Skip to comments.American Colleges Are Over $205 Billion in Debt, Harvard is $6 Billion in Debt
Posted on 12/30/2012 4:04:17 PM PST by SeekAndFind
The Student Loan Bubble is bad, but interestingly enough, as this New York Times article points out, the loan problem extends all the way up the ladder to the institutions of higher education who never seem to have enough money.
Remember that our financial experts come out of a system that is this deep underwater and they have a heavy investment is bailing it out.
Overall debt levels more than doubled from 2000 to 2011 at the more than 500 institutions rated by Moodys, 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 more than 40 percent relative to the amount they owe.
While Harvard is the wealthiest university in the country, it also has $6 billion in debt, the most of any private college, the data compiled by Moodys shows.
At the Juilliard School, which completed a major renovation a few years ago, debt climbed to $195 million last year, from $6 million in inflation-adjusted dollars in 2002. At Miami University, a public institution in Ohio that is overhauling its dormitories and student union, debt rose to $326 million in 2011, from $66 million in 2002, and at New York University, which has embarked on an ambitious expansion, debt was $2.8 billion in 2011, up from $1.2 billion in 2002, according to the Moodys data.
The pile of debt $205 billion outstanding in 2011 at the colleges rated by Moodys comes at a time of increasing uncertainty in academia. After years of robust growth, enrollment is flat or declining at many institutions, particularly in the Northeast and Midwest. With outstanding student debt exceeding $1 trillion, students and their parents are questioning the cost and value of college. And online courses threaten to upend the traditional collegiate experience and payment model.
Student debt turns out to be only 5 times as high as the accumulated college debt, and that’s only at the colleges rated at Moody’s. What would happen if we added up the entire pile of debt for all institutions of higher education in the country? Somehow I think we would arrive at some very scary numbers.
The system is broken and spending its way deeper into debt. Tuition costs have risen dramatically and hardly made a dent in the tremendous piles of debt accumulated over the last decade.
It would seem as if Academia’s brokenness amplifies the brokenness of its graduates. It acts as a predictor for the entire broken system. Academia is a deadbeat metaphor turning out deadbeat students in a deadbeat nation.
Harvard borrowed $1.5 billion to pay its bills rather than selling off assets at a sharp discount. Its interest expense more than doubled from fiscal 2008 to fiscal 2011, to nearly $300 million.
The financial crisis has acted like a tidal wave that, as it receded, exposed certain vulnerabilities with a new clarity, Harvard officials said in the November annual report.
That’s a fancy way of saying, “We’re morons.”
What is the source of all this debt?
I hypothesize it is the “grow or die” philosophy of so many colleges. I have yet to be on a campus that isn’t building, have some recently completed building, or have a new building about to start.
Colleges aren’t businesses (in the traditional sense). Businesses must grow. Colleges can stay the same size and still execute their mission: educate.
Harvard has an endowment of $32 billion!
One of the beast things that could happen to America would be if the Harvard schools of Business and Law were burned to the ground.
Harvard has an endowment of $32 billion!<<
You usually can’t use endowments to pay for expenses. They are for special projects and scholarships.
Also, a lot of the debt they are talking about is long-term debt. You don’t pay for that with endowments, but out of the general operating fund.
These same morons teach students economics, They taught the Congress critters economics when they went to school there.
In debt up to their ass like our country and they still teach economics, Envirowhackism, Socialism, Marxism.
They hire faculty that are morons.More faculty than they need teaching subjects no one needs to learn.
Yu wonder why our country is in the shape it’s in? Colleges that teach Homosexuality is the new sexual norm, Colleges that teach that Good does not exist. Colleges that teach liberalism as their religion. They learn it in these sh*t colleges and they spread it to the Government. America’s colleges are a cancer that need a cure fast.
They always thought they were going to be in charge after it happened.
It's hard to be in charge when you're dead.
A $32 billion dollar endowment would probably only generate about $2 billion in revenue, on a good year.
I smell a plan to scam taxpayers.
How much money do you think BO and MO have given back to their schools? How much money do you think other diversity-entrants of Harvard and other Ivies give back to the schools that let them in over more qualified students?
So a $6 billion debt would take a few years. Hardly a crisis, if changes are made to spending levels.
The headline says Harvard IS $6 billion in debt, leading some people to believe Harvard is broke and owes $6 billion.
Absolutely. Cut back on the spending, over ten years, and the debt disappears.
But you would need real conservatives to make that happen. Good luck finding one on a college campus.
>>How much money do you think BO and MO have given back to their schools? How much money do you think other diversity-entrants of Harvard and other Ivies give back to the schools that let them in over more qualified students?<<
The answer to the first is: just enough to have things named after them.
The answer to the second is: TONS for the ones who make it. They are usually the ones who give the most.
