NYU Students: Debt and Debtor

NYU is number one in student debt. But is it really worth it?

But the school isn't stopping its spendthrift strategy. It's not even slowing down. If anything, NYU's metastatic expansion is only speeding up. Last year, the school announced plans to grow its space by another 40 percent, further saturating the Village and expanding into Brooklyn and Governors Island. And the school isn't confining itself to New York City. Last year, it opened NYU Abu Dhabi, a sort of clone of itself in the United Arab Emirates. In 2013, the school plans to do it again, this time in China. These global forays are for the most part funded by their host countries, but many students see this relentless focus on growth as coming at their expense.

NYU's thirst for money to fuel its rocket ride to the top has certainly led it to some unsavory places. In 2007, then-attorney general Andrew Cuomo busted the school for a kickback scheme involving student loans. When students were accepted to NYU, the school would direct them to Citibank as its "preferred lender" for all private loans. In return, Citi would kick back a percentage of its loans to the school. NYU's take amounted to $1.4 million over five years.

Citi did offer lower rates than the seven other institutions that vied to be NYU's preferred lender, and NYU says the money was plowed back into student aid anyway. But the relationship was still unsettlingly cozy.

Andrew Jenks and masked NYU students during the ‘Casualties of Debt’ protest.
Andrew Jenks
Andrew Jenks and masked NYU students during the ‘Casualties of Debt’ protest.

Lyndsey, the alumna who will have paid $350,000 for her NYU education, went to Citibank for her private loans because NYU directed her there. When she was accepted in 2003, she was ecstatic. That enthusiasm dimmed somewhat when she saw the meager financial aid package NYU was offering her. If she wanted to attend her dream school, she'd be paying for 90 percent of it with loans.

Despite living in a swanky suburb northwest of Boston, Lyndsey's parents were hardly wealthy. Her mother ran a café, where Lyndsey often helped out. Her father worked in sales for the telecom industry but had lost his job, and the past few years had been difficult. Lyndsey's mother had never gone to college. Her father is English, and had no familiarity with the American university system.

"We relied on the University to help explain it to us," Lyndsey says. "We didn't take it lying down. We called financial aid to ask what was up. They told us that NYU has a fairly high dropout rate, so to protect themselves, they don't offer a lot of financial aid the first semester, but we could expect the financial aid to increase in future semesters."

With that reassurance, Lyndsey and her mother inked promissory notes to Citibank. But when the second semester started, Lyndsey's financial aid didn't change. The next year, tuition went up, and her aid actually went down.

"The relationship with Citi just shows how little incentive NYU had to limit their tuition or offer me better financial aid," Lyndsey says. "They were getting my $40,000 in tuition plus a 15 percent kickback for everything I borrowed. Everybody was winning: NYU was getting paid; the bank was getting a guaranteed revenue stream of 8.5 percent interest guaranteed by the government. Everyone was winning but me."

The feeling that her education financing had turned her into an indentured servant made Lyndsey political. Her activities have connected her with a network of other NYU students and alumni saddled with crushing debt and looking to do something about it. A Facebook group she runs called "The $100,000 Club" for students with six figures of debt has more than 60 members. Some students have staged publicity-ready actions like storming into the NYU bursar's office and attempting to exchange their diplomas for a full refund.

In 2009, the "Take Back NYU" occupation of the school's student center was motivated in no small part by frustration at ever-increasing tuition and the administration's refusal to reveal meaningful details about how it spends its money. But these were larded up with nearly a dozen other demands, including opening the school library to all and offering 13 scholarships to Palestinian students. By the time the occupation ended, it had become caricatured in the media as an unfocused tantrum by privileged kids.

Last winter, the NYU debt protest movement got another shot in the arm as MTV's Andrew Jenks used NYU as the backdrop to his "Casualties of Debt" demonstration. On a cold February day, Jenks organized students in Washington Square to don Anonymous-style masks and T-shirts emblazoned with their amount of debt.

The event was long on theatricality, but Jenks wasn't exactly a terrific spokesman for the movement. When MSNBC's Dylan Ratigan asked him what the masks were all about, he said, "We're all wearing masks to show that as a whole, right now, we may not be doing enough, and we sort of have these blank faces, and we're looking around, and we're not sure what to do."

A more cogent perspective came from Charlie Eisenhood, then an NYU senior and the editor of school's unofficial newspaper, NYU Local.

"When you think about it, people trying to make a financial decision that's going to affect the next two decades of their life when they're 17 and 18 years old is crazy," Eisenhood told Ratigan. "A lot of the time, they don't understand what they're getting into, and it's really up to the universities and Congress to make sure that the banks and the universities are focused on making sure these young students are making financial decisions that aren't going to leave them penniless when they're 25 and 30 years old."

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