I’m aware of the leadership challenges at both institutions and this probably belongs in the wild ideas thread, but if both are going to continue into the future I’d like to see a complete re-imagining of a true college campus on the St. Aug’s property after a merger of Shaw and St. Aug’s. Sell off Shaw DTR property and use it to build out the campus on St. Aug’s land. In my limited experience with them most HBCUs seem to be woven into urban centers and not your traditional campus vibe. If done well I think it would really stand out nationally in their category and could be a point of pride for the city at large. Something similar but larger in scope to Peace College.
6 Likes
Could be great, could be a PR nightmare! Either way, seems like SOME changes need to be made.
2 Likes
Some details out on St. Aug’s recent loan from Gothic:
The document outlines a 26% interest rate on the $7 million loan, plus a 2% “loan management fee” and a $75,000 “due diligence and documentation fee.” It also lists Lots 1, 2A, 3, 4, 5, and 6, referred to as the “Main Campus,” along with …If the university were to default on the loan, all that property could be forfeited to the lenders.
The loan comes due on June 30, 2025, and the document states Saint Augustine’s University has the right to extend that maturity date until Dec. 31, 2025.
2 Likes
Jesus, I get a better interest rate on my AmEx. Brutal.
2 Likes
But do you have a $7 million limit?
(If yes, maybe go talk to St Augustine’s!)
So let me get this straight: they don’t have $7 million now, so they borrowed it and have to pay it back plus all that interest and fees… In a year from now? What is changing in the next year that is going to get them all that money??
Also, probably could’ve saved the million bucks to the department of education since Trump’s getting rid of that…
6 Likes
The plan is clearly to line up a refinance for the end of the term that would presumably be at non-extortionary rates
3 Likes
But who would take on that note for a refi - only private equity can get away with a loan this risky (standard/commercial lenders couldn’t do this). Gothic was already a hail-mary move for them. Gothic only did it for the land since they will very likely acquire it for pennies on the dollar when they default and resell to developers. People don’t usually turn to loan sharks and pay day loans unless every other option is exhausted. This is the end of the road for them. Also enrollment is down 80% -
2 Likes
I didn’t say it was a good or likely plan. Not sure what will be available but I understand that in the moment the options were (1) pack it up and quit or (2) take your chances with the loan shark and buy a year to figure it out. Even if your plan is “a miracle occurs”.
In some ways I’m fascinated by Gothic’s underwriting, since a portion of their risk is that foreclosing on an HBCU is an unenviable position in litigation.
Who is going to loan them money?
They had to go to Gothic beause they are high risk of default & nobody else will give them money.
I hope it happens soon
2 Likes
The adventure continues…
1 Like
It is unclear what allegations the attorney general’s office is looking into.
To note, a lower court Judge dismissed whatever the case was, before “Save SAU” took this to the AG. So either a corrupt Judge is/was working with the chairman, or there’s actually nothing to the “allegations” - my money is on the allegations being true, whatever they are lol
The judge was Becky Holt, I doubt there were any shenanigans on her part.
1 Like
More details
1 Like
Student loans were the housing bubble in a different format. A bunch of cheap money being lent against something with a dubious or inflated value, borrowed by someone who really wasn’t qualified to sign the paperwork.
There’s still a reckoning to be had with colleges. 30 and 40 year olds today sitting on tens of thousands of dollars of debt aren’t going to push their kids to make the same mistake.
3 Likes
They’re still a phenomenal investment for colleges and degrees that have real pull in the job market, but the sad truth is that a St. A’s English major is probably not making that money back.
1 Like
That’s not a realistic statement of the cause or solution to that problem, but this thread is already a dumpster fire so I don’t know why I’d bother
1 Like
I almost can’t believe this article is real. WRAL is reporting that “Several concerned alumni and community advocates are calling on lenders to change the terms of Saint Augustine’s University’s $7 million loan”
They claim the loan the current president agreed upon is too predatory? And want the lender to change their terms? This is why they are in this position, stupid decisions. Are we allowed to approach VISA or Mastercard after running up a $30K credit card debit and say their rates are too high? This is unbelievably dumb.
Concerned community advocates condemn terms of St. Aug’s $7M loan :: WRAL.com
7 Likes
This is a school that bought a new football field and couldn’t pay it off. The reason the loan looks predatory is because Saint Augustines is super risky to do business with (and no one else will give them a loan)
5 Likes
Not sure what these folks expect. VC firms don’t give loans to make 9% - if their goal was 9% they would just take the money and become fund managers. VC’s make investments to return 50%-100%+ on their investments. Since no other types of lenders could take on this level risk, SAU is stuck with a VC with VC rates. It seems like people think there was a line of lenders out the door ready to cut checks. This was either their only option, or the best offer they got. There may have been more lenders with worse terms.
2 Likes
The community leaders aren’t looking at it from that angle at all, and the SAU leadership is incentivized to stoke those feelings up.
By framing it as a poor helpless nonprofit and pillar of the Black community being preyed upon by evil big city money they have a chance at getting out from under the only loan terms they could get after their history of financial mismanagement and outright corruption.
1 Like