A Tale Of Ii Ucs
Friday, August 22, 2008
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As nosotros acquire create for some other large tuition increase, in addition to nosotros read most the elimination of several UC grade programs, the bond rating agency, Fitch, has re-affirmed the university’s strong financial standing. While the bond raters have got been incorrect inwards the past, nosotros tin nonetheless read the latest analysis of UC’s financial wellness every bit indicating the existent priorities of the administration.
Since the UC has decided to assist trim back its pension liability past times selling most $1 billion of commercial newspaper (debt), it has asked to have got its financial condition rated. As I have got argued inwards the past, due to the UCs high flat of debt, it is subject on getting a high rating from the bond raters in addition to so that it tin have a depression involvement rate, in addition to ane number of this dependency on debt is that the bond raters tin enjoin the academy how they intend the organization should construction its finances. Moreover, fifty-fifty though the bond raters pretend to hold upwardly neutral in addition to costless of whatever ideology, they covertly force the same agenda that nosotros discovery inwards the World Bank in addition to the International Monetary fund. This agenda pushes for the privatization of world entities, a taking on of huge debts, in addition to the deregulation of markets. The excogitation for the UC educate out past times Fitch is thence inwards many ways the global excogitation existence pushed past times conservatives in addition to bond raters.
In reading the summary of Fitch’s report, nosotros larn that the academy has received a high rating because of, “UC's substantial flat of residual canvass resources in addition to liquidity; various revenue base, which enables the organization to conditions temporary weakness inwards whatever ane funding source; in addition to manageable debt burden, despite the expansive, uppercase intensive nature of its operations.” In other words, UC has many dissimilar revenue streams, in addition to although it has a high flat of debt, over $14 billion, it has the resources to choose aid of its financial obligations.
According to Fitch, ane of the principal signs of UC’s financial wellness is its mightiness to constantly heighten tuition: “Recent reductions inwards soil appropriations, in addition to the potential for additional cuts through the intermediate term, are partially mitigated past times the university's nonetheless considerable, though instantly to a greater extent than limited, mightiness to heighten tuition in addition to fees, in addition to its overall express reliance on soil operating support.” In other words, the UC should non worry also much most losing soil funds because it has shown a willingness to heighten tuition. In fact, this same logic of privatization is driving the state’s reduction of funding for the UC; since the Democrats believe they cannot heighten taxes, they cutting the UC, which they know volition plow roughly in addition to heighten tuition.
Not exclusively does the soil experience comfortable reducing the university’s funding, simply they are planning to borrow some other $1 billion from the UC system, in addition to the ground why the direction volition have got this bargain is that the academy volition plow a turn a profit past times lending coin to the state. This bargain brand feel on newspaper because due to UC’s high bond rating in addition to the state’s depression rating, the soil has to pay a higher involvement charge per unit of measurement to borrow money, in addition to if the UC lends money, the soil tin improve its bond rating, in addition to the UC tin turn a profit from the deviation betwixt its depression involvement charge per unit of measurement in addition to the state’s high involvement rate.
What is left out of this equation is that students are paying 6.8% to choose out their loans, in addition to these loans non exclusively permit the UC to heighten tuition, simply the coin generated from tuition tin hold upwardly leant to the soil at something similar 5%, which is meliorate than the 2-3% the UC gets from putting tuition dollars into its Short Term Investment Pool. If nosotros connect the dots, nosotros run across that students are lending coin to the state, in addition to so that the academy tin convey inwards to a greater extent than money, simply the destination number is that the students volition have got to pay for this involvement deal.
Perhaps the biggest casualty of this constant escalation of tuition is the oculus class. While students whose parents brand below $50,000 volition have got their tuition covered past times financial aid, other students who are non rich in addition to create non qualify for assist volition destination upwardly paying to a greater extent than in addition to taking out huge loans. In fact, over the catamenia of 1999 to 2009, the percent of UC students whose parents combined income is betwixt $50,000 in addition to $150,000 has gone from 50% to 40%.
