April 3

Quick Takes: Drop in Bonds Backed by Student Loans, Another Lender Bolts Federal Loan Program, Court Rules for U. of Minn. on Medical Residents’ Taxes, Fund Raising Knowledge Faulted, No NYU in Paris, British Students Accept Tuition

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• A new report by UBS has found that the sale of bonds backed by student loans was 65 percent smaller in the first quarter of 2008 than it was last year, Bloomberg reported. The study is the latest evidence of a retrenchment of investments in the student loan industry.
• Also on Tuesday, Northstar Education Finance, Inc. became the latest lender to announce that it would stop making federal student loans, the Wall Street Journal reported. A note on the lender’s Web site said it would “temporarily suspend” such loans. According to the Finaid.org Web site, Northstar is the 13th largest originator of federal student loans, and the second biggest, after the College Loan Corp., to suspend its participation in the loan programs since the credit crunch hit.
• Only 1 percent of the leaders of small colleges believe that their trustees are well versed in fund raising, according to “Advancing Small Colleges: A Benchmarking Survey Update,” by the Council for Advancement and Support of Education and the Council of Independent Colleges. In contrast, a survey a decade ago found that 13 percent of college leaders believed their trustees were knowledgeable about fund raising. Selected data and information about purchasing the full report may be found on CASE’s Web site.
• A federal judge has ordered the Internal Revenue Service to pay $1.1 million to refund tax payments that it improperly levied on the University of Minnesota for payroll taxes on medical residents, The Star-Tribune of Minneapolis reported. The ruling by Judge Richard H. Kyle is the latest in a long-running set of federal court decisions, which have recently swung in favor of colleges and other institutions and against the federal government, that contend that medical residents are students rather than employees, and hence should not pay Social Security and Medicare taxes.
• A proposed merger between New York University and the American University of Paris is off, according to the Washington Square News, NYU’s student newspaper. The newspaper cited an e-mail message that the head of the Paris institution wrote in which he said that the two institutions had mutually agreed “not to pursue the option of assimilation.” NYU and the Parisian institution had announced a “strategic partnership” in 2006 that was anticipated to result in NYU establishing a European campus. The two institutions said they would continue to cooperate, but in smaller ways. An NYU spokesman told the student paper that the university, which has been ambitious in seeking international growth, would continue to look for a European outpost.
• In a dramatic shift, Britain’s National Union of Students will no longer fight against all tuition plans and has adopted policies that will consider approving of some payments, The Guardian reported. While moving away from a free tuition doctrine, the group’s leaders also denounced current tuition policies as unreasonable and unfair.

— Scott Jaschik and Doug Lederman

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