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Floating destinies
Published in Al-Ahram Weekly on 27 - 12 - 2016

Since its founding nearly 100 years ago, the American University in Cairo has perennially been much too expensive for the average Egyptian. Its students come primarily from well-to-do families of the upper class who can afford its exorbitant tuition. But even this super-rich bracket has been up in arms this academic year after the university increased tuition fees from an astronomical LE160,000 a year to a stratospheric LE260,000 for a normal workload of 10 courses a year, following the floating of the Egyptian pound. The huge rise led to student protests and strikes on campus for several weeks and strong intervention by livid parents.
"The problem started when the AUC administration decided in 2014 that students pay the educational fees 50 per cent in US dollars and 50 per cent in Egyptian pounds despite the fact that the fees were always paid entirely in Egyptian pounds since the time the university was founded," says Ola Al-Mandouh, whose daughter is in her second year studying business in AUC. "Even though the Student Union did not accept this, they still endorsed the decision.
"When we registered in the university it was a law. At the time the exchange rate was not so high; it was about LE8.80. When the decision was made to float the Egyptian pound, the gap became wider, that is, the exchange rate became higher so we told the university that we are all from the middle class, not rich people. We tried talking to the university administration but they refused to listen. Our children went on strike for three weeks until we told them that we will handle the situation." Al-Mandouh said she was the only parent who addressed the Faculty Senate to explain the problem, but received no reply.
"Two advisors from our side met with representatives from the university administration and they told them that there was a grant they could offer the students. "The problem is that this grant is only for the next semester and will not cover all the students using a selective process which is unclear to us. The fact is that we pay more than 50 per cent in Egyptian pounds and 64 per cent in dollars. There is the fear that some children will not be able to continue their studies in the university," she adds.
"The problem is that after the increase of the exchange rate of the dollar, we have to pay double the fees we used to pay. This is beyond our financial capabilities especially parents who have more than one child studying at the university," says another parent who chose to remain anonymous. "All we want is that we be allowed to pay our fees entirely in Egyptian pounds and to allow no more than a five per cent to seven per cent increase per year. We do not want this to be a burden. How are we going to provide all these dollars?"
"We are part of a huge segment of the society that seeks a good education for our children. We chose AUC for this purpose while others chose Cairo University and a third party sent their children abroad. All these people know the educational fees that they are required to pay at any time. On the other hand, we used to know what we were required to pay, but now we do not because the university has tied part of the fees with the dollar and its changing prices," says Tareq Mekheimar, also a parent. He acknowledges that the decision was made in 2014, however, its results have just now appeared. People did not complain at first as the total they were required to pay was the same at the time and the university did not benefit from it. But the situation has changed now, Mekheimar says.
AUC Director of Media Relations Rehab Saad Al-Domiati explains the system parents need to abide by when they pay the university's fees. "Tuition at AUC is 50 per cent in Egyptian pounds and 50 per cent in US dollars. For Egyptian students, they are allowed to pay the equivalent of the dollar portion in Egyptian pounds according to the Central Bank of Egypt's prevailing rate on the day of payment." This system was applied starting from the academic year 2014-2015. It was meant to allow the university to equally share with families the impact of currency fluctuations over time. All Egyptian students may pay in either currency or in both, according to the prevailing rate set by the Central Bank of Egypt on the day of payment. This tuition structure has been widely discussed with representatives of the Parents Association, Student Union and the Student Senate, Al-Domiati says.
On Saturday 17December the parents of AUC students attended a meeting to discuss legal solutions to the problem after the new president of AUC Francis Ricciardonedecided that fees would increase by 60 per cent after the government decided to float the Egyptian pound two months ago, and that students should pay according to the new exchange rate.
The meeting was attended by former president of the Monetary Market Authority Mahmoud Fahmi and former president of the Egyptian Council of State Monsef Suleiman. According to a petition issued by the parents, there was a previous decision in 2014 that the students must pay 50 per cent of the fees in US dollars. The university previously allowed students to pay entirely in Egyptian pounds ever since it was established in 1919. This decision breaks the Central Bank Law 88 of 2003 and its amendments -- Law 162 of 2004 and 93 of 2005, Article 111, Section 4 and Article 42 of the law, the statement said. The parents believe that it also defies the sovereignty of the country by ignoring its local currency and is driving students to seek other universities.
Al-Domiati gave an account of the previous meetings with parents to resolve the problem. "The AUC administration met with parents several times on campus after the floating of the Egyptian pound. The last of these was on 6 December when the Parents Association and several other parents of current students met with the university's senior leadership team, including President Ricciardone, counselor Amr Salama, and AUC alumnus and trustee Hisham Al-Khazindar."
"Throughout the discussion that lasted several hours, President Ricciardone emphasised the university's commitment that no single student would be forced to leave AUC because of an inability to pay tuition. While the university sympathises with and fully understands what the floatation means for everyone budgeting in pounds, the basis for all support by AUC must be an assessment of need," she says.
