The Abu Dhabi Scandal: New York University Should Be Kicked Out of the Federal Student Loan Program

Today's New York Times carried a front-page story about New York University's recently constructed campus in Abu Dhabi.  According to the Times, the campus was built by immigrant laborers who worked under harsh conditions for salaries of as little as $272 a month.

Photo credit: NYU Photo Bureau

  

New York University pledged that the Abu Dhabi campus would be built by construction workers who would work under humane conditions and receive fair wages; but apparently that did not happen.  As many as 15 workers lived in tiny rooms, and apparently they were not paid the wages that had been promised to them.  When workers went on strike, the police were called in; and some of the workers were beaten.

New York University is a private institution with extremely high tuition--about $64,000 a year for tuition, room and board.  NYU students graduate with some of the highest student-loan debt levels in the country.  In 2010, NYU students graduated with a total of $659 million in student loans. That's right--nearly two-thirds of a billion!

Nevertheless, John Sexton, NYU's president, is compensated at an obscene level; and the university operates as if it should be answerable to nobody. And when I say obscene--I mean obscene.  President Sexton makes almost $1.5 million per year and is guaranteed a "length of service" bonus of $2.5 million.  When he retires--supposedly in 2016--he will receive annual retirement income of $800,000 a year.  Oh yeah--and he also get an apartment near Washington Square.

Here are a few other recent stories of unseemly behavior by this behemoth institution.

•  According to a recent news story, the university provides a luxury apartment for scholar Henry Louis Gates at below-market rent. Professor Gates is not even employed by NYU; he works at Harvard.

• NYU paid Jacob Lew, now Secretary of the Treasury, an exit bonus of several hundred thousand dollars when Lew left NYU to go to work in private industry.

• NYU gave President Sexton and other favored faculty members low interest loans to purchase second homes. For example, a former law school dean and his wife used a NYU loan to buy a 65-acre estate in Connecticut. 

NYU has the right to operate as it wishes and to disregard its many critics.  The governing board has paid no attention to a vote of no confidence in Sexton's leadership that the Arts & Science faculty issued in 2013.

But does NYU deserve to participate in the Federal student loan program, which is financed by American taxpayers, when it shows so little regard to financial propriety?

I don't think so.  If it wants to pay its president more than $1 million a year and start a high-profile campus in the Middle East, let it do so.  But NYU should not benefit from a federal student loan program that was intended to provide broader access to higher education--not subsidize a lavish and unseemly enterprise.

References

Jake Flanagin. The Expensive Romance of NYU. Atlantic, August 13, 2013. Available at: http://www.theatlantic.com/national/archive/2013/08/the-expensive-romance-of-nyu/278904/

Ariel Kaminer &  Alain Delaquieriere. N.Y.U. Gives Its Stars Loans for Summer Homes. New York Times, June 17,2013.

Ariel Kaminer & Sean O'Driscoll. Worker's at N.Y.U.'s Abu Dhabi Site Face Harsh Conditions. New York Times, May 19, 2014, p. 1.

Abby Ohlheiser. John Sexton will officially leave NYU in 2016. The Wire, August 14, 2013. Available at: http://www.thewire.com/national/2013/08/john-sexton-will-officially-leave-nyu-2016/68346/

Bruce Wright, Harvard Prof. Henry Louis Gates Gets Unreal Housing Perks from NYU. Boston.com, May 17, 2014. Available at: http://www.boston.com/news/nation/2014/05/17/harvard-prof-henry-louis-gates-gets-unreal-housing-perks-from-nyu/pXTFg7YDd3BMSekltbQ4tI/story.html