According to Cooper Union’s president, Jamshed Bharucha, it currently operates at a $12 million annual deficit. The number reflects several factors: ... most significantly, $10 million a year in payments on a $175 million loan the school took out a few years ago, in part so that it could invest money in the stock market.
And this, ladies and gentlemen, is why meaningful bank regulation is long overdue. The signs of the present crisis were there to see for anyone with eyes in 2005: in that year my ex-landlady, who was from Bushwick, one of the poorest parts in New York, bought five rental properties with no-money-down loans.
Let's have this again: Bank of America found nowhere better to invest than in this clueless lady that perceptibly could not run her rental empire successfully, and they loaned her the funds anyway.
And this, ladies and gentlemen, is why meaningful bank regulation is long overdue.
This would sound a little less popular as: "Even if your college owns the land under the Chrystler building and has entirely predictable cash flow for loan service, you should be unable to construct a new academic building which you sincerely, but perhaps unwisely, believe to be your most important priority, unless you can come up with $160 million in cold hard cash."
I'm just finding it hard to square the narrative of sophisticated Wall Street operators conning low-sophistication average Americans into making wildly leveraged bets on real estate with the facts of this case, where (presumably) highly educated New Yorkers who own a lease with NPV of several hundred million dollars are assumed to be incapable of making a judgement call like "Do we want to build out facilities to support our core operations or not."
I don't see how your conclusion follows from the data. It appears to have been a very wise decision by the bank, given that even though Copper Union's investments have gone bad they're still paying the loan back. If I were a bank I would jump at an opportunity to own a loan that's backed by the land under the Chrysler building.
And the bank could afford to lose that $175 million. And then the bank would gladly take the Chrysler land or whatever other collateral it was promised.
They would probably then get a loan from a credit union or a sovereign fund, or bond buyers with appetite for junk, or one of those fancy Silicon Valley social lending sites.
It's not like Cooper Union is the paragon of financial prudence here, borrowing money to play the stock market.
At least BofA could repo your landlady's estate, rent it out, and have it bounce back by now.
What would bank regulation would have done to stop Cooper Union's getting a loan and blowing it?
If you own the land under the Chrysler building, someone is going to be willing to lend you money. It seems to me this is the bank functioning pretty well.
Regulation that would requie borrower to declare what the loan would be used for and force lender to get all the money back if the borrower spends it on something else.
I'm not saing that this would be good regulation or if this regulation would prevent this exact case. Just giving an example.
So not really "bank regulation" as much as "legally-enforced risk aversion", then?
And what unintended consequences would that have?
Maybe a better idea is for those who actually need to be risk-averse to carefully consider the full chain of risks associated with their investments, and not merely put their full faith in abstract systems - especially regulatory systems, which fail quite often.
The financial crisis wasn't the result of banks conning the public; it was the result of essentially everyone at every level buying into too-good-to-be-true presumptions about the real estate market.
Legal enforcement of how much gambling bank can do with the money, people with accounts there entrusted them.
Noone considers full chain of risks. Most people feel they are immortal, feel that they are forever winners as soon as they won 3 times in a row. Besides there really no risk taken by decission makers. They often don't even loose their jobs.
The only thing we can do is set up barriers to curb the risky behavior. Some risks are worth to be taken but by hedgefund not a bank.
As for the financial crisis no catastrophy can be traced to a single cause but it often turns out that not failing at single point could have averted the catastrophy.
> Legal enforcement of how much gambling bank can do with the money, people with accounts there entrusted them.
And are the limits of "how much gambling" the bank can do with the money defined by some universal prescription or by the particular understanding established by the bank and the depositor in each case?
If the former, then we're back to universal usurpation of everyone else's risk judgments by... whom, exactly? Yet more human beings, subject to the same failures of judgment as the people who you claim are incapable of effectively assessing risk?
If the latter, where's the evidence that there ever was a breach of that understanding? Reward is proportional to risk, and those seeking high-interest investment opportunities implicitly acknowledge that with higher return comes higher risk.
