The Other Debt Crisis – Public universities will take on more debt as states decrease spending on capital projects

Source: Kevin Kiley, Inside Higher Ed, April 10, 2012

Burdened by aging campuses, several years of backlogged maintenance projects, increased competition for students (and the tuition revenue that comes with them), and little hope that states are going to fund the construction they need, either through appropriations or by issuing their own debt, public colleges and universities are likely to issue their own debt to finance the renovation of their facilities — a change that moves public institutions closer to their private counterparts, could change what institutions build and repair, and could pass more costs on to students….

…For institutions that can take on more debt — those that have low debt loads or are growing enrollments and revenues, typically flagship universities — the financing change will have little impact on their bottom lines. They might have less money to spend on other priorities, but most expect revenues to keep pace with the amount of debt they’re assuming.

But other public institutions aren’t so lucky. Many can’t issue cheap debt, either because they’ve run up against statutory limits or because their internal finances won’t let them.
See also:
U.S. Higher Education Outlook Mixed in 2012
Source Moody’s Investor Service, Industry Outlook, January 20, 2012

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