August 30, 2012
HIGHER EDUCATION BUBBLE UPDATE: The High Cost of Free Money.
Administrators at Long Island University, a private university in New York with multiple campuses, had to make budget cuts and are dealing with faculty pushback after the financial aid awarded by one of the college’s two main campuses exceeded the budgeted amount. Administrators overspent in an effort to meet enrollment targets and meet demonstrated need.
The university does not have a large endowment, so most of the aid came in the form of discounted tuition, meaning the college likely will not bring in as much in tuition revenue as expected. Administrators said the campus in question, referred to as the Post campus, did not have procedures in place to account for the financial aid awards relative to the budget.
“Existing business processes at Post did not effectively track the level of funds either committed or accepted by incoming students,” wrote President David Steinberg in a letter responding to an inquiry by the president of the faculty union. “By late fall 2011 it became clear that we were over-expending financial aid resources.”
Really? They “did not have procedures in place to account for the financial aid awards relative to the budget?”