> Noone considers full chain of risks.
Plenty of people do, and where sufficient information to make a confident risk judgement is unavailable, plenty of people take that into account and plan accordingly.
"Most people" do not feel they are immortal or perpetual winners; indeed, although the systemic effects of the financial crisis have impacted us all, the number of people who did not engage in irrational real-estate speculation far exceeds those who did. (The "everyone" I mentioned above refers to segments of the chain of investment, not to individuals in general).
> The only thing we can do is set up barriers to curb the risky behavior
No; there are plenty of other viable alternatives, like providing mechanisms to insulate unwilling third parties against the risk-taking activities of others. Most public policy and regulatory intervention seems to do the exact opposite, however, and seeks to shoehorn everyone in society into a single uniform pattern of interaction, which, of course, exposes us all to the new systemic risks it creates and doesn't account for, and leaves us little room for escape.
Let's regard regulation as what it is: a flawed attempt to mitigate the downside of universal social systems in order to sustain those systems, and justify corralling everyone into them in order to maximize their putative upside. The problem is that it just doesn't work: at best we're reducing small and predictable risk impacts for massive and chaotic ones, which doesn't yield an environment suited to evolutionary resilience.
As in everything else, variation is the key to stability and survival, and top-down regulation of individuals' subjective risk judgments diminishes variation. We need lots of separate baskets to put our eggs in, not one giant over-engineered basket that's ultimately no more unbreakable than the Titanic was unsinkable.
The problem was that, for the guy making the loan, and his superiors all the way up, this was not a mistake, but rather the whole foundation of their bonuses. The loan was almost certainly at a higher than normal interest rate, and thus when bundled with other such loans, could be sold at a substantally higher price, thus generating higher profits. This, even though everyone making these loans knew (or should have known) that there was no way they were going to be repaid. The trouble was that the bank regulators, unlike those in the 80's during the savings and loan crisis, let this go on unchecked, and have not prosecuted anyone for the massive frauds that took place.
Note, of course, that the profits booked for such loans, were temporary and delusional. The bonuses paid, however, were real, and permanent - never clawed back.
I believe that if actually bank were left to run unchecked, specially having no help from government, more of them would fail... Yes, it would be quite painful in short term, but long term that sort of crap would stop.
The regulation that exist right now, and that people keep trying to expand, has the end result that ties the government too tighly with banks, and bailouts and other help from government become a necessity.
Removing FDIC and letting banks fail would mean that individuals would only deposit money when banks had high equity %. i.e. the bank owners/shareholders invest 30 cents of their own money for every 70 cents of the customers that is loaned out. That way if loans start to fail the customer is protected by the owners share.
well governments de facto need the banks to lend them money, which is used to finance their welfare policies (and their wars), which in turn gets them elected. So politicians make it easy on the bank and ask everyone to pay up. I am making things sound simple on purpose, but it's not too far from the reality.
It sounds like you're talking about eliminating things like the FDIC, which is crazy. People (and banks) suffered tremendously before bank regulation evened out the business cycle. Then they decided to ease things up and let banks play around with depositors' funds, and within a decade we had the financial crisis.
Banks ran wild with unregulated markets that ended up being a huge percentage of the economy. That's what got us into trouble.
Banks and the financial sector were always heavily regulated, even during the years before the crisis.
The whole securitization of debt and cutting it up into tranches only get fuelled up to such an extent, because there were customers hungry for yield but barred from buying anything that didn't have some official (even useless) triple-AAA stamp on it.
It's just debt arbitrage. The problem is that they were not sufficiently sophisticated (i.e., they were ignorant about how the game was rigged, the house was built on an old cemetery, or that they were walking through the part of town with the highest violent crime rate) to profit in an extremely hazardous environment.
I won't get into the "providing liquidity" or "it's just moving money around" arguments (feel free, though), but it's not significantly different from taking out a loan or accepting funding for a start-up. In most cases, you are accepting more financial risk than you can afford to pay in the belief that you can leverage that capital to generate a profit above the principal and interest.
