The University Union (UU) is granting University Housing a no-interest $7.9 million loan taken from its reserve pot of student fees, but the sudden deal has raised questions from the student body.
After having to refund a total of $20 million to students for spring quarter housing amid the COVID-19 pandemic, University Housing’s year-end deficit amounted to $3.9 million, Administration and Finance Vice President Cynthia Vizcaíno Villa said at a Sept. 23 ASI board meeting.
University Housing has also accumulated debt over the past few years after receiving loans from the state government to build more dorms, Mustang News reported in June.
While University Housing has not taken loans from the UU in the past, the sudden need for a loan is because Cal Poly “cannot close the year with a deficit in Housing,” according to Villa.
The loan, which would be repaid within seven years starting next year, will go toward University Housing’s student refunds. Villa said the remaining $4 million may go toward restoring Fremont Hall, which was deemed unsafe after a mudslide destabilized a hillside behind the dorm years ago.
Although the UU is funded by mandatory student fees, ASI Board of Directors member and political science senior Parker Swanson said administration did not consult the board. Instead, the board was notified after the terms of the loan were decided.
“I’m supposed to be a director representing students,” Swanson said. “When I don’t even get that chance, I kind of feel like I didn’t even get the opportunity to do my job.”
Armstrong said he did consult some students, though he didn’t provide any other information, according to Swanson.
Though Swanson acknowledged the school is allowed to use “alternative consulting methods,” he said the purpose of the ASI board is to be the voice of Cal Poly students for administration.
“So if you’re going to consult someone on student fees, I would really recommend you start with the Board of Directors,” Swanson said.
Swanson said that Cal Poly characterizing the $7.9 million as “university money” takes away from the fact that it is funded by students for specific purposes.
The UU gets its money through a mandated student fee, which is currently at $261.91 and is typically used to “support University Union programs, services and administration,” along with the recreational center and sport clubs, according to the Cal Poly Administration and Finance website.
“Why even have student fee descriptions if it’s all university money, [and] why were we the organization asked to front that over the other money in this university?” Swanson said.
Additionally, students have expressed concerns over the 0 percent interest between the two campus entities.
English senior Luke Bartell, who’s a lifeguard student manager for the Recreational Center, says an interest rate would give University Housing an incentive to pay back the money as efficiently as possible, therefore guaranteeing a larger sum of money that can be put toward UU projects in the future.
Also, with the seven-year repayment plan, the $7.9 million would depreciate over time due to inflation, which is typically countered by imposing an interest rate.
As the money is taken away from possible UU projects — which Swanson believes students would prefer their money goes to — students also questioned whether University Housing has other motives for the money.
Cal Poly plans to create a two-year housing requirement, even though ASI has long opposed the requirement, especially after reviewing University Housing’s flawed data. Swanson said that although restoring Fremont isn’t directly related to the pending two-year requirement, he assumes the Fremont renovation would increase dorm availability in compliance with the new policy.
“I’ve heard about Fremont Hall many times,” said Bartell, who was a Resident Advisor his sophomore year. “If Fremont has been an issue that we have known about for the past four years that [University] Housing has been well aware of, then why does [University] Housing need a no-interest loan from another on-campus entity all of a sudden?”
Bartell said any benefit of on-campus learning communities has to be weighed with the housing costs — especially when students can often find more affordable housing options off campus.
“There’s some great parts of living on campus,” Bartell said. “However, I think that there is a significant difference between encouraging students to live on campus and mandating that they live on campus.”
Fremont Hall would be reopened fiscal year 2021-22, but Cal Poly spokesman Matt Lazier said the project would only happen if the CSU Chancellor’s Office provides funding for remediating the hillside. Without that funding, Lazier says the loan repayment will be “accelerated.”
Victoria Lachnit contributed reporting to this story.