(MoneyWatch) Last summer I met a woman who decided, along with her husband, to sell their home so that her daughter could attend New York University. The family concluded that this enormous sacrifice was worth it so her daughter could major in theater at a school near Broadway.
I was stunned when I heard the woman confess to giving up the family home so they could afford to send their child to NYU. But I wasn't surprised that it would take something so extreme to pay the school's tab. The institution is not only one of the most expensive universities in the country, but also is among the stingiest when it comes to providing financial aid to its students.
That anecdote seems especially relevant given the report in The New York Times that revealed that NYU is quite generous to the very people who don't need a helping hand. They include John Sexton, the school's president, as well as some star faculty and administrators. The university has been giving these lucky folks sweetheart loans so that they can buy expensive vacation homes.
Sexton, for instance, received a $600,000 loan from a university's foundation that ultimately swelled to $1 million to buy a beach home. While dean of NYU's law school, another administrator received loans worth $5.7 million to buy a home in New York and a vacation spread in Connecticut.
What's equally troubling is that the university has been forgiving at least some of these "loans" to favored NYU faculty and executives.
Let's contrast how NYU treats its favored insiders with how it treats its own students.
NYU is on the federal government's "hall of shame" list of schools that charge the highest net price among all four-year private colleges and universities. The schools that land on this list represent the top five percent of institutions that charge the highest prices after typical grants and scholarships are deducted. The government has hoped that spotlighting the schools' exorbitant costs might spur them to moderate their prices.
According to statistics from the College Board, NYU typically meets just 59 percent of a student's financial need, and that percentage includes a loan. Just as damning, only three percent of NYU students have their full financial need met. Contrast that to nearby Columbia University, which meets 100 percent of the financial need for all of its students.
I asked an NYU admission rep at a college fair in New Jersey last year why the university's financial aid was so poor. She shrugged, acknowledged the problem and then promised, "We are working on it."
I agree with Sen. Charles E. Grassley, R-Iowa, a frequent Capitol Hill critic of the higher-education industry, who had this to say yesterday in an interview with The Times regarding NYU's dubious lending practices: "Universities are tax-exempt to educate students, not help their executives purchase vacation homes. It's hard to see how the student with a lifetime of debt benefits from university leaders' weekend homes in the Hamptons."
It's clear that at NYU, the least-deserving recipients are getting the school's.