While in come cases it can be very much like gambling, that also covers "games" where skill can influence the outcome. For example, slot machines in a Russian casino are probably not the best risk. However, if you're a good poker player, you can do quite well in private games.
It's a gamble along the lines of "I bet I can invest money better than the bank". Often turns out the bank can invest money better. I wonder who convinced them to invest, er, gamble.
In the short term I'm sure it's true. But in the long term, banks have a major advantage over us mortals: they get bailed out. So I'd imagine they tend to win in the end.
Before we discuss more regulation of either banks or universities, perhaps we should first consider the extent to which we need more regulation of regulation.
No, it isn't. People across the world make billions (combined) every week doing just that. From Fortune 500 LBO's over leveraging assets to finance real estate portfolio expansion (despite what you read in the papers, there are still many profitable ways of doing this) to bank loans for starting small businesses - it's all about risk management and entrepreneurs having better access to information on profitable opportunities than those with capital (often, banks, but also angel investors). I'm a bit fed up with the 'finance = gambling' fallacy - there is a spectrum of risk profiles, and money can be made in arbitraging this risk, without it being 'gambling' (which is, by definition, risking money on a 100% or near 100% stochastic process. Yes I realize one can argue that poker wouldn't fall under gambling under that definition, but I'm not talking about the margin).
Do you truly not see a difference between a company leveraging their own assets and a college taking out a loan to play the stock market? Your argument is solid, but simply doesn't apply in this scenario. No college is in a good position to do this. If they were, they'd be a hedge fund instead.
"I find the whole idea of borrowing money for investment purposes a little strange. Isn't that basically just gambling?"
which is exactly what my comment addressed. One can debate what investment strategies colleges should use, or how much risk they should take on - probably less than these people did, I don't know and I don't really care either. The GP was throwing around populist blanket 'debt = bad' rhetoric, that's the point I was agitating against.
I think you're reading "invest" more broadly than I am, and it's not unlikely that I am misusing a technical term, but I certainly do not want to be taken as arguing that debt is intrinsically bad.
Oh I don't look at usernames on purpose - I want to avoid falling into the traps of 'upvote/downvote because I usually like/dislike this guy's answers' and 'I have a mental image of such and of this guy because of previous posts, therefore this post must be correct/wrong too'.
Anyway I did read your post (and I'd argue, I read that reasonably) as saying 'debt = bad'. So if you're not saying that and only meant this particular investment, then I guess we're resolved our differences.
You could argue that this is exactly what you're doing when you buy a house. You're more or less borrowing money to invest it in real estate. I think the problem is borrowing money for risky purposes (which btw seems to be the scenario for about 50% of gangster related movies)
It's only the same if you buy the house purely to re-sell it later. Most people live in the houses they buy, so they extract value out of it that a bank wouldn't, even if they don't earn more when they sell it.
If she had been able to run a business, now would be a good time to own property in Bushwick. Seems to be quickly gentrifying and rents are increasing.
I must admit that I don't spend a lot of time on HN defending banks, but I'm not sure what they are supposed to have done wrong in this case. A commercial entity wants to borrow money and they have plenty of assets to cover the loan if it goes bad - not the bank's fault they were bad at investing.
Well the bank would normally be on the hook for making the bank loans. Unless it bought insurance then it would only be on the hook if the insurer failed. Luckily they had buddies at the fed/ government to ensure this insurance was paid out at the full 100 cents on the dollar.
One of the biggest problems in higher ed shows its face here: increased administration costs[1]. It is ridiculous how bureaucracy has insinuated itself so thoroughly and, as a result, has driven so many costs up, especially during a time when people should be getting more productive thanks to technology.
