University of California funds generous home loans for faculty

By Alexei Koseff

When UC Berkeley law school professor Mark Gergen was considering a move from Texas in 2007, the biggest factor in his decision was the quality of the institution.

But a low-interest home loan offered by the University of California, which helped him buy into the expensive Bay Area market, certainly helped.

“It was a material factor,” Gergen said. “It made it much easier to persuade my wife.”

Since 1984, more than 6,000 UC professors and nearly 200 executives have saved thousands of dollars a year through a university program to assist them in purchasing residences near the campuses where they work.

University officials and faculty say it has been an important recruiting and retention tool for bringing a world-class teaching staff to pricey areas, like Los Angeles, San Diego and Davis, on salaries lower than competing schools.

But the Mortgage Origination Program came under fire in a blistering state audit last week that questioned whether UC had done enough to reduce its costs before recruiting higher-paying out-of-state and international students to raise revenue.

The report suggested that the university conduct a cost-benefit analysis to determine whether hundreds of millions of dollars tied up in outstanding loan balances might be better used elsewhere. With an interest rate tied to short-term investment earnings, UC is bringing in about a quarter of what it could if those funds were invested in its intermediate-term portfolio instead – nearly $22 million over the past five years, according to the state auditor’s office.

“It needs to consider whether the low return on its investment is worth the cost,” the audit stated.

University of California students protested a proposed tuition hike outside the Board of Regents meeting in San Francisco on Nov. 19, 2014. A state audit last week blasted UC for, among other things, admitting nonresident students to the detriment of resident students. Alexei Koseff The Sacramento Bee

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[Source]: Sacramento Bee