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NYU’s Gilded Age: Students Struggle With Debt While Vacation Homes Are Lavished on the University’s Elite

The problems at NYU are emblematic of an insular institution whose Board is heavily dominated by the same Wall Street people who heaped disgrace upon their own institutions.
 
 
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A review of deeds and mortgages in some of the toniest towns on the East Coast reveals that not only is New York University financing luxury Manhattan brownstones and high rise condos for its faculty and administrators out of its nonprofit coffers, it has also been secretly financing country homes for a select group. These extravagances have fallen directly on the shoulders of financially struggling students. NYU ranks fourth in Newsweek’s 2012 list of the least affordable colleges.  

In September 2009, the New York Times published a remarkable exercise in inanity, profiling John Sexton, President of NYU, relaxing at his Fire Island beach house. Sexton calls his summer getaway a “rather large, wonderful house” in the interview. We learn what Sexton eats for breakfast (black coffee and yogurt), the name of his dog (Legs), how long it takes him to walk to church from the ferry (five minutes), how much weight he’s lost (30 pounds), and little else.

We don’t, for example, learn from the interview that his home on Fire Island has been financed since 1994 by several million dollars in loans from the NYU School of Law Foundation and NYU itself, according to the Suffolk County Clerk’s records.

This is not the only residence that NYU has made possible for its President. He has the use of two well appointed apartments owned by NYU in Manhattan. Sexton, who turned 70 in September, is also set to receive a length of service bonus of $2.5 million in 2015 and an annual pension of $800,000 when he retires. That pension is the equivalent of NYU taking $10 million of its assets and placing them in an immediate annuity for Sexton.   

Sexton has plenty of company when it comes to getting out of the city in the summer through the generosity of NYU. Richard Tsien, Director of the NYU Neuroscience Institute, bought a house in East Fishkill, New York, 76 miles from the university, for $1,125,000 in February 2012 with $500,000 in financing from NYU. According to an online description, it’s a stone house on 7 park-like acres with a flowing stream and a functioning 12-foot water wheel.

Numerous other NYU professors have country homes financed by the NYU School of Law Foundation or NYU. Between primary residences and vacation homes, NYU and its affiliated nonprofits have an estimated $72 million to $96 million outstanding in loans to faculty and administrators. The university has acknowledged 168 loans. 

These revelations come on top of other recent outrages at the university, such as the purchase of a $6.15 million condo on East 70th Street to house Robert Grossman, Dean of the NYU Medical Center. Grossman’s combined compensation at NYU as of the fiscal year ending August 31, 2011 was $3,488,960. Five other doctors at the Medical Center receive a combined total of $10.5 million in compensation.

The excesses at NYU under the presidency of John Sexton came partially to light during the Senate confirmation hearings of Jack Lew, President Obama’s pick for Treasury Secretary. As NYU’s Chief Operating Officer, Lew had received a partially forgivable mortgage loan for $1.4 million to buy a luxury home in Riverdale and “severance pay” of $685,000 – even though he had voluntarily left to join Citigroup. In testimony to the Senate, Lew said NYU provided him with an annual payment equal to the interest paid on his mortgage.

Senator Chuck Grassley, ranking member of the Committee on the Judiciary, was part of Lew’s confirmation hearings and was deeply disturbed by Lew’s opaque and grudging release of the materials requested. As a result of what he had heard in the hearing, Grassley sent a March 15, 2013 letter to NYU requesting “all loan documents for loans made to individuals from 2000 to the present,” along with a demand to know the details about whose loans were forgiven, interest reimbursed, and so forth.