The chief problem besetting universities in the US is administrative bloat, administrative bloat and reduced NIH funding lines. The two problems besetting universities are bloat, reduced NIH funding, and a collapsed endowment due to the funding crisis. And reduced state funding. Amongst the problems besetting universities are bloat, reduced NIH funding, and a collapsed endowment due to the funding crisis, reduced state funding, and reduced alumni donations.
Says Cardinal Ximenez. Pinning the very real problems facing colleges and universities on one cause, top-heavy administration, and then insisting that it can be remedied somehow through technology is simplistic.
I did not say it was the only problem, nor do I believe it is. I do think it may be the most critical one, but that is just an opinion with only data from having worked in the higher ed vertical once upon a time.
The reason I think it is most critical is two-fold. First, extra administration just pulls money away from the actual teaching in salaries. But worse, the costs grow exponentially, as administrators ensure people know the "value they bring" or grow their "fiefdoms". The actions wind up creating additional costs and drag throughout the organization.
Universities have seen a near doubling of non-teaching staff[1][2]. These people do not bring much value to students, instead, they focus on the university. But it's the students that pay their salaries.
Now, a bigger question is how to fix it. The reading I've done on it lays much of the blame on the easy availability of student loans: they've allowed universities to jack up tuition prices well beyond the consumer index. Universities kept the teaching ratio about the same[1], so students get roughly the same education, while employing many other professionals and administrators with the extra money they could pull out of the system. Because they can continue raising tuition, they have a way to keep their staff through spending cuts from their funding sources.
To fix the administration problem, you have to fix the student loan problem. Unfortunately, it's a catch 22.
That is always my question. Where is all this money going? Tuition goes up well above inflation, that money doesn't disappear? Are more professors hired, more facilities built? Keep adding middle managers and secretaries?
State and federal funding has shrunk dramatically, and universities must make up the shortfall through tuition. At my university they are building new dormitories, from money out of the general fund, and they hope to recover this through increased enrollment.
They are expanding the faculty, too. But here is the problem: there isn't an infinite supply of capable students; the squabble that is going to happen for the few capable students in the mediocre horde isn't going to be fun. I predict that the model isn't going to be successful, but I cannot see what is going to take its place.
That squabble started happening 10 years ago, as universities started shifting far more money to marketing efforts for prospective students. I was working for one of the biggest companies in the higher ed space at the time, and following those dollars became its highest priority.
But you are right, it is going to get ugly as more students question the value of an education versus not or look to other alternatives. The higher ed balloon is stretch pretty thin right now and easy student loans are the only thing left inflating it, IMO.
It's going to pop, and I wouldn't want to be employed in higher ed when it does.
For state schools, there are many websites where you can see where all the money goes. There are armies of administrators who make unbelievable salaries. My sister is an academic and her advisor went into administration which bumped his salary up from $90K to $400K+.
Add up the loans and loan interest to build out sports facilities, hundreds of "athletic directors", bunch of underlings they direct on a daily basis, staff and maintenance hired to run the sports facilities, sports scholarships handed out to gifted students, multiply by number of universities and it starts to add up.
I think there are a fair number of colleges to profit from their sports programs. There is also no question that sporting programs are an important aspect of alumni contributions.
The problems is that there are many more that sink dollars into programs irresponsibly because they either irrationally believe they will get a profitable program or feel like they have to maintain some level of "sporting commitment" for its own sake.
Those calculations are highly dependent on how you interpret the costs of facilities build-up and maintenance.
Most of the time they're hidden on university's balance sheet apart from athletic program budget, since in theory a brand new stadium, training facility, basketball court or swimming pool is used by staff, faculty and students outside of athletic departments.
If the economic incentive was there, a host of private operators would bid to operate an athletic team and facility on a for-profit basis with school getting a cut of the action, sort of what you see with cafeteria, swag stores and other commercial outlets.
So, if I'm understanding your comment, it is even worse than that data shows? That is a frighteningly bold waste of money.
However, the other thing it doesn't show, which is also probably hard to quantify, is how much donor money comes in to the main fund because of continued interest in sporting (I believe my link shows contributions directly to the sporting program). Another factor is the marketing impact to prospective students who choose their school off if their teams.