As I have got stressed before, almost everything the UC does loses money, in addition to and so the exclusively stable origin of income is pupil tuition dollars. Ultimately, the soil in addition to the bond raters are telling the UC to screw the oculus class, in addition to the UC is obliging on a regular basis.
Since the UC has decided to assist trim back its pension liability past times selling most $1 billion of commercial newspaper (debt), it has asked to have got its financial condition rated. As I have got argued inwards the past, due to the UCs high flat of debt, it is subject on getting a high rating from the bond raters in addition to so that it tin have a depression involvement rate, in addition to ane number of this dependency on debt is that the bond raters tin enjoin the academy how they intend the organization should construction its finances. Moreover, fifty-fifty though the bond raters pretend to hold upwardly neutral in addition to costless of whatever ideology, they covertly force the same agenda that nosotros discovery inwards the World Bank in addition to the International Monetary fund. This agenda pushes for the privatization of world entities, a taking on of huge debts, in addition to the deregulation of markets. The excogitation for the UC educate out past times Fitch is thence inwards many ways the global excogitation existence pushed past times conservatives in addition to bond raters.
In reading the summary of Fitch’s report, nosotros larn that the academy has received a high rating because of, “UC's substantial flat of residual canvass resources in addition to liquidity; various revenue base, which enables the organization to conditions temporary weakness inwards whatever ane funding source; in addition to manageable debt burden, despite the expansive, uppercase intensive nature of its operations.” In other words, UC has many dissimilar revenue streams, in addition to although it has a high flat of debt, over $14 billion, it has the resources to choose aid of its financial obligations.
According to Fitch, ane of the principal signs of UC’s financial wellness is its mightiness to constantly heighten tuition: “Recent reductions inwards soil appropriations, in addition to the potential for additional cuts through the intermediate term, are partially mitigated past times the university's nonetheless considerable, though instantly to a greater extent than limited, mightiness to heighten tuition in addition to fees, in addition to its overall express reliance on soil operating support.” In other words, the UC should non worry also much most losing soil funds because it has shown a willingness to heighten tuition. In fact, this same logic of privatization is driving the state’s reduction of funding for the UC; since the Democrats believe they cannot heighten taxes, they cutting the UC, which they know volition plow roughly in addition to heighten tuition.
Not exclusively does the soil experience comfortable reducing the university’s funding, simply they are planning to borrow some other $1 billion from the UC system, in addition to the ground why the direction volition have got this bargain is that the academy volition plow a turn a profit past times lending coin to the state. This bargain brand feel on newspaper because due to UC’s high bond rating in addition to the state’s depression rating, the soil has to pay a higher involvement charge per unit of measurement to borrow money, in addition to if the UC lends money, the soil tin improve its bond rating, in addition to the UC tin turn a profit from the deviation betwixt its depression involvement charge per unit of measurement in addition to the state’s high involvement rate.
What is left out of this equation is that students are paying 6.8% to choose out their loans, in addition to these loans non exclusively permit the UC to heighten tuition, simply the coin generated from tuition tin hold upwardly leant to the soil at something similar 5%, which is meliorate than the 2-3% the UC gets from putting tuition dollars into its Short Term Investment Pool. If nosotros connect the dots, nosotros run across that students are lending coin to the state, in addition to so that the academy tin convey inwards to a greater extent than money, simply the destination number is that the students volition have got to pay for this involvement deal.
Perhaps the biggest casualty of this constant escalation of tuition is the oculus class. While students whose parents brand below $50,000 volition have got their tuition covered past times financial aid, other students who are non rich in addition to create non qualify for assist volition destination upwardly paying to a greater extent than in addition to taking out huge loans. In fact, over the catamenia of 1999 to 2009, the percent of UC students whose parents combined income is betwixt $50,000 in addition to $150,000 has gone from 50% to 40%.
As I have got stressed before, almost everything the UC does loses money, in addition to and so the exclusively stable origin of income is pupil tuition dollars. Ultimately, the soil in addition to the bond raters are telling the UC to screw the oculus class, in addition to the UC is obliging on a regular basis.