OP-EDS

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April 28, 2020

A Tuition Reduction Without Trade-Offs Is Possible

Given the University's resources, cries of austerity in the face of a student tuition strike are unacceptable.

Last month, UChicago for Fair Tuition mobilized to fight for a 50 percent tuition reduction for all students, the elimination of advanced residency tuition, a transparent operating budget, the reinstatement of part-time status, and a tuition freeze. Within weeks, we won our tuition freeze demand and garnered widespread support from students across all schools and divisions. 

But some members of our community have expressed a fear that reducing tuition is not possible without sacrificing staff pay or financial aid. At times, these worries go hand in hand with a concern that reducing tuition would primarily benefit wealthier students. In order to argue that the University cannot and should not reduce tuition, students have cited restricted donations, low endowment payout rates, and the assertion that all families making less than $125,000 a year already pay no tuition. These myths have been propagated by administrators who claim that they cannot legally allocate resources necessary to reduce tuition and that they already meet the demonstrated need of all students. As organizers with UChicago for Fair Tuition, we would like to dispel these misconceptions. 

When we say that we will not accept tuition reduction at the expense of staff or financial aid, we mean it. UChicago for Fair Tuition rejects narratives that set students against staff or tuition reduction against financial aid. Given what is publicly available about the University’s wealth, such trade-offs should not be necessary. 

We knew that as our campaign grew stronger, University administrators would try to portray the University in a position of financial strain. But without a transparent operating budget, we cannot take the administration at their word when they say they are unable to reduce tuition for the duration of this crisis. And despite the lack of transparency, we have every reason to believe that the University can afford a tuition reduction. As student organizers, we are accustomed to hearing the University say, “We can’t,” when they really mean, “We won’t.” 

The issue at hand is not a question of resources but a question of priorities. UChicago for Fair Tuition was formed from a long line of students, who, for years, have questioned the University’s budgetary priorities and called for more financial transparency. Last year, #CareNotCops’s #ReleaseTheBudget campaign called out the University for funding one of the largest private police forces in the world with no budget transparency. Similarly, Fair Budget UChicago has advocated for a more just allocation of the budget, including fighting for a $15 minimum wage on campus and improved access to mental health resources.

We cannot accept scarcity myths coming from a University that funds one of the largest private police forces in the world. We cannot accept austerity from an institution with the money to buy and maintain immense real estate holdings in Woodlawn and Washington Park. We cannot accept trade-offs from a University whose eight highest paid administrators each make upward of $1 million per year. Despite these excesses, UChicago’s own financial statements show multi-million dollar budgetary surpluses for almost every year data is available, going back to 1996, with tuition and fees accounting for only 10.5 percent of revenue. Let’s break down the resources UChicago could leverage to afford a tuition reduction amidst this international crisis.

This is an institution with an $8.5 billion endowment and the second most expensive tuition in the country. UChicago also recently raised $5.4 billion in a fundraising campaign, almost a billion more than its initial goal. President Robert Zimmer himself said this money would be allocated for helping students afford the cost of attendance. It would only cost about 1.5 percent of that recent fundraising haul to halve tuition for all undergraduate and graduate students in the spring 2020 quarter. Of course, this $5.4 billion is still only a portion of the funds they have on hand. And the endowment isn’t even the extent of the University’s investment portfolio, which totals $14 billion.

In a recent email to the student body, the Provost Ka Yee Lee claimed that the “vast majority” of the funds from their fundraising and endowment are “legally restricted.” Even if 95 percent of these funds were restricted, that would still leave more than enough money to reduce tuition for spring quarter and beyond. Financial statements from 2018–19 reveal that the money is there—roughly $2.1 billion of the endowment is described as being “without donor restrictions,” while around one-third of the University’s net assets are similarly unrestricted. Furthermore, Lee specifically did not disclose how much of the recent fundraising haul was committed into the endowment, despite a portion of this money being specifically intended for student financial support. 

Administrators can and should reallocate wasteful spending in the long run, such as halting their purchases of South Side real estate and reducing funding for their police force, which has jurisdiction over 50,000 people who are not affiliated with the University. The University can also use unrestricted funds from the endowment and donations to pay for a tuition reduction. 