Some of these colleges building student union buildings at costs of 15-30 million and how long does it take to recoup that cost, Just to attract students to come to their college?..
May I be the first to say I think this is false? Most colleges, especially Harvard have huge endowments and probably have secreted investment and off shore accounts as well. I'm gonna guess that this was a planted story to take the heat off them when Obama starts redistributing incomes, trusts and savings.
Harvard can pay that debt with its endowment
What is your response to Post # 5 above?
Agenda driven writing ... 6B debt, 32B assets. Debt isn't bad if you can afford it and it depends what the debt is. Colleges are non-profits generally. The color of money comes into play as well to keep their non-profit status. Not defending Harvard but this article lacks additional facts.
Is there a way to know which institutions have what debt? Like, looking up Rice Univeraity vs UT.
Some public universities have seperately incorporated and administered FOUNDATIONS that have whatever rules they want. Indiana, a heavily endowed public university, and University of Texas, almost as heavily endowed, benefit from such arrangements.
In digging up facts about how much illegal aliens with in-state tuition were going to cost Texas U and Texas Tech it seemed to me the endowments there paid mostly for institutional upkeep, but there was some directed funding for various 'chairs' ~ and that always takes a load off the school's need for tuition, so it ain't all roof repairs!
special projects and scholarships?
Harvard and Yale would never use their funds to benefits students. They could give every student free tuition if they wanted but won’t.
Harvard and Yale Endowments are exempted from the 5% rule so why not let them pay their debts with the money? If these “endowments” don’t have to abide by the same rules as other endowments and are invested in for-profit ventures, then what is the point in not letting them pay debt with it?
It’s always the school of liberal arts that brings down the house. A worthless degree that costs everyone else.
Harvard has an endowment of $32 billion!
Yeah, I don’t get it either.
In 1940, fewer than 5 percent of Americans had a college degree. Starting with the GI Bill in 1944, governments at all levels promoted college. From 1947 to 1980, enrollments jumped from 2.3 million to 12.1 million. In the 1940s, private colleges and universities accounted for about half. By the 1980s, state schools - offering heavily subsidized tuitions - represented nearly four-fifths. At last count, roughly 40 percent of Americans had some sort of college degree: about 30 percent a bachelor's degree from a four-year institution; the rest associate degrees from community colleges. http://www.realclearmarkets.com/articles/2012/05/29/lets_drop_the_college-for-everyone_crusade_99690.html
Since 1961, the time students spend reading, writing and otherwise studying has fallen from 24 hours a week to about 15. http://www.washingtonpost.com/local/education/is-college-too-easy-as-study-time-falls-debate-rises/2012/05/21/gIQAp7uUgU_print.html
After two years of college, 45 percent of college students hadn't significantly improved their critical thinking and writing skills; after four years, the proportion was still 36 percent. The study was based on a test taken by 2,400 students at 24 schools. "Academically Adrift," by sociologists Richard Arum and Josipa Roksa; http://www.realclearmarkets.com/articles/2012/05/29/lets_drop_the_college-for-everyone_crusade_99690.html
Over 50 percent of students at four-year schools and more than 75 percent at two-year colleges lacked the skills to perform complex literacy tasks (unable to interpret a table about exercise and blood pressure, comprehend arguments of newspaper editorials, compare credit card offers with different interest rates and annual fees, or summarize results of a survey about parental involvement in school). American Institutes for Research Ben Feller, Associated Press | January 20, 2006
States appropriated almost $6.2 billion for four-year colleges and universities between 2003 and 2008 to help pay for the education of students who did not return for their second year, while the federal government spent $1.5 billion and states spent $1.4 billion on grants for such students. "Finishing the First Lap: The Cost of First-Year Student Attrition in America's Four-Year Colleges and Universities." reported by AP, Report: College dropouts cost taxpayers billions, October 11, 2010
More than 25% of low-income first-generation college students leave after their first year, and 89 percent fail to graduate within six years. Time Magazine, What We Can Learn from First-Generation College Students, April 11, 2012
Almost 80% of seniors at 55 of our best colleges and universities earned a D or F grade on a high-school level American history test a 1999 survey showed. USDE 1992 National Adult Literacy Survey tests http://www.philanthropyroundtable.org/magazines/2000-11/cohen.html
The National Center for Education Statistics reports that only 31% of college graduates can read and understand a complex book. Walter E. Williams , professor of economics at George Mason University. http://www.ibdeditorials.com/IBDArticles.aspx?id=336612797889002
Nearly half (47 percent) of college freshmen enrolled in 2005 had earned an average grade of A in high school, compared to 2-in-10 (20 percent) in 1970. The majority (79 percent) of freshmen in 1970 had an important personal objective of developing a meaningful philosophy of life. By 2005, the majority of freshmen (75 percent) said their primary objective was being very well off financially. Statistical Abstract of the United States: 2007, (Table 274). http://www.census.gov/Press-Release/www/releases/archives/miscellaneous/007871.html
Enrollment has increased 70.6 percent since 1990, from 135,000 to 230,000, at the 102 Evangelical schools belonging to the Council of Christian Colleges and Universities. Higher Education Research Institute at the UCLA; USA Today Dec. 14, 2005 .
