Will tuition ruling impede American University of Cairo?

CAIRO — On March 12, Egypt’s Administrative Court ordered the administration of the American University in Cairo (AUC) to accept tuition payment in Egyptian pounds rather than US dollars. The verdict was rendered in a lawsuit filed by parents of students against the university based on a decision it had issued in 2014.

According to the verdict, “The AUC is subject to the Ministry of Higher Education and is not entitled to operate outside the scope of Egyptian laws. The Ministry of Higher Education should have prohibited the collection of tuition fees in dollars. The fact that it refrains from doing so is a negative decision.”

The lawsuit filed by 60 parents against Egypt’s prime minister, parliament speaker, the minister of higher education and the president of AUC said that for 95 years the university has been receiving tuition payment in Egyptian pounds. But in 2014, the AUC issued a decision whereby students should pay 50% of their tuition fees in Egyptian pounds and 50% in US dollars, at the Central Bank’s exchange rate in 2014 (7.5 Egyptian pounds to $1).

The parents indicated that the Egyptian government’s decision to float the Egyptian pound at the end of November 2016 changed the exchange rate for the US dollar to at least 17 Egyptian pounds, which raised the university’s fees by about 30%.

University students started a series of protests in November 2016, objecting to the university administration's request to pay half of the tuition fees in US dollars — or the equivalent in Egyptian pounds — following the Egyptian government's floating of the pound in early November that led to the devaluation of the pound against the dollar, and consequently hiked the tuition fees.

To explain the need for paying a part of the tuition fees in US dollars, Brian MacDougall, AUC’s chief financial officer and executive vice president for administration and finance, told Al-Fanar Media, a news website on higher education, “Prior to the spring of 2014, AUC absorbed all losses associated with the [partial] devaluation of the pound. … As we were building the budget for the year 2015 in consultation with the Parents Association, the Student Union and the University Senate budgetary committee, everyone agreed that we should share the risk. How best to share the risk but to look inside the formula for the expression of tuition and denominate the tuition half in pounds and half in dollars, which basically mirrors the realization of both currencies where you are in a situation that will be self-correction.”

Within the scope of a wave of protests, dozens of students held a three-day sit-in on Nov. 10, 2016, in front of the university administration building chanting “My father is not a thief,” in reference to their families’ inability to pay the rising tuition fees.

AUC information officer Rehab Saad told Al-Monitor over the telephone that the AUC Board of Trustees approved on March 17, 2017, tuition for the 2017-2018 academic year to be stated exclusively in Egyptian pounds for Egyptian students.

“The new tuition rate will provide for a simpler formula of a standard per credit rate while equalizing rates among currently enrolled and incoming classes. Tuition for international students will still be denominated and payable in US dollars,” she said.

According to Attia Abdel Maqsoud, a father of two students at the university, the tuition fees for each semester — depending on the number of credits, which are usually not less than 15 — hover around 85,000 Egyptian pounds, paid in two parts: $5,000 and 40,000 Egyptian pounds.

“The devaluation of the pound against the dollar increased the fees to over 135,000 Egyptian pounds, and this is a very large amount,” he told Al-Monitor.

He added, “Our financial situation is getting worse, and I want my children to be able to complete their education at the university and not to move to another private university. A degree from the prestigious AUC is highly appreciated in the labor market and would ensure them a great job.”

In turn, AUC counselor Amr Ezzat Salama said, “AUC is keen on keeping its students and does not want to lose enrolled students in good academic standing due to their family's inability to meet tuition increases.”

About the expected impact on the educational process at the university after the tuition cut ensuing from the administrative court’s decision, he explained to Al-Monitor that the university is a non-business entity and does not rely on an investor for financing, who can pump money to compensate for the financial deficit. “The university will seek to avoid the negative repercussions of the decision on the quality of the educational process,” he added.

But Salama did not reveal how the university would compensate for the increase of tuition without it affecting the education process. “The issue is very complex,” he said.

MacDougall noted in a statement issued by the AUC on March 21, “In anticipation of continuing and possibly increased need, the University has substantially increased its financial aid and scholarships budget for the 2017-2018 academic year.”

One of the repercussions of the Egyptian financial crisis on AUC students was the rise in the proportion of student applications to the AUC’s $28 million allocated to students in the form of scholarships and financial aid, according to a report issued by the AUC in May 2015.

The report noted that the university administration has removed achievement awards to focus on need-based financial award.

The head of Egypt’s Supreme Council of Private Universities, Ezz Eddin Abu Steit, told Al-Monitor, “The AUC is a nonprofit university. Students enrolling in this university seek and expect a good education. The AUC should not link the provisions of this service to tuition fees paid in a currency of a higher value than the Egyptian pound.”

He added that most of the 21 private universities accredited by the Egyptian Ministry of Higher Education were affected by the Egyptian pound flotation decision, especially since the majority of these universities fix the value of their tuition fees in dollars and at the official rate prevailing at banks.

He said the Supreme Council of Private Universities suspended in November 2016 the collection of any tuition fees of Egyptian students denominated in a foreign currency until the economic conditions improve, but he added that “part of the tuition still needs to be collected in foreign currency, as some private universities have joint programs with international universities.”

Abu Steit said, “The portion of the tuition fees to be collected by private universities in dollars, which varies from one university to another, shall be determined based on the partnership agreed upon in the implementation of the joint program. The services provided by the foreign partner may include recruiting foreign teachers, providing a follow-up program or the accreditation of certificates. The Egyptian university is bound in this case to meet its obligations toward its partner.”