I'm sure the politics and internal value judgements are complicated, but, as much as I enjoy my alma matter beating up on our rivals, I would enjoy my tax burden and my kids' tuition burden (which comes out of my pocket) to be less. More transparency on the subject would be nice.
But my understanding, in my state, and I have skin in the game, is that tuition is rising as state subsidies are declining, pretty much 1:1. Whereas previously residents would get a discount compared to out of state students, pretty soon there will be no discount.
Said another way, all of my state's universities will be 100% tuition supported within a few years.
The part that I find the most repulsive about this – aside from the fact that the school got itself into debt by borrowing money to gamble it, and then lost it – is that its board of trustees went from a visionary model of free tuition, and against the advice of the professionals it hired to analyse the decision, opted, on purpose, for a sliding scale.
Schooling in america is not fucked up because it charges tuition; that's fine. It's fucked up because it charges tuition so unequally. Often, half the student body does not pay a dime, while the other half gets itself in massive debt because of bureaucratic technicalities. In my case, I paid full $50k/yr tuition, by myself, because not being a US citizen made me ineligible for all scholarships, whereas many of my peers got a free ride even though their families were much wealthier than mine. All around me, and throughout the academic culture of the united states, I see this. Students struggle to battle for the few scholarships schools offer subsidized by the financial hardships of other students.
We'd all be much better off if we abolished all scholarships and dropped tuition to a price much more reasonable for everybody. School ought to cost 5-10k a year, not 50. And everybody should pay it, or take out a loan for it, because at that price, it's a no-brainer.
Yes, it's unfair that international students get boned by almost every step of American higher education. On the other hand, there's (still, for some reason) massive international demand.
> Schooling in america is not fucked up because it charges tuition; that's fine. It's fucked up because it charges tuition so unequally.
You use "scholarships" as the example in the rest of your comment, but the dominant price difference in American tuition is probably the difference between in-state and out-of-state tuition. International students (and non-residents) pay out-of-state tuition because the state is betting on its residents remaining in the state long enough to repay them in property and sales taxes. (The situation isn't nearly as sane as that, but it's approximately so.)
Most scholarships are run by private groups and individuals (though sometimes administered by the university), and seem to be completely within their rights to discriminate.
> I paid full $50k/yr tuition, by myself
Why didn't you go somewhere cheaper? (Oh, right, supply and demand didn't stop being a thing while I wasn't looking.)
> We'd all be much better off if we abolished all scholarships and dropped tuition to a price much more reasonable for everybody. School ought to cost 5-10k a year, not 50. And everybody should pay it, or take out a loan for it, because at that price, it's a no-brainer.
I'm sure there are some community colleges that could survive charging $10k/year (e.g., by gutting their support staff, hiring only adjuncts, and so on) but they're not the sort of institutions that international students would want to attend.
To be fair, I've examined the way college admissions works in the US, and by and large those who get financial aid actually need it, and those who are charged full freight tend to actually be able to pay full freight.
Secondly, in the case of private institutions, they are private institutions and are largely free to spend their endowment as they wish. Most thus choose not to give financial aid to internationals, but some do give aid.
Well, and then you have people like me who had to wait 6 years to become eligible for enough aid to even pay tuition, much less pay for food or rent. (I applied for about 40 scholarships when I was 18, so it's not like I didn't try or anything.) I wasn't out to study Chicano Lit or whatever, either; I'm an EE+physics major. Meanwhile, many of my friends who studied liberal arts with thousands of dollars of financial assistance from the state and federal government continue to work the same level of job they held in high school.
Without knowing more about the reason you never got aid (wealthy parents refused to pay tuition?), there's not much I can say about the general applicability of your anecdote.