When it comes to endowment payout and sustaining the endowment, we must ask ourselves: What is the purpose of sustaining and growing the endowment if it can’t be leveraged to support students and staff in need in a time of crisis? The current rates of endowment payout are decided each fiscal year by the Board of Trustees, which is overseen by Zimmer. The limits on those rates exist under the presumption that the endowment should be constantly increasing. Since 2007, the University’s endowment has increased by over $2 billion. The endowment, and the predetermined yearly payout, is set up so that the University can continue to accrue wealth, even as students and staff struggle. Experts have argued for years that endowment payout rates should be significantly higher to stop these non-profit institutions from hoarding tax-exempt wealth while constantly raising tuition. Endowment payout rates can and must change, especially in a time of crisis.

Furthermore, it is possible to remove restrictions on “legally restricted” funds—University leadership would only need to ask for written permission from their donors. It is also possible, though likely unnecessary, for the University to safely take out a loan, which, for example, they did in order to fund the $19.5 million acquisition of Jewel Osco. Zimmer and the Board could easily make up for this debt in the following years by allowing more endowment payout. University of Chicago, a 130-year-old, multi-billion dollar institution will recover from this economic crisis. It recovered quickly after the 2008 recession, with its endowment soon surpassing pre-recession levels despite dropping that year. Many students and their families, however, will struggle for years to come.

In statements to the media, University spokespeople have said that universal tuition reduction is unnecessary because of the University’s No Barriers Plan. This plan guarantees full tuition for families earning under $125,000 a year, and suggests that no students should have to take out loans in order to pay for their education.

This guarantee is misleading for many reasons. First, we have heard from many students whose families make below this amount but who have been deemed ineligible by the University. In these cases, the University often cites criteria that are not publicly available, such as how they determine assets. One first-year in the College told us that although she qualifies for the No Barriers Plan, she was told that her family had too many assets, even though her mother had just sold everything to relieve debt. The University accused her of hiding money and told her to take out loans.

Second, the promise that UChicago will cover tuition for families earning under $125,000 a year does not apply to two-thirds of the University: international students and graduate students. There are 13,311 students in programs that charge tuition as of last quarter, including 6,678 masters students or professional school students, and 1,061 undergraduate international students. This does not even include Ph.D. students paying advanced residency tuition, a quarterly tuition charged to doctoral students finishing dissertations in their advanced years. We know from the testimonies we’ve received that many graduate and international students have struggled to pay tuition even before this crisis. Now, many international students are facing rapid devaluation of their local currencies, and many graduate students have additional caretaking responsibilities, have lost their jobs, and cannot rely on their family income. 

We believe means-testing is not a viable solution during an economic crisis. Existing data for financial aid is based on tax returns from two years ago—this is not an accurate indicator of current finances in light of this unfolding crisis. Unemployment has reached record rates. Families that were getting by two years ago may now be in serious financial trouble. We have heard countless stories from students who were turned away from the financial aid office after seeking additional coronavirus-related assistance. We cannot rely solely on the bureaucratic proceedings of the financial aid office to address the additional burdens brought on by this crisis. Furthermore, we cannot accept that graduate students must defer to their individual departments for aid; some departments have more funding than others, so some students will receive more aid simply based on their department. This is inequitable given widespread financial insecurity. 

Outside of financial aid, the University’s “solution” to financial distress has been to encourage students to fill out the Financial Hardship Form, which explicitly does not provide any additional aid, and only allows students to delay tuition payments. Delaying payment is not a solution—families who cannot afford tuition now will likely still be struggling in June. 

We firmly believe that a 50 percent tuition reduction is possible and necessary, no trade-offs impacting staff or financial aid needed. Hundreds of students are withholding spring quarter tuition for this reason. But UChicago for Fair Tuition is not approaching this campaign with an all-or-nothing mindset. We hope to negotiate toward an equitable solution to tuition reduction with the administration before tuition is due on April 29. As is typically the case in negotiations, we understand the need for compromise—but to make compromises, the administration needs to show up. At the virtual negotiation table, we would also discuss our demands for budgetary transparency and part-time status, neither of which requires immediate adjustments to the budget itself. 

It's their move.

Anna Attie and Luis Rubio are undergraduates in the College. Laurel Chen is a graduate student in the School of Social Service Administration.

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