Ivory Tower Page #5

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and he thinks that we should

become like other colleges.

It's covered by normal kinds

of words like sustainability.

I'm here before you

because the very survival

of this institution is at stake.

We do not have a sustainable budget.

If you want free education,

how are you going to structure it?

I believe it's not compatible

with small class size,

highly-interpersonal interaction,

and with providing

good compensation to people,

and I believe in providing

good compensation.

The President makes in excess

of $700,000 as total compensation.

At a school of only 1,000

students in tight financial times,

one would have thought there

would have been some proportionality.

I believe the President

of Harvard makes $899,000,

and she's overseeing

12,000 faculty, 21,000 students,

and $30 billion endowment.

She doesn't have a fraction

of the problem we have.

Not a fraction of the problems we have.

Apparently we are the Harvard

of Astor Place.

I don't think that the model

of free education doesn't work.

There's all sorts of things

that got us into this mess,

and it wasn't the cost

of educating the students.

Most of higher education

believes in growth at all costs,

growing their way out of difficulty.

And that becomes rather problematic

when you are building

a building at about $1,000 a square foot,

which is more than a luxury hotel.

It's possible to have downsized,

as Cooper Union has done in 150 years

of ups and downs in the market.

But that was not the decision

that was made.

Do you think

it was wise to invest in hedge funds

and to use the money borrowed

in the $175 million loan for that purpose?

You know, I'm not an investment person.

I mean, I'm...

Uh...

I'm good at budgets,

but I'm not an investment person.

Were they risky decisions?

Well, uh.

One can ask if they were or not,

but there is no question

that loan is a, uh...

Yes, a challenge

for the institution to pay back.

Cooper Union is faced with a

mortgage payment of $10 million a year.

It's a terrible irony that

an institution which was

supposed to get people out of debt

gets into that kind of debt itself.

The idea that Cooper Union

would think about charging tuition

really seemed like such a huge betrayal

and a bellwether of where education is.

Students are not seen as

having a right to their education,

and institutions sort of feel free

to continue to raise the price.

What's happening

to higher education in this country?

Why is it seen as being the province

of the rich and the rich alone?

People are ignoring all of the functions

that education has served

throughout our history as a public good.

Certain economic truths

have become self-evident.

Among these,

the right to a good education.

Right after

the Second World War,

the GI Bill was passed,

which made it possible for men,

who would never have been

allowed to walk onto a college campus,

except perhaps as members

of the custodial staff or as delivery boys,

to actually walk through

the gates as students.

Over two million

veterans took advantage of the GI Bill.

This was an opportunity that was free,

given by the government.

And it made a difference to

the American middle class.

That expansion

of the franchise of higher education

was really so unprecedented,

and it led directly

to the Higher Education Act of 1965,

creating the Federal

student aid programs.

This law means that a high school senior

can apply to any college

and not be turned away

because his family is poor.

But the rug was pulled out

from under students in the 1970s.

We shifted from seeing

education as a public good

to seeing it exclusively

as a private good.

Conservative governors, especially

Governor Reagan of California,

had really run on the idea that

higher education was a wasteful

way to spend taxpayer money.

Governor Reagan actually said

the state should not

subsidize intellectual curiosity.

And he ran for president later

on a promise to disband

the Department of Education.

Certain advisors

started to say that

anything of a private advantage

should be paid for.

The word free is one of

the most misused words.

We speak of "free education."

Education isn't free. It costs money.

If this is something

that is going to be good for individuals

to get a job and earn more money,

they should finance it

and make the investment themselves.

We need to keep government

on the sidelines.

Let the people develop their own skills,

solve their own problems.

We stopped expanding

the franchise of higher education,

graduation rates stopped rising,

and access for the poor

to higher education started going down.

In the 1970s, a Pell Grant was

more than enough to pay for tuition

at an average state institution.

But today a Pell Grant

pays for a fraction of tuition.

This led to the growth of

the student loan industry,

which ended up being the largest

source of money for all of tuition.

The student loan program

was never intended to be this large.

We've just hit

an awful milestone.

Our nation's combined

student loan debt has now hit $1 trillion.

It's now larger than

credit card debt in this country.

The average

American student now

graduates more than $25,000 in debt.

STEFANIE GRAY:

I grew up in a low-income household.

I was always told to work hard,

and if you follow your dreams,

it will pay off,

and if you need to go

into educational debt

to achieve those dreams, then so be it.

A couple of months after I graduated,

collectors started calling,

and I told them that I could not pay.

Even with a master's,

I couldn't get a job

cleaning toilets at a local hotel.

I was on food stamps.

I was living off mostly beans and rice.

Twenty years ago,

we would have said

all the kids who aren't going

to college are being the victims,

and now it's actually turning out that

a lot of the kids who are going to college

are also the victims.

It's like a subprime mortgage

broker that ripped you off

and talked you into buying

a house you couldn't afford.

Education in some ways

is even more insidious than housing.

There actually isn't the same kind of

safety valve in the student loan market

that you see in the mortgage market,

in the sense that

there's no such thing as foreclosure,

and, in fact,

there's no such thing as bankruptcy.

Over half of loans today

are either in deferment,

or else they're in default.

And when you default

on your student loans,

interest is applied to the principal.

And you see, very commonly, things like

original balances in the tens and

twenty thousands of dollars

ballooning up into

the hundreds of thousands of dollars.

Starting off, $78,000.

Ending up at $106,000 in interest alone.

You're going to be saddled with that debt

and that ballooning balance

until the day that you die.

That's the kind of garbage

our government is playing

with our young people.

The government will make

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