to focus on allocating federal student aid and loans in a way that isn’t accelerating rises in tuition costs.

So if both cutting and raising government funding makes the student debt situation worse, what is the solution? The question is not about raising or lowering spending, but rather how the money is spent. Heaping thousands of dollars in subsidized loans on young borrowers to cover exorbitant education costs is not the answer, but neither is cutting support for important academic research. It’s a complex equation, but until it’s figured out young graduates are going to be bearing a heavy financial burden.

50 University of Oregon students interrupted the Investiture of President Gottfredson demanding a tuition freeze last Thursday, May 30th. The Student Labor Action Project and our allies are pushing our University President and the Oregon University System for a tuition freeze and administration salary freezes.  These demands are supported by campus unions, who with SLAP lead LESS-T (League of Educators and Students Slashing Tuition) to fight tuition increases that provide no additional resources for the students or teaching staff at the university.

This year tuition is proposed to be raised 4.5% for resident students, with additional fees bringing the total increase to 5.8%.  But the administration of our university has consistently demonstrated that they do not have good reason to raise our tuition.

SLAP & LESS-T protested at the Matt Knight Arena for The President’s Investiture, a ceremonial welcome and symbolic exchange of authority to Michael R. Gottfredson. SLAP and other student groups on campus have been trying to meet with President Gottfredson throughout the year and were repeatedly told ‘no.’ So we came to him to demonstrate the seriousness of our concerns about tuition hikes. We did a mic check stating that we were not going to accept tuition increases because we were given little information or reason as to why it was increasing.  Senator Ron Wyden and the Interim Oregon University System (OUS) Chancellor Melody Rose were also in attendance, and fortunate enough to hear our message that day.

You can watch a video of the mic check here: http://www.youtube.com/watch?v=Qlf5lo_p0Qk

You can watch a video of the mic check here: http://www.youtube.com/watch?v=Qlf5lo_p0Qk

This action comes after multiple letters, meetings and visits, and hours of testimonials. Our experience has made us feel that the administration does not have the interests of students at heart.  “We’re the ones getting a 4.5 percent tuition increase, and he’s the one getting a fancy party,” said UO SLAP President Jeremy Hedlund.

We reached out to Gottfredson who has not responded to our requests for a meeting and who cancelled a scheduled meeting with campus workers from SEIU Local 503 once the delegation arrived to his office. We went to the Administration’s town hall with students (scheduled the week prior to Finals Week) about tuition increases/budget processes, where little was explained to us and we were talked to in a condescending tone. We have attended every town hall with legislators in Eugene voicing our concerns to elected officials. We had a call in day for students to call OUS representatives’ listed office number to give testimony about how they would be affected by tuition increases. We gathered over 300 petition signatures demanding a tuition freeze targeting OUS and presented them during testimony to OUS in Portland.

The last action will be on June 21st at the Oregon University System’s board meeting where they will be voting on tuition increases for the coming school year. SLAP will be at that meeting with students from the UO to show that we are not going to accept tuition increases.  Where will you be?

A version of this blog was posted at http://slashtuition.blogspot.com/

where you can learn more about LESS-T’s work!!