A handful of distinguished retired journalists (and me) meets once a month at a Baton Rouge Piccadilly Cafeteria (I told you we were retired) to solve the ills of the state, nation, and the world. Occasionally, we even delve into local Baton Rouge politics.
One of those, Ed Pratt, with whom I had the pleasure of working at the old Baton Rouge State-Times back in the ‘70s, is an occasional attendant but because he is still gainfully employed (unlike the rest of the over-the-hill-gang), he doesn’t join us each month.
But several months ago, at a lunch he did show up. The subject that day was the future of the Taylor Opportunity Program for Students (TOPS) and the legislature’s failure to adequately address the looming fiscal cliff that will see about a billion dollars fall off the books with the expiration of a temporary sales tax.
On March 9, Pratt, who still does a regular op-ed column for the Baton Rouge Advocate, WROTE a piece that accurately illustrated the direct connection between the continued funding of TOPS and the return on investment of apartment developers and restaurant owners, investments that exist in the immediate orbit of the state’s institutions of higher learning.
And while Pratt’s analysis singled out the spurt in apartment, condo, and restaurant development, primarily in the immediate proximity of LSU, other colleges and universities have also witnessed similar private investment, particularly in student housing.
Those investments could be in peril if the legislature continues to shirk its responsibility in setting the state on firm fiscal footing.
Take my alma mater, Louisiana Tech, for example, and Grambling State University, just five miles from Tech. There has been an explosion of housing construction around those two campuses. And because Tech has embarked on an ambitious program of student recruitment to bump its enrollment to something like 20,000 or so over the next few years, construction workers have been particularly busy in Ruston. (The enrollment at Tech when I was there was something like 4,000. But they had rotary dial pay phones, Cokes in 61/2-ounce glass bottles, manual typewriters, carbon paper, and 8 p.m. weeknight curfews for female students back then, too.)
But the way they’ve gone about with their student housing construction at Tech is quite creative and is being emulated by every other campus in the state, according to Ruston political consultant Dr. Gary Stokley, a retired Tech professor.
The Tech Alumni Foundation approaches alumni and other supporters with an “investment opportunity” that, as long as TOPS is maintained, is virtually risk-free. (And no, it’s not a Ponzi or pyramid scheme.)
Tech, despite having torn down some of its dormitories, is growing and with an increase in enrollment, students need housing. And, of course, students would prefer a home environment with private baths and kitchens as opposed to dormitories with a community bath and no kitchen.
By working with the school’s foundation, which actually negotiates the construction contracts, investors enjoy a generous tax write-off, plus they will own a percentage of the apartments or condos. The school takes care of filling the housing units and collecting the rent and is also responsible for the maintenance of the buildings. The dollars generated by student rent pays off the debt. The advantage to the school is that it is relieved of the burden of having to go through the State Bond Commission to obtain funding for the construction. The alumnus or supporter who ponies up the money does nothing but sit back and reap the rewards of his investment.
If you have the funds to sink into the project, it’s a win-win proposition.
“Tech is one of the first schools to come up with this method of financing construction of student housing,” said Stokley. “Other schools have since replicated that method.
“Tech and Grambling have a tremendous impact on the economy of Ruston and Lincoln Parish as do others schools on their communities,” he said.
“A four-year student at Tech has an economic value of a million dollars on Ruston,” he said, “so the retention of students is critical. If TOPS craters, enrollment will drop and these apartments will sit empty.
“It’s a domino effect. If TOPS is cut or eliminated, it affects not only students’ families, but the ripple effect impacts colleges and the community as well.” Stokley said it was not unrealistic to envision some universities actually shutting down or converting from public to private schools with even higher tuitions—which could further reduce enrollment.
There are already all those extra fees that students voted to impose on themselves—before tuition began rising so sharply seven or eight years ago. “At Tech, we have the $62 million Davison Center that students voted to pay a portion of by assessing themselves fees totaling $8 million,” Stokley said. “That’s an added fee tacked onto already rising tuition. If TOPS is cut, that’s money that will have to be made up by students’ parents or by students taking out student loans. If that happens, the money for private apartments and condos just won’t be in the budget.”
Combined with the threat to TOPS, banks are lobbying Congress to cap the amounts of government student loans which could place additional financial hardships on students.
With federal student loans, the interest rate is fixed and often lower than private loans which can have variable interest rates of more than 18 percent. Plus, with federal loans, students are not required to begin repayment until they graduate, leave school or change their enrollment status to less than half time. Private loans require payments while still enrolled.
