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The Other Kind of College Debt

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Back to College Finance & Operations

While much of the attention about higher education borrowing is focused on student loans, universities and colleges have taken out extensive amounts of debt and collectively owe about a quarter of a trillion dollars, according to the Moody’s bond-rating agency.

Debt at individual private institutions is also listed on their Form 990s (Part X, Line 20: “Tax-exempt bond liabilities”); most higher education debt is in municipal bonds.

Much of this money goes to new construction, even at a time when enrollment is declining, finances are strained and the COVID-19 pandemic accelerated the move to remote learning. At least two private consulting companies track it: Dodge Data & Analytics and Gordian, which produces an annual database about the state of higher education facilities called Sightlines.

Universities tend to say that capital spending comes from a different part of the budget than operating expenditures do, but critics point out that new buildings have to be cleaned, heated, cooled and powered when they’re finished — which falls under, and can significantly increase, operating costs.

Meanwhile, colleges are putting off maintenance of existing buildings. There’s an estimated national backlog of $30 billion worth of deferred maintenance, also called deferred renewal, which is tracked by APPA (originally the Association of Physical Plant Administrators), the association of higher education facilities officers. Gordian says the figure has increased to $112 billion.