Dive Brief:
- The Roosevelt Institute has issued a report detailing the growing debt crisis in higher education tied to construction bonds and interest-rate swaps, which have cost the 19 schools sampled in the study more than $2.7 billion since 2008.
- These schools would have to pay a total of $808 million in penalties to get out of the bad deals, which in part, stem from the race to build more modern facilities in order to attract more students.
- Some schools have board members who work for Wall Street corporations connected to some of these investments, which researchers call a dangerous conflict of interest.
Dive Insight:
It is not surprising that an industry in flux like higher education is revealing the signs of what put it into massive debt and a reliance upon misguided investments that are now leading to divestment from public resources and students. Elite institutions with billion-dollar endowments will remain protected thanks in part to corporate and private support and research machines that generate millions in grants and contracts, and wealthy families who pay tuition in full for their students.
But mid-sized and public institutions will have a difficult time explaining their role in what TIME calls a 'debt bomb,' and justifying the continuing culture of passing the costs onto students. There are no solutions, just mounting questions on if schools can recruit enough students or fundraise enough to stop the bleeding.