While the fiduciary role of trustees precludes them from negotiating directly with parents, students or other stakeholders — a role tasked to the administration — Al-Khazindar explained that he was keen to attend the meeting, at the request of Ricciardone, both to demonstrate an understanding of the seriousness of the situation and out of a deep respect for the parents, says Al-Domiati.
"Al-Khazindar stressed two foundational principles for the discussion. The first is that AUC is a non-profit university, meaning no individual or group stands to profit. AUC seeks to cover its cost and to ensure its continuity for the future. The second principle is that the floatation of the pound impacts everyone and should be shared by all."
Al-Domiatisaid that by the end of the evening, a consensus seemed to be forming around what would be called the Emergency Scholarship Programme, which she says is different from traditional financial aid. This would be on the basis of demonstrated need but with the most streamlined possible process to ensure accomplishment of the primary goal: “to keep each currently enrolled student.” Parents challenged whether the emergency budget re-allocation would suffice to meet all needs. Ricciardone reaffirmed that if a final review of all applications for emergency scholarships revealed a need totaling more than the emergency budget allocation, he would be prepared to go back to the Board of Trustees to recommend a third emergency re-allocation.
The Parents Association's second point is that AUC should rationalise its expenditure, especially from the dollar side and increase its investment and fundraising. "That was a place of agreement among participants. The single largest share of dollar expenses is faculty compensation. President Ricciardone confirmed AUC's commitment to continue to reduce costs through prudent management, while striving for excellence in everything we do at AUC," Al-Domiati added.
On the third point -- expressing tuition entirely in pounds -- this was also an area in which all sides agreed that progress could be made. Executive Vice President for Administration and Finance Brian MacDougall explained the decision to switch to a 50 per cent dollar denomination of tuition in 2014 as a middle ground to sharing what, at the time, was an anticipated risk of the devaluation of the pound. In light of the now fully convertible Egyptian pound, the administration would explore alternate tuition approaches, Al-Domiati said.
The fourth point was the request for a discount for siblings. "The current financial aid process already takes into consideration families with several students attending AUC as a criterion in determining the amount given," adds Al-Domiati.
"There are general concepts and specific concepts. The first is that AUC is a public facility in Egypt. The second is that there was a protocol that was signed between it and the Egyptian government in 1976. The AUC made an offer to present parents with a service, namely educating their children for a certain fee. This is written in a contract between the parents and the university. Judicial proceedings take a long time, effort and a lot of money,'" says Fahmi who offered his legal services free of charge to the parents if they were to file lawsuits against the university for the sake of the children and the public's benefit.
According to Fahmi, there are two sides in this case, target and objective. "In the first we can resort to stopping the decision to pay the 50 per cent in US dollars by a decision from the Council of State until the court rules that this is a permanent solution. It has the mandate to do so. This is built on a previous ruling by the Council of State whose decisions AUC abides by," Fahmi says, adding that there is no person or institution in a foreign country that does not abide by its laws. This is a general concept. According to the protocol signed by AUC and the government, Article 4 says the government has the right to appoint a representative to negotiate between it and the university.
"We could also send a petition to the minister of higher education to take an administrative decision that the students who are already enrolled in the university pay half their educational fees with the old LE8.88 dollar exchange rate until they finish what is left of their academic years as this is what is stated in the contract they signed. If he does not accept or does not answer within 60 days that means it is a refusal. Then we can resort to the Council of State," Fahmi adds.
"We are witnessing a fair case. One stroke of a pen results in the deconstruction of the future of a student. There is no doubt that there is a contract between the university and the parents and that it is unacceptable for parents that the university to change parts of this contract. The role of the government here is to restore the situation to its correct path. We have to take into consideration that AUC is a non-profit organisation. When a student is unable to pay his educational fees, this is considered a form of discrimination that the Egyptian constitution prohibits. The government has the right to question how much the university is spending on these students that justifies increasing the fees. To go to a civil court would take a long time as it could take up to 10 years since they usually resort to experts. This is why an administrative court would be more effective. The problem is not in the 50 per cent dollar payment rule itself but in the price of the dollar which has gone sky-high. A decision from the Council of State could be made in about six months," Suleiman said.
"There are three laws in Egypt that organise universities functioning in Egypt. One is for governmental universities, another for profit private universities and a third for private non-profit international universities which concerns AUC," says Fahmi.
"We identify ourselves with you as our children go to the same university," said Vice Chair of the Parents Association Nesrin Al-Mahdi while addressing around 1,000 parents "We represent all the parents. The crisis started on 2November when the price of the dollar increased from LE8.88 to LE18. We are a consultative council at the university so we have no right to change any decisions on behalf of the administration. We are only a pressure organisation for the parents.
