UVA’s $37 million Bavaro Hall built on student loans
Last Friday, October 5, UVA president John Casteen and others got to wield fancy shovels and break ground on yet another multi-million dollar building project, this time the $37 million Bavaro Hall, the long-awaited addition to the Curry School of Education, which will double the size of the school.
Casteen called the new building "absolutely essential," noting that Curry faculty and students have had to use off-grounds space for some time, and new Curry dean Robert Pianta said the building signals an "exciting new era" for the Curry School, according to a UVA release.
The new building will be designed by Darden School architect Robert A.M. Stern, and will include "multiple open conversation areas," conference rooms, and a garden courtyard. The building will be located between Ruffner Hall and Emmet Street, and should be completed by 2010. (see photo right)
Also present at the groundbreaking was Daniel M. Meyers, 44, chair of the Curry Foundation and former CEO and co-founder of First Marblehead Corp., a Boston company that specializes in offering privately funded student loans. Meyers has donated $23 million to the project and asked that the building be named after an old friend and mentor, Anthony D. "Wally" Bavaro, who played pro football for
the San Francisco 49ers in the 1960s, and was a coach and teacher to Meyers when he was growing up in Massachusetts.
Several members of the Bavaro family participated in the ground breaking. Meyers and a partner started First Marblehead in the early 1990s, took it public in 2003, and by 2006, Meyers had cashed in over $80 million in stock and held $188 million more.
However, in 2005, improper gifts to a female executive led to Meyers' resignation as CEO. And just recently, Meyers and First Marlblehead were featured in a New York Times story on the types of student loans that have been compared to sub-prime mortgages, as they're marketed to students unable to obtain cheaper government subsidized loans and come with higher interest rates.
According to the Times, the average interest on a loan from Marblehead is 11 percent, while federal student loans can't go above 6.8 percent. In the last decade, business has been booming as college costs have soared and so has the amount of debt that students are carrying.
As the Times reports, New York's attorney general, Andrew Cuomo, has exposed some unsavory dealings between these kinds of lenders and some colleges. In fact, First Marblehead was recently subpoenaed as Cuomo's office looked into the sketchy marketing practices of such companies, which include aggressive direct mail and Internet campaigns. Investigators have asked the company to hand over documents from the last six years.
Meyers, the Times reports, grew up fatherless and had to hold several jobs to put himself through college. He insists that First Marblehead has nothing to hide and that the company will cooperate fully with the investigation.
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Photos by Will Walker
3 comments
First Marblehead does make loans to students who qualify for federal loans. Many of their loans are made to students who also receive federal loans. Most of their loans are co-signed by parents, the average FICO score of whom is 710.
Federal loans are subsidized, which is why they have a lower interest rate.
However, since the cost of going to college has gone up much faster than the federal loan limit, First Marblehead and other lenders still have plenty of business.
First Marblehead claims that it always encourages students to take advantage of grants, scholarships, and subsidized loans before getting a loan from them. They will get in trouble if this is not true or they have been otherwise shady. So far, I don't believe any evidence of wrongdoing has come to light. The New York Times author did not find any. Perhaps the New York AG has found evidence. We will see. In the meantime, I'm glad Meyer is giving his money to UVA.
For a full skewering of the NYT piece:
http://www.bankstocks.com/article.asp?id=9881513
I don't think any of the loans are backed by collateral. Private student loans are essentially personal loans secured only by the credit of the individual. 11% may seem high compared to a mortgage, but these loans are actually more like credit card debt. Obviously, 11% isn't so bad when viewed in that context.
Also, I forgot to mention the most obvious way in which the analogy to sub-prime is misleading. The reason why people don't qualify for Federal Loans and are forced to take private loans is not because their credit and income are low. It is because their income is too high!
I wonder if the 11% interst rate reflects the billions of dollars in college loan defaults or the fact that many loans are made not backed by collateral.