New York University’s students arrived in August at an institution embroiled in scandal.

Universities usually make headlines with sports-related meltdowns, but NYU—the very model of the modern, inflating mega-university—was fending off charges of outlandish payouts and perks to some high-level executives, and of labor and human-rights abuses at its branch campus in the Middle East.

This past May, Ariel Kaminer and Sean O’Driscoll, of The New York Times, reported that South Asian migrant laborers building NYU’s gleaming new satellite in Abu Dhabi worked as many as 12 hours daily, six or seven days a week, while living as many as 15 to a room. After a strike protesting the conditions, workers were beaten, jailed, and deported.

But that’s not all:

In June 2013 the Times reported that an NYU-related foundation had lent John Sexton, the university’s president, at least $1-million to finance a beach house on Fire Island. Some, if not all, of the loans had been forgiven. Sexton is paid $1.5-million a year, plus perks.

Top NYU executives and star professors have received university-­connected financing for vacation homes in Bucks County, Pa.; Litchfield County, Conn.; and the Hamptons. In some instances, portions of these loans may have been forgiven.

In April the New York Post reported that Jed Sexton, adult son of the president, had spent five years in subsidized faculty housing, near Washington Square. The younger Sexton was, at the time, an aspiring actor and not a member of the NYU faculty. And the arrangement was made in 2002, a period during which university administrators were worried about a faculty-housing shortage.

The current U.S. secretary of the treasury, Jacob Lew, benefited from NYU’s generous real-estate policies. While serving as the university’s executive vice president, Lew received a mortgage of $1.5-million from NYU, which had forgiven $440,000 by 2005, when he left for a top post at Citibank. Although his departure was voluntary, Lew also received an unusual \”exit bonus\” of $685,000.

By May 2013 the faculty of four schools at NYU had voted \”no confidence\” in Sexton. Only at the law school, where he’d once been dean, did the professors affirm their support. Nonetheless, Sexton does not plan to step down until 2016, when he will retire with a $2.5-million bonus, a professorship, and use of a university-­owned apartment. His retirement package is worth nearly $800,000 a year.

Paydays of that sort were unheard of when I arrived at NYU, in the autumn of 1962.

I am a proud alumna, and the recent developments are painful. However, the NYU that I attended was a far more modest place than the imperial university into which it has evolved.

In the 1960s, NYU was already the largest private university in the country, but it was a commuter school. It had only a few small dormitories and no serious gym, and it accepted pretty much anyone who applied. It gave students with quirky nontraditional talents a chance they couldn’t find at places with more-rigid requirements.

Perhaps because it took all comers, the university had a middling academic reputation. Still, because of where it was—in the heart of Greenwich Village—it drew an interesting faculty. I received a wonderful education there.

I can recall reading English dramatic literature with John McCabe III, part of a great American theatrical family. The Irish writer Conor Cruise O’Brien mesmerized in \”Literature and Politics\” with his recollections of W.B. Yeats, who, apparently, had been in love with Dr. O’Brien’s aunt.

Evenings, after classes, I’d head to the Village Gate, on Bleecker Street, to hear Nina Simone. Sometimes, en route to the subway, I’d stop by the Limelight, where one could sing along with a Clancy brother or a not-yet-famous Judy Collins. I was 19.

Here’s what I remember about my NYU. Yes, it could be somewhat impersonal, but you could take from a rich intellectual smorgasbord as much or as little as you wanted. Though at the time the $3,200 annual tuition seemed steep, most middle- and working-class students found it manageable. As far as I know, few of my classmates carried heavy student debt; in fact, it was a rarity then.

Interestingly, in my four years at this low-status college, I can’t remember ever being taught by a graduate assistant. In those days, NYU wasn’t trying to be a research powerhouse. That meant that most of my professors—though they certainly wrote—didn’t think of themselves primarily as researchers. They viewed themselves as teachers, and they were deeply involved in the intellectual development of their students.

My life was changed the day O’Brien said, \”Claudia, you’re so bright—have you ever thought of journalism?\”

I was a working-class kid from Brooklyn, with a mixed academic record and a vague interest in writing plays. NYU gave me polish and the chance to figure it all out. Countless graduates can tell similar stories.

During its best moments, NYU was this giant escalator, lifting tens of thousands of New Yorkers into the middle class—and some beyond.

