University Business - June 2012 - (Page 77)

CAmpus FINANCE Michigan Leads Nation in Loan Default Actions Michigan means business when it comes to going after student loan defaulters. Michigan college students graduate with a slightly higher debt than the national average, and about one in 10 Michigan student loans winds up in default—on par with the national average. However, the U.S. Attorney’s Office in Detroit has been far more aggressive in pursuing defaulters than in other states. In the most recent data compiled by Syracuse University’s (N.Y.) Transactional Records Access Clearinghouse (TRAC), relative to population size, defaulters in the Eastern District of Michigan were prosecuted at a rate about 10 times the national average during March 2012. Lawsuits are usually a last resort in default cases—an action taken after other recovery methods, such as wage garnishment, have failed. The Eastern District of Michigan’s leadership in per capita student debt lawsuits is nothing new. The region topped the default list five years ago and came in second last year, according to the TRAC report. DATA POINT Compensation Crisis Given widespread protests against rising tuition and the impending doubling of student loan interest rates, one might expect to see students picketing on a college campus. But at Fairfield University (Conn.) in May, the shoe was on the other foot, as nearly 100 faculty and students picketed outside President Jeffrey P. von Arx’s annual address to faculty. The reason? The Fairfield U administration, faced with budget woes and shrinking enrollment, wants to end a longstanding practice of paying professors as well as, or better than, peers in comparable institutions. Faculty salaries at Fairfield have been set at a level higher than 95 percent of faculty at similar comprehensive mastersgranting universities. That salary rate has been cited as a major enticement for recruiting the best faculty. At the heart of the protest is a claim that the school has reneged on a promise. Three years ago, faculty agreed to assume a greater portion of their health insurance costs in return for a continuation of the way salaries were set. But, after dealing a $5 million budget shortfall earlier this year, von Arx said, “Tying compensation to an external standard was no longer financially sustainable.”   The jump since 2007 in the measure of consumer credit held by the government, comprised primarily of student loans. —The Wall Street Journal 368% Audit Alleges Fund Mismanagement The Pennsylvania State System of Higher Education revealed that an audit shows California University of Pennsylvania inappropriately used university employees to raise money for its private foundation and improperly diverted nearly $6 million to the same nonprofit. The audit led to the firing of university President Angelo Armenti, who led the institution for nearly 20 years. Armenti says the audit findings are “baseless” and “unfounded.” Chief among the audit’s findings: The university improperly used more than $1 million in rent money from students in residence halls that went to the landlord, Student Association Inc., which in turn gave the money directly to the foundation rather than to the university. In response, Armenti argued that rental payments are “institutional funds” rather than state or public money. They do not become “public” until they are deposited into a university account, he said. “At no time during the audit process were we ever shown any of the complaints that ostensibly prompted the audit,” Armenti wrote in a response to the charges. “The false accusations of fraud and money laundering are so incendiary that we would certainly have rebutted them—and clearly remembered doing so—had they in fact been mentioned at the exit interview, thereby giving us early opportunity to respond.” June 2012 | 77

Table of Contents for the Digital Edition of University Business - June 2012

University Business - June 2012
Editor's Note
College Index
Ad Index
Behind the News
Independent Outlook
Special Section: Thinking Green
4G: Is It Time for an Upgrade?
Unified Security: All Together Now
Collaborative Workflow
Campus Finance News
3 Student Aid Myths
Deepening the Donor Pool
Keeping Tuition Within Reach
Internet Technology
End Note

University Business - June 2012