AU will continue normal financial operations even as the university begins to react to the current economic crisis, President Neil Kerwin said in a memo e-mailed to the AU community Friday.
The university refinanced $137 million of its tax-exempt bonds in the market and limited withdrawals from its short-term investment fund. The university is not considering any scholarship reductions, according to David Taylor, Kerwin’s chief of staff.
Vice President of Finance and Treasurer Don Myers and Provost Scott Bass also sent an e-mail to the AU community Friday, in which they detailed how AU students can address potential financial concerns with the university.
“[AU] is committed to our students and families and will work with you during this time,” they said in the e-mail. “Most of our students receive some type of financial aid, and we recognize these unsettling times might prompt concern among students and families about their academic endeavors.”
Kerwin’s e-mail came on the same day President Bush signed a bill to aid the ailing financial industry. The U.S. House of Representatives voted 263-171 in favor of the plan, which will provide $700 billion in aid, earlier that same day. The Senate had passed the bill 74-25 Wednesday, according to The Washington Post.
The bill’s backers said it was a necessary measure to help avoid an economic collapse; its opponents expressed concern over the length of time it took to create and present the bill, as well as the use of taxpayers’ money to fund failing banks, according to The New York Times.
Martha Starr, an economics professor in the College of Arts and Sciences, said she was concerned about the bill.
“The trouble with the bailout plans ... is that they’re emergency measures intended to calm markets,” she said. “There hasn’t been time to devise policies and programs that will credibly and effectively repair the financial system - while also distributing the benefits, costs and risks of the bailout fairly between Wall Street and Main Street.”
Starr said that while every American will lose if the financial system deteriorates, she believes the bill’s emphasis on government purchases of “toxic assets” turns the tables in Wall Street’s favor.
The $700 billion plan will allow the federal government to purchase the bad assets of some shaky financial organizations, offer tax breaks to businesses and families and reward investments in renewable energy, according to The Post.
When the House rejected an earlier version of the plan last Monday, the Dow Jones Industrial Average dropped 778 points in one day and people began to fear a possible global recession. Starr said she believed a restoration of confidence is just as important as the aid plan.
“Key figures ... have been running around saying ‘The sky is falling, the sky is falling’ in order to mobilize the White House and Congress to act,” she said. “But this has been like throwing fuel on the fire: If you weren’t worried about your bank account before hearing them speak, for sure you’ll be worried after!”
There is danger of an economic downturn that will affect many Americans, including AU students, if the government does not take action, said John Willoughby, an economics professor in CAS. However, he said he believes the recently passed bill is not the best course of action. Willoughby said he prefers the government buy shares directly from banks that do not have enough money to lend.
Matthew Kabak, a freshman in the School of Public Affairs, said the bailout seems necessary.
“No one likes to bail out industries notorious for corruption like Wall Street,” he said. “Yet the economy depends on it.”
The economic crisis is beginning to hit close to home for college students, as it begins to affect college funds invested in the stock market and the probability a student will be able to get a job after gradation. However, Starr said she remains optimistic and said she has advice for worried students.
“Get everything you can out of your education,” she said. “Become as skilled and as knowledgeable as you possibly can in your field of interest, so that ... you will stand out as a uniquely qualified and together [job] candidate.”