Building costs burden colleges

A decade-long spending binge to build academic buildings, dormitories and recreational facilities - some of them inordinately lavish to attract students - has left colleges and universities saddled with large amounts of debt and students often stuck paying the tab.

Overall debt levels more than doubled from 2000 to 2011 at the more than 500 institutions rated by Moody’s, according to inflation-adjusted data compiled for The New York Times by the credit rating agency. In the same time, the amount of cash, pledged gifts and investments that colleges maintain declined by more than 40 percent relative to the amount they owe.

Colleges and universities - public and private, elite and obscure - have borrowed money for expansions and amenities such as improved student unions and single-person dormitory rooms.

The pile of debt - $205 billion outstanding in 2011 at schools rated by Moody’s - comes at a time of increasing uncertainty in academia.

Higher debt payments and other expenses have contributed to the runaway inflation of college costs.

While payments on debt principal and interest have increased overall, they remain a manageable piece of the expense pie for most institutions, financial analysts said.

Business, Pages 69 on 12/16/2012

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