In the 1980s, NYU began gentrifying. The goal was to upgrade from a regional commuter school to a residential research university. Instead of night-schoolers who arrived on the subway, the new freshmen would be suburbanites who paid top dollar to live in dormitories.

There were hubristic dreams as well. The not-so-secret goal was to give the Ivies a run for their money.

Though the rebranding was risky, it was the moment for such a move. All of American higher education was beginning to change. Tuitions started ascending, as did salaries of senior faculty members, and colleges became more concerned with institutional growth than with education.

At the \”new\” NYU, all that happened on steroids. The university started acquiring real estate at a frantic pace. It began a fund-raising blitz to finance the purchases. Donors with money so new that it couldn’t buy them much at more prestigious colleges were identified and cultivated.

New dormitory buildings, cornerstones of the transformation, were purchased or built. NYU has 23 student residence halls and owns more than 2,000 apartments for faculty and staff members. As the university grew, its footprint expanded from Washington Square into Greenwich Village, from Union Square to the edge of Soho, and deep into the East Village. In recent decades, it has come to dominate those communities and much of Lower Manhattan as well.

On the educational side, if NYU was going to compete with elite colleges, it had to replicate what they had: prestige. Toward that end, it raised both admission standards and tuition. Old institutions got new names. The plain-vanilla School of Education, for instance, was upgraded to the Steinhardt School of Culture, Education and Human Development.

Although NYU always had well-known faculty members, an upscale research university required \”stars.\” And so big names were lured with Ivy-level money. The university pays senior professors an average salary of $195,700 now, with add-ons like a sabbatical every third year, subsidized Manhattan apartments, and, in some cases, mortgage assistance for country houses. (After word of that particular perk hit the news, the Board of Trustees voted to end it.)

It’s the students who have paid for those markers of prestige. Despite John Sexton’s considerable fund-raising skills, NYU is a giant with a meager endowment, which costs out to a mere $60,000 per student. By contrast, the ratio at Williams College is $840,000 per head, and at Harvard $1,520,000. That means NYU is quite dependent on tuition dollars for its cash flow. The current sticker price for tuition, room, board, and fees comes to about $64,000 a year, making NYU one of the costliest universities in the United States. About 53 percent of its students have taken out loans.

Meanwhile, roughly 60 percent of the teaching staff is contingent.

Like so many American universities today, NYU has no discernable center, no real purpose, except growth and a better spot on the U.S. News rankings. The university attempts anything and everything—new programs, new buildings, new schools, new types of perks for its stars. No one seems to ask, \”Can the students afford this?\” Or, better yet, \”Is this wise?\”

Nor is the grandiosity modulated by the personality of John Sexton, who seems to be an empire builder by nature. The president’s signature effort is something he terms \”Plan 2031,\” which involves stake-claiming swaths of Lower Manhattan, Governors Island, and Brooklyn.

\”NYU needs to secure the space it requires in order to stay relevant and rigorous,\” the university’s website declares. But such rigor, given the relatively small endowment, might come at taxpayers’ expense. The university’s takeover of tens of thousands of square feet of prime real estate would take that property off the tax rolls, weakening the city’s financial base. What about New York City’s rigor?

Given that mentality, the road to Abu Dhabi was inevitable. Certainly, American universities had long been sending students abroad for that clichéd junior year in Tuscany. But NYU Abu Dhabi is the avatar of something new: a branch of an American university, offering American degrees, but funded by a foreign government. Sexton is evangelical about the project, which he describes as \”an opportunity to transform the university and, frankly, the world.\”

Only a few insiders know exactly how many petrodollars were spent on this transformational opportunity. However, I happened to be at a dinner a few years ago where the wine was flowing and a somewhat lubricated high-up NYU official blurted out a number: $2-billion.

What is known is that the government of Abu Dhabi is picking up most, if not all, of the tab. That’s for 21 buildings, travel, accommodations and salaries for a rotating faculty, a complement of imported administrative staff members, glitzy weekends for prospective students from all parts of the world, and scholarships and plane tickets for much of the student body—very few of whom are citizens of Abu Dhabi.

