In a move that has raised eyebrows among legal experts and education officials, the University of Groningen (RUG) and Hanze University of Applied Sciences (Hanze) have invested a significant amount of public funds into private student housing. The investment, which amounts to at least €1.5 million, has been criticized for potential legal violations and questions about its transparency.
The decision to plough money into private student housing by RUG and Hanze stems from a severe housing shortage in Groningen. The city has seen a rapid influx of students in recent years, leading to a shortage of affordable housing options. In 2015, the municipality collaborated with the universities to address the issue, relaxing local regulations and partnering with various housing providers.
COVID-19 turns housing solution into financial burden
In 2018, the housing shortage intensified, particularly for international students. To alleviate the situation, RUG, Hanze, SSH (a student housing management company), housing cooperatives, and Ploeg ID3, a private investor, came together to create additional living spaces. Ploeg ID3 faced financial challenges in purchasing 250 housing containers (Sugarhomes) for the development of the Sugaruni site for the municipality. RUG and Hanze stepped in, assuming financial risks by guaranteeing the investments.
The initial investment appeared to be successful, preventing homelessness among students. However, the COVID-19 pandemic caused a mass exodus of international students, affecting occupancy rates and triggering SSH to invoke the guarantee. According to the Dagblad van het Noorden, this resulted in costs of at least €1.5 million for RUG and Hanze over the two pandemic years.
The Education Inspectorate has taken notice of this investment and is examining the guarantees provided by RUG and Hanze. Daan Jansen, a spokesperson for the inspectorate, has stated that “signals warrant a closer look,” and they are evaluating whether further investigation is necessary.
Experts in education law, including Dennis van Tilborg, have raised legal concerns about the investment. Public funds are generally intended for the core tasks of universities, such as education and research. Van Tilborg claims that the investment might breach the conditions set by the minister for the use of public funds in private activities, including student housing.
Universities claim public duty, but experts disagree
RUG and Hanze have defended the investment, arguing that it aligns with their societal responsibility to provide housing for international students. They claim that the costs incurred are part of their public duty, emphasizing the need to provide guaranteed housing for international students upon arrival. However, legal experts challenge the validity of this claim and raise concerns about transparency and potential competition distortion.
The ongoing investigation by the Education Inspectorate will determine the legality of the investment and its potential implications for the universities. The outcome of this investigation could have significant consequences for public universities across the Netherlands and beyond.