Friday, March 25, 2011

Oaklan Nonprofit University Gets Hit By Budget Cuts

It looks like yet another round of state budget cuts are impacting a nonprofit.  This time, it's Patten University in Oakland, CA.

According to a story in the Mercury News, the Christian university (the only traditional nonprofit college in Oakland) will be affected by a series of cuts that were supposed to be only targeted towards for-profit colleges.  However, since Patten because they have high borrowing and default rates.  Because of this, they will be subject to a new rule that denies tax-payer funded Cal Grants to schools that have 40% or more students using federal loans, and where 24.6% of borrowers default on those same loans.  The new legislation as among $14 billion in state budget cuts signed by Governor Jerry Brown on Thursday; the cuts were mainly a result in growing anger at for-profit universities that get tax-payer money yet don't help their students prepare for jobs.

Patten's president, Gary Moncher, was still very shocked that his school was going to be affected by this new rule, and he said that he and his colleagues were trying to find a way around it.  He argued that a very small number of their graduates are skewing the numbers, and that most of the students who default on their loans take classes online, which makes it hard to discourage them from doing this. 

If Patten University finds no way around this rule, there will have to be a lot of changes at the school.  For one thing, there is speculation that they will cut back on online courses, as they tend to attract students with high borrowing and default rates.  Moncher says, however, that they are going to put all of their energy in getting Patten off the list.  As he says:

"If we are knocked out of Cal Grant eligibility, that will discourage students from coming to Patten.  And obviously it would be a loss of revenue, which is bad."
Read the full story over at Mercury News.

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