During the same period, enrollments at public colleges increased by 12.8 percent, and at private colleges the increase was 28 percent. USA Today Dec. 14. 2005 Southern Baptist Convention, Baptist Press http://www.bpnews.net/bpnews.asp?ID=22361
62% more students are going to college than did in the 1960s". Bill Fitzsimmons, dean of admissions at Harvard.
Nearly 40 percent (approx. 11.5 million) of the nations 18 to 24 year olds were enrolled in two- or four-year colleges as of October 2008. U.S. Census figures released by the Pew Research Center, Nov. 2009
The District of Columbia leads the nation in the proportion of college grads. http://www.epodunk.com/top10/collegeDiploma/index.html
Tuitions and fees have risen more than 440 percent in 30 years. http://www.washingtonpost.com/opinions/george-will-subprime-college-educations/2012/06/08/gJQA4fGiOV_print.html
On a typical campus, per capita students spending for alcohol--$446 per student--far exceeds the per capita budget of the college library. (Eigen, 1991 in the 1998 National Household Survey on Drug Abuse).
College students spend over $5.5 billion a year on alcoholic beverages (mostly beer)--more than they spend on all other drinks [soda, tea, milk, juice and coffee] and books combined. Sidney Ribeau, PresidentBowling Green State University http://www.collegevalues.org/diaries.cfm?id=476&a=1. See also www.hsph.harvard.edu/cas/rpt1998/CAS1998rpt2.html [which is also a illustration of how to do a survey.]
A (disputed) study showed that 50% of American college faculty identified themselves as Democrats and only 11% as Republicans (with 33% being Independent, and 5% identifying themselves with another party). 72% described themselves as "to the left of center," including 18% who were strongly left. Only 15% described themselves as right of center, including only 3% who were "strongly right." North American Academic Study Survey (NAASS) of students, faculty and administrators at colleges and universities in the United States and Canada 1999. The Berkeley Electronic Press http://montages.blogspot.com/2005/04/conservatives-underrepresented-in.html http://www.bepress.com/forum/vol3/iss1/art2 http://www.associatedcontent.com/article/17963/liberal_bias_in_our_schools.html
A survey of 6,000 academic psychologists resulted in 10% reporting they had falsified research data; 67 per cent selectively reported studies that worked; 35% said they had doubts about the integrity of their own research. Leslie John, George Loewentstein, and Drazen Prelec in Psychological Science, December 2011
That is what I said. What do you think a scholarship is?
>>Harvard and Yale would never use their funds to benefits students. They could give every student free tuition if they wanted but wont.<<
I refer you to my FRiend muawiyah, who says otherwise.
Check it out on Snopes if you want ~ under Harvard Tuition Hoax ~ there's no hoax here but some people don't understand what's going on.
Yale does something similar, particularly for outstanding graduate students they recruit, and a buddy of mine whose wife is an instructor at M.I.T. says it's the same there. Princeton, Brown, Columbia ~ all of them do that.
Chemistry, physics, mathematics ~ all Liberal Arts Degrees. You get your physicians through the Chemistry department, or American history for that matter.
Oh hell, these maroons are supposed to be our best and brightest. Did they not learn the American way of simply raiding the endowment and leaving IOUs?
Recessions uncover what auditors do not.
How are big colleges like Harvard in such debt when they have such big endowments?
In order to maintain their tax-exempt status, college endowments aren’t allowed to employ leverage (otherwise they could employ infinite leverage to invest in taxable interest-bearing securities). To get around this, their parent institution borrows, under the fig-leaf of some capital project - new building or whatever.
If they had half a testicle, the GOP would be demanding an end to tax-exempt status for all trusts and endowments.
Let. It. Burn.
Endowments, schmowments, it is a simple matter of creative accounting. They are no different than the crooks in congress - rules are for the fools that read them, not for the users that bend them.
There's the answer.
Borrowing to invest, by definition, increases risk. It is no free ride. There is nothing abusive about it. It is simply imprudent. Borrowing can cause foundations to commit waste and is outside the scope of their mandate. Therefore, it is appropriate to leave the foundation unleveraged and have the operating entity borrow, which is the practice.
Borrowing to invest by tax-exempt institutions is inherently abusive. Personally, I’d argue that their tax-exempt status is abusive even in the absence of leverage.
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