There are plenty of articles out there documenting the inaccessibility of higher education. In my experience, and many others, the "aid" system is a ploy to make people who can afford college feel good that they're there on merit (instead of ability to pay, even if that's the actual primary criteria), as well as to give colleges excuses for jacking up tuition even more ("well it -says- $50,000/year, but act now and we'll give you it for $29,999!"...inflates people's egos that they're "so smart" that the college is giving them a $20,001 discount, increases perceived "value" of an institution, and also helps to obscure the real price of attendance so that the only way to find out if you can afford to attend is to gamble away $100+ in application fees before they'll tell you or not).
That does not match with my experience, especially considering that the majority of scholarships are need based. Especially at top universities, where merit scholarships are vanishingly rare (except at top LACs - liberal arts colleges).
Unfortunately, your experience does not match reality, wther it "jives" with it or not. Blithely ignoring the actual situation is, of course, almost guaranteed to ensure that poor but smart people will continue to be priced out of college educations in the US.
"Over all, the report found, published college tuition and fees increased 439 percent from 1982 to 2007 while median family income rose 147 percent. Student borrowing has more than doubled in the last decade, and students from lower-income families, on average, get smaller grants from the colleges they attend than students from more affluent families."
"While 79% of students born into the top income quartile in the U.S. obtain bachelor’s degrees, only 11% of students from bottom-quartile families graduate from four-year universities, according to Postsecondary Education Opportunity."
Anyway, if 1 trillion dollars in student loan debt doesn't sound like a problem to you, there's probably not much to be gained from continuing the discussion.
People like you have no idea what it's like to live below the poverty line.
out of curiosity, where did you go that costs 50k a year? Even for American stuff that sounds excessive.
It would probably have been a better bet to study in your home country, and get into a school with an exchange program with a good uni in the US (Granted, your country might not have had that).
International student fees can be much higher than even out-of-state tuition, supposedly to cope with the added bureaucracy. I wouldn't be surprised if that school was usually $40k/year, e.g., a Big Ten school.
>...it currently operates at a $12 million annual deficit. The number reflects several factors ... most significantly, $10 million a year in payments on a $175 million loan the school took out a few years ago, in part so that it could invest money in the stock market.
In case you were wondering what is the real cause of this event, 85% of the problem is due to an ill advised stock market gamble.
Which brings me to my hobby horse; why are stockbrokers, financial advisors and investment bankers able to collect such huge pay? Y'all should stop feeding these leeches.
According to this[1], $160 million of that was for a new building.
> And what of the huge new $160 million (ish) academic building? The trustees still say that it has nothing to do with the fiscal crisis, despite the fact that it’s responsible for some $10 million a year in interest payments
I'm not sure what precedent there would be for either of those actions.
All of the major universities "gamble" with their endowments in the various markets. There's the corny adage that Harvard is a hedge fund with a university attached.
It's one thing to gamble with an endowment, that can be couched as investment, and another to borrow money to gamble with and endanger the operational budget of the non-profit you are overseeing.
That may well violate the fiduciary duty of prudence under the New York Prudent Management of Institutional Funds Act.
I'm sure most endowments use some margin, but there are different leverage ratios. The Harvard endowment has since eliminated net levage, but before the crisis they were levered to 105%. The borrowing that Cooper Union did amounted to 30% leverage.
Further each the duty of prudence has to be measured against each sitution individually, according to the eight factors listed in the law:
(1) general economic conditions;
(2) the possible effect of inflation or deflation;
(3) the expected tax consequences, if any, of investment decisions or strategies;
(4) the role that each investment or course of action plays within the overall investment portfolio of the fund;
(5) the expected total return from income and the appreciation of investments;
(6) other resources of the institution;
(7) the needs of the institution and the fund to make distributions and to preserve capital; and
(8) an asset’s special relationship or special value, if any, to the purposes of the institution.
Which is not to say that other boards aren't also violating their duties of prudence, but an egregious case is a good place to start.
The funny thing is, if it were to have paid off it may have been incorporated into business lore in much the same way as the story of FedEx's founder's Vegas trip has. People would have called Cooper Union's gamble a good thing, and while acknowledging it as reckless (or, more charitably, risky) would have also argued that you can't argue with success!