"However, since the beginning of the crisis we extended the deadline given for students to pay the fees from 15 to 20 November. There were negotiations that resulted in a decision to let students pay the fees this semester with the old exchange rate of LE8.88 on the grounds that there will be $1 million in grants that they will receive."
Al-Mahdi added that they asked for a meeting with the board of trustees and upon hearing about a page the parents designed on Facebook they were pleased, as it guarantees that more parents will join the meeting because there was a lack of communication between them.
"So they organised a general assembly meeting in which 105 parents attended and decided that the best solution would be to pay the fees in pounds. They refused but said they would implement in the long run because they could not do so now. We also contacted the legal officer of the university.
"Another solution proposed by the AUC representatives was that they give those on financial aid scholarships and give all the students a 50 to 100 per cent scholarship and that those already on financial aid will be automatically covered," Al-Mahdi said. "We said that those who could not pay before will not be able to pay in the future so we called for a 100 per cent grant for those on financial aid. The university has not answered us yet. They said that there will be about $5 million that they will receive soon which will guarantee more grants divided into 0, 50, 75 and 100 per cent, but we refused as we insisted that those who applied for it must take it because the price of the dollar is too high for everyone."
Al-Mahdi says 25 per cent, for example, is not enough. "In another meeting we agreed that if the number of students who need scholarships were two-thirds of the university students, then the grant will cover them all. Up till now, only 500 students have applied for these scholarships. They will increase the grant according to the number of students needing it," she adds.
"The 50 per cent and 75 per cent scholarship is going to be for all students, whether those who are on financial aid or not," says Al-Domiati. "Applicants for the programme must be full-time students with a course load of at least 12 credits (four courses) and a GPA of 2.0 (grade of satisfactory) or above, and must demonstrate financial need. Those who should not apply are the approximately 1,700 AUC families who are already enrolled in financial assistance programmes in fall 2016 and who have already applied and are eligible for financial aid for spring 2017. They will be automatically considered for the grant programme unless they do not want that. Application to the Emergency Tuition Grant Programme is voluntary, and no one is obliged to apply."
The petition signed by the parents states that AUC does not need to increase its revenues and that the 2014 decision to have students pay half the fees in US dollars is unnecessary as the university is already given support from the state. It was also given land by the Egyptian government for a low price and many businessmen built most of its campus buildings. In addition, about 20 per cent of its students are foreigners and pay entirely in dollars, forcing students and parents to ask why does AUC need all the money when it is classified as a non-profit organisation in its protocol. They says AUC is built on Egyptian territory and is supervised by the Egyptian state and so should respect the Egyptian constitution and laws according to Article 4 of its founding protocol signed with the Egyptian government in 1975.
Suleiman advised parents to send a petition to the minister of higher education. However, Fahmi suggested they find a peaceful solution with AUC which will be more effective than discussing the issue in parliament since the minister can only be questioned, nothing more.
"We want all the students to be allowed to pay with the old exchange rate, LE8.80, and that the fees be paid entirely in Egyptian pounds as was the case in the past," Al-Mandouh said. "I am not asking the university administration to change its policies, as they are the ones who changed it in the first place after two revolutions. All we want is that if a student is enrolled and paid a certain exchange rate, he should be charged with the same rate with a small increase every year until he or she graduates. I can't be charged with such a high price of the dollar that has reached a 100 per cent increase in fees and be expected to bear this. We asked them to apply any rules they want to the students who are about to enroll in the university, not those who are already enrolled. It is supposedly a non-profit organisation that had revenue of $16 million last year and $18 million the year before. There is no institute in Egypt that does this. We call on President Abdel-Fattah Al-Sisi to save the future of our children," Al-Mandouh said.
As a non-profit university that seeks to cover its cost and expenditures, mostly in dollars, the ideabrought up by parents to pay the fees with the previous dollar exchange rate of LE8.88 for students who are currently enrolled is not possible, saysAl-Domiati. However, she said as Ricciardoneemphasised several times, no single student would be forced to leave AUC because of an inability to pay tuition. As such, AUC took two steps: it granted an emergency budget re-allocation of about $1 million to enable all currently enrolled students to complete the 2016 term. The payment of the deferred fall semester installment was fixed at the pre-float exchange rate of LE8.88 to the dollar, following the university's Board of Trustees authorisation.
In addition, AUC re-located $5 million (approximately LE89 million at today's rate) from the 2016-2017 budget to fully cover the costs anticipated for all families requiring grants. Automatic enrollment in the new Emergency Tuition Grant Programme will be effective for the approximately 1,700 families who are already enrolled in financial assistance programmes, says Al-Domiati.
The AUC administration is willing to seek solutions, Al-Domiati says. "According to MacDougall, the decision to switch to a 50 percent dollar denomination of tuition in 2014 was a middle ground to sharing what, at the time, was an anticipated risk of the devaluation of the pound. In light of the now fully convertible Egyptian pound, the administration will explore alternate tuition approaches."

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