For other advantages of federal over private loans, click HERE.
If you are a parent with a kid enrolled in a Louisiana public university who is on TOPS, you may wish to turn your attention from March Madness long enough to give your House and Senate members a call to suggest that they take time away from campaign fund raising long enough to do the job they were elected to do.
Better yet, here are the links to the HOUSE and SENATE. Scroll down and click on the name of your members to get their email addresses to contact them that way.
I don’t think Patrick Taylor envisioned TOPS as a boondoggle for investors or for students to be able to live in apartments rather than dormitories. TOPS was designed to offer low income students the opportunity to attend college, not provide a luxury experience at college for middle and upper income students.
NolaNirvanna – I have to agree with your post. The legislature ( in its rush to enrich themselves and ingratiate themselves to their political supporters ) appears to have reshaped the TOPS program into something that is far from what Pat Taylor envisioned. Why would the entire state be compelled to pay tuition for students in which their family income exceeds 100K a year? I recall when Mr. Taylor announced his innovative program, and he made that announcement so that students who had been left out, in spite of good grades, could still afford to attend school and thus keep our “brain drain” to a minimum. What happened to that ideal?
What happened was, legislators caved in to rich campaign donors and opened up TOPS to everyone. And now we see what happens when money is the driving force that shoves good intentions aside.
That’s a common complaint which has merit. But as you know, there are always those who see an opportunity to capitalize and take full advantage of a situation.
Tom, Before I retired as a lobbyist, I remember a conversation with the man who was representing the new car dealers. He said TOPS was the best thing that ever happened for his members as parents could buy new cars for their kids since they didn’t have to pay tuition. I was surprised that Ed Pratt didn’t add that to his list of organizations that will be impacted if the Legislature doesn’t fully fund TOPS.
Sandra Adams
…the law of unintended consequences…who would have ever thought that a well-intentioned program to assist students and their families afford higher education, and keep educated young adults in the state as an economic driver, would serve to enrich savvy opportunists. Besides investors, parents often buy luxury condos as investments; after the kids finish college the housing units can be rented to other students, making a nice little profit. Those who created TOPS, and now feel somewhat foolish at this revelation, may come to the sad conclusion that no good deed goes unpunished…
The Tech Alumni Foundation approaches alumni and other supporters with an “investment opportunity” that, as long as TOPS is maintained, is virtually risk-free. (And no, it’s not a Ponzi or pyramid scheme.)
It sounds like a R.E.I.T.
https://en.wikipedia.org/wiki/Real_estate_investment_trust#United_States
Oh well, meant that to be a blockquote and not bold.
This has little to do with TOPS per se. Before TOPS funding expanded so radically during the Jindal administration, the housing and restaurants (and new cars) were subsidized by low tuition, which gave students and their parents more money to spend off campus. During the Jindal administration, the direct appropriation for LSU was cut drastically, large tuition increases allowed so that LSU could survive, and TOPS funding increased. So the only reason TOPS funding funnels millions into student condo rents, restaurant checks, and car notes is that the direct appropriation to higher ed no longer does. So let’s not blame TOPS for having unintended consequences. The more basic issue is that the net tuition at LSU (actual minus TOPS subsidy) is very low by national and regional standards.
So now the TOPS program (the public’s $s) has become an engine to fund private developers’ projects? And that’s a good reason to keep funding it at its present level?!
NONSENSE!
TOPS should be retained but the criteria re-written to help low-income students as intended—not provide a free ride for wealthy students and certainly not to enrich developers.
You know it hardly ever fails in Louisiana, when you see these budding investment opportunities come up and get to rolling, seems like there’s a federal grand jury to convene at some point thereafter on the subject!!
I wonder how many of our legislators are “investors” in this “virtually risk free ” scheme? Oh the love of money!!
Am I understanding this correctly – Tech Alumni Foundation approaches private investors to put money into the building projects as well as issuing municipal bonds using Innovative Student Facilities, Inc? Louisiana Tech University Foundation also loaned $11 million, “with no formalized repayment schedule” to complete the new Press Box.
As a LA Tech alumnus, I am ashamed, not proud, that the university invented yet another way to funnel yet more $$ to local contractors and use alumni funding to pay for vanity projects like the stadium boxes instead of education. The Taylor program was designed to help students who were good students but not eligible for top academic scholarships and who came from financially strapped families. It filled a real need. The greed of Louisiana politicians and big university donors altered it entirely. I’m waiting for the day LA Tech invents a way to fund the library. And we wonder why so many of our best students leave the state?