Then again, where is the line between reckless and calculated risk? A lot of non-entrepreneurial people would call the business of startups a reckless gamble.
FedEx (alledgedly) was otherwise bankrupt; Cooper Union was just fine. It's administrators and board members were just having a severe case of building envy. Go on any university campus in the US and you will find them building something. I've never heard of a building educating anyone.
It seems like administration and trustees have been treating Cooper Union with the standard expansionary approach that is the norm for universities – spending money to make money, extravagant capital projects, overpaying and overstaffing administration. Disappointing. There are few institutions left for those that value frugality.
Note to self: If I ever find myself a billionaire industrialist and I want to start a tuition free school, bake into the rules for operation that any administration that decides to charge a tuition anyway becomes immediately fired along with all administrative positions at that time. If they really feel its best for the institution, let them prove it with unemployment.
It's a sad day for education. I'm a Cooper alum and have been following this fiasco for quite some time. Feel free to ask me any questions you may have and I'll do my best to answer them.
So, its this really caused by them borrowing $170m to play the stock market? What were they thinking?!
Also: What happened with the failed fundraising drive? I would have thought such an exclusive school would have had many well off graduates, who would be happy to help out their old school in its hour of need.
Not quite. The media saying that the loan was for playing with the stock market is erroneous. The $175M loan was to build a new building in the east village. However, when the building was complete, some geniuses decided that the leftover money would be better spent in the stock market rather than using it towards paying back MetLife. They did calculations and saw that the gains from new investments would outpace losses from the additional interest. It was a hedge, basically. But then the recession hit, and naturally that investment failed, leaving Cooper both without gains from the investment AND with extra debt burden.
My grandfather was a first generation American. He was able to attend college by earning admission to The Cooper Union. Tuition would have kept him out.
What is the level of alumni donation like at Cooper Union? I would think a free education in architecture or engineering (I can't say the same about a free education in art) ought to have some real economic value, and allow some alumni to pay it forward to keep alma mater financially sound.
Apparently, you are unfamiliar with the economics of architectural practice. Six figure salaries are for senior licensed staff. The typical age these days for completing licensure requirements is about 33 based on the few states which have made such data available...and new graduates, well New York City has a long tradition of unpaid internships ( graduates are interns in the licensure process). In the heady days of the boom, an intern from a top school at a big firm might make 60k - for 70 hours a week and holding a degree which takes at least five years to complete.
To put it in perspective, Frank Gehry was unknown until his mid-forties, and only came to the national spotlight for work he did on his own house. How many programmers do you know who are still running a company in their 80's?
Edit: Mathew Arnold did the study which extracted the age at which licensure is achieved. It is presented here: http://www.di.net/blog/tag/ncarb/
Matt is a Cooper Union Alum. I played a minor role in the data collection phase - I egged him on.
All that. And, if you're at a small firm, you're often chasing small commissions with cheapskate clients who use all kinds of methods to stiff and delay payments. It's tough to build a good portfolio that way. (Like lots of design work in that regard.) Add in the cyclical nature of the construction trade, and it's a rough business.
Architecture is currently oversupplied with architects. The salaries are not that great, especially for starting (it runs under $50k and more likely in the low 40s).
(a few architecture boards I frequent, for the cool pictures, are full of endless complaining about the lack of jobs and the poor pay for starting architects)
Starting salary right now is probably $32,000 to $33,000. Then, licensed architects, usually licensed architects are making around $50,000. It varies between all of their capabilities .
You and your parent comment are exaggerating. The pay (with a masters) starts in the low 40's for 40-50 hour weeks. There are exceptions, but they are not the norm.
Pay progresses decently over a career, but no one gets into it for the money. (On the upside, all of your coworkers are passionate for the right reasons.)
