"They basically said we're not producing enough content for them to justify funding us," said Editor in Chief CC Gillespie.
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The online newspaper produces about an article a week and is run entirely by students on a volunteer basis.
Gillespie says "The Prodigy" will run out of money by the summer unless a new source of funding can be found.
"They're not seeing that we're covering everything that we can that's happening on campus," Gillespie said. "They're seeing that there's a group of dedicated students behind who care very much about what is happening and care very much about keeping this publication alive."
Students on campus were disappointed to hear "The Prodigy" would likely be disbanded without new money.
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"It's just a fact that every school has their own newspaper so if they cut funding or lose it entirely it would just be a massive disappointment," said Nicholas Lee.
"The Prodigy" is not a university-funded program, but administrators say they are in support of keeping UC Merced's student-run news source.
"We're always in support of those types of experiences for our students to get that hands-on work that the student newspaper would provide," said vice chancellor Charles Nies. "Our hope is it'll come back, and those students who are really passionate about journalism will be able to find that avenue to continue to develop in their skills and talent."
Students plan to appeal the decision to cut funding. We also reached out to the student government but they declined our invitation to speak on camera.