Abu Dhabi, capital of the United Arab Emirates, is an authoritarian monarchy awash in oil money. It’s also a country with a rocky human-rights record. In 2010 a member of the royal family, Sheik Issa bin-Zayed al-Nahyan, was acquitted on charges of torturing an Afghan grain merchant, this despite a videotape of the incident. Last year the UAE put 69 Emirati dissidents on trial; some were sentenced to up to 10 years in prison.

Given who is paying the bills, how does an American university maintain academic freedom, the bedrock of the American system, at this offshore branch? Not a problem, says the university: \”NYU Abu Dhabi enjoys full academic freedom as it exists at NYU New York.\” On the other hand, \”members of the NYU Abu Dhabi community should be respectful of local culture and customs.\”

One local custom is censorship. Ominously, the presses in the UAE failed to roll for the International New York Times on May 20, 2014. That was the date the labor-abuse story was scheduled to appear in the regional edition of the newspaper. Interestingly, the local printer/distributor of the Times is a company owned in part by the prime minister.

Back at Washington Square, the Abu Dhabi project has divided the faculty. \”The impact has been quite corrosive because of all this oil money that has come sloshing over here,\” complains Andrew Ross, a professor of social and cultural analysis who is also president of the NYU chapter of the American Association of University Professors.

Ross says academic departments that have cooperated with the project by sending faculty members to teach at Abu Dhabi are being rewarded with six-figure grants from a discretionary fund, \”while other departments have zero. It’s created an enormous ill will.\”

Ross visited Abu Dhabi in March 2014 as part of a team from Gulf Labor, a human-rights organization seeking to document working conditions at Saadiyat (\”Happiness\”) Island, where the branch campus is located. \”We didn’t find it difficult to come across workers whose treatment wasn’t up to par,\” Ross recalls. \”We came back and told the administration. There wasn’t an adequate response. In general, the administration is not responsive to faculty pressure.\”

Or to inquiries from United States senators. Last year Charles Grassley, an Iowa Republican on the Senate Finance Committee, told The New York Times that he was being \”stonewalled\” in his efforts to learn more about NYU’s extravagant executive-compensation policies. Grassley sees the big payouts and the Abu Dhabi scandals as linked. \”NYU’s stated lack of knowledge, as reported in media accounts, of the reportedly poor labor conditions in Abu Dhabi raises questions,\” he wrote me in an email. \”Where is the Board of Trustees in controversial matters? Does the board sign off on vacation-home loans? Is the board independent and doing its job to provide checks and balances on management and not serving as a rubber stamp?\”

In his first official statement on the exposé, President Sexton called the working conditions at his branch campus, \”if true as reported, troubling and unacceptable.\” He wrote that \”they are out of line with the labor standards we deliberately set for those constructing the ‘turnkey’ campus being built for us on Saadiyat Island and inconsistent with what we understood to be happening on the ground for those workers.\”

If it’s true as reported, to borrow Sexton’s phrase, that top university administrators didn’t know of the abuses, that in itself is scandalous. The Abu Dhabi development was under way, after all, in 2008.

\”NYU can’t compete with Harvard in terms of endowment or basic resources,\” Hilary Ballon, a senior administrator of NYU Abu Dhabi, told New York magazine in April of that year, after she was sent there to oversee planning. \”For NYU to become a world institution of higher education, it has to imagine itself in a different paradigm. It has to do something bold to get noticed.\”

Well, it certainly has. Still, as an alumna, I wonder what this bold paradigm has done to NYU’s moral standing. Great universities are about things more important than empire building and real-estate acquisition. The New York Times’s Upshot columnist, David Leonhardt, recently published a chart ranking the nation’s \”most economically diverse top colleges.\” The good news for NYU’s leadership was that it was among the top colleges. The bad news was that it was listed in the bottom third. In my time there, I feel sure, it would have ranked higher.

In 2010, Andrew Hacker and I published a book positing that in the search for growth and status, many American colleges were losing their way. At the time, I couldn’t imagine my own alma mater emerging as a prime example of our thesis.

But then what do I know? I attended a local commuter school where the administration was content merely to educate its students.

Author Bio: Claudia Dreifus is a journalist, an adjunct professor of international affairs and media at Columbia University, and co-author, with Andrew Hacker, of Higher Education? How Colleges Are Wasting Our Money and Failing Our Kids—and What We Can Do About It (Henry Holt & Co., 2010).