I understand the financial mistakes (underperforming investments). I understand the building mistakes (extravagance, over-spending). What I don't understand is this policy that will (in my opinion) destroy The Cooper Union's core asset: the student body. Having attended, I whole-heartedly believe that nearly all of Cooper Union's value-add is in being surrounded by incredibly intelligent peers. Peers who are now less likely to apply or attend.
Me: Spent two years at Cooper, currently graduating from NYU.
Basically, I derive a significant amount of esteem and happiness from making things that people use. It was this that lead myself and those around me to believe I should pursue Engineering. Unfortunately, I derived very little to no esteem from what I felt was merely "book learning" at Cooper. The school system I grew up in was extremely liberal and forward-thinking, so Cooper Union felt extremely rigid to me (although I acknowledge the possibility that all Engineering programs are like this). I simply couldn't survive four years like that.
Ultimately, I studied Economics at NYU, so I moved away from Engineering to allow myself to pursue development on my own. There are other reasons why I moved to Economics, but thats the gist of it.
I see. I almost thought about applying to transfer to CU, but didn't since I didn't know how their financial situation would work out. Non traditional students don't really get a lot of help with these things, and it's uncertain enough as a transfer already. Hopefully you were treated ok as a transfer at NYU!
It's really sad to see CU's free tuition gone. It was one of the few places that smart but poor people with no access to easy credit still had a fighting chance of attending. :(
I'm a Cooper grad -- the first two years are book learning, the second two were hands on. I built lots of fun stuff; interactive art projects with the art school, lots of robots, and even a race car for my senior thesis.
This really feels like a smaller version of the American story. Corporate boards make large investment gambles, stock market tumbles, the regular people end up paying when it all goes south. Nobody on Cooper's board has been asked to step-down for the decisions that led to this crisis.
We alumni have actually asked basically the entire board and the Cooper president to step down. (Edit: though I don't believe we've made an official petition yet. I'm sure that'll happen soon.)
glad to hear it, they are so incomprehensibly bad it is hard to put into words. They took a beautiful thing and ruined it for what I do not see. A new building? Higher profit margins? A desire to keep-up with the aspirations of the other corporate boards they are on?
I had never heard of cooper union before, but am curious, did they have a huge endowment to fund the school for so long? The article states they own land under the chrysler building, and the founder endowed them with the buildings and land 100+ years ago. However for ongoing expenses (staff, upkeep, etc), how were they funding this prior?
I also looked it up on wikipedia, and it looks like the endowment also owns the land underneath the Chrysler Building.
A substantial portion of the annual budget, which supports the full-tuition scholarships in addition to the school's costs, is generated through donations from alumni in both the public and the private sector. In addition, real estate has become a very important asset to the College and has drastically increased its endowment to over $600 million.[43] The land under the Chrysler Building is owned by the endowment,[44] and as of 2009, Cooper Union received $7 million per year from this parcel. Further, under a very unusual arrangement, New York City real-estate taxes assessed against the Chrysler lease, held by Tishman Speyer, are paid to Cooper Union, not the city. This arrangement would be voided if Cooper Union sold the real estate. In 2006, Tishman Speyer signed a deal with the school to pay rent that will escalate to $32.5 million in 2018, $41 million in 2028 and $55 million in 2038. Cooper Union investment committee member John Michaelson acknowledged to the Wall Street Journal that Tishman Speyer "would not have signed a generous agreement like that had it been approached in 2009."
Not quite. They borrowed money to build a building, but used the leftover cash to invest in the stock market. They calculated that capital gains would outpace the additional debt interest. But then the recession hit, and they basically lost that money.
And this, ladies and gentlemen, is why meaningful bank regulation is long overdue. The signs of the present crisis were there to see for anyone with eyes in 2005: in that year my ex-landlady, who was from Bushwick, one of the poorest parts in New York, bought five rental properties with no-money-down loans.
Let's have this again: Bank of America found nowhere better to invest than in this clueless lady that perceptibly could not run her rental empire successfully, and they loaned her the funds anyway.