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American Colleges Are Over $205 Billion in Debt, Harvard is $6 Billion in Debt
Frontpage ^ | 12/21/2012 | Daniel Greenfield

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 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 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 Moody’s 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 Moody’s data.

The pile of debt — $205 billion outstanding in 2011 at the colleges rated by Moody’s — 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.”



TOPICS: Business/Economy; Education; Society
KEYWORDS: college; debt

1 posted on 12/30/2012 4:04:29 PM PST by SeekAndFind
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To: SeekAndFind

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.


2 posted on 12/30/2012 4:11:25 PM PST by freedumb2003 (MOLON LABE)
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To: SeekAndFind

huh?

Harvard has an endowment of $32 billion!

http://www.usnews.com/education/best-colleges/the-short-list-college/articles/2012/11/27/10-colleges-with-largest-financial-endowments


3 posted on 12/30/2012 4:11:35 PM PST by jjotto ("Ya could look it up!")
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To: SeekAndFind

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.


4 posted on 12/30/2012 4:12:37 PM PST by Lurker (Violence is rarely the answer. But when it is it is the only answer.)
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To: jjotto

>>huh?

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.


5 posted on 12/30/2012 4:15:47 PM PST by freedumb2003 (MOLON LABE)
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To: SeekAndFind

Morons??? Yes

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.


6 posted on 12/30/2012 4:16:29 PM PST by Venturer
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To: SeekAndFind
Looks like the architects of "overwhelm the system" are about to be "overwhelmed.?"

They always thought they were going to be in charge after it happened.

It's hard to be in charge when you're dead.

7 posted on 12/30/2012 4:16:55 PM PST by E. Pluribus Unum ("Democracy is indispensable to socialism. The goal of socialism is communism." --Vladimir Lenin)
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To: jjotto

A $32 billion dollar endowment would probably only generate about $2 billion in revenue, on a good year.


8 posted on 12/30/2012 4:18:28 PM PST by Jonty30 (What Islam and secularism have in common is that they are both death cults.)
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To: freedumb2003

I smell a plan to scam taxpayers.


9 posted on 12/30/2012 4:20:16 PM PST by jjotto ("Ya could look it up!")
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To: freedumb2003

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?


10 posted on 12/30/2012 4:22:14 PM PST by petitfour
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To: Jonty30

So a $6 billion debt would take a few years. Hardly a crisis, if changes are made to spending levels.


11 posted on 12/30/2012 4:23:29 PM PST by jjotto ("Ya could look it up!")
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To: jjotto
The article says Harvard has $6 billion in debt. Okay, so Harvard's borrowed money for whatever reason; it has an endowment of $32 billion.

The headline says Harvard IS $6 billion in debt, leading some people to believe Harvard is broke and owes $6 billion.

12 posted on 12/30/2012 4:23:38 PM PST by Scoutmaster (You knew the job was dangerous when you took it)
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To: jjotto

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.


13 posted on 12/30/2012 4:26:09 PM PST by Jonty30 (What Islam and secularism have in common is that they are both death cults.)
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To: petitfour

>>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.


14 posted on 12/30/2012 4:31:01 PM PST by freedumb2003 (MOLON LABE)
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To: SeekAndFind

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?..


15 posted on 12/30/2012 4:34:03 PM PST by oust the louse (Obamacare has morphed into a tax on staying alive.)
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To: SeekAndFind
"Colleges Are Over $205 Billion in Debt, Harvard is $6 Billion in Debt

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.

16 posted on 12/30/2012 4:34:16 PM PST by Baynative
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To: SeekAndFind

Harvard can pay that debt with its endowment


17 posted on 12/30/2012 4:36:08 PM PST by GeronL (http://asspos.blogspot.com)
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To: Baynative; GeronL

What is your response to Post # 5 above?


18 posted on 12/30/2012 4:37:05 PM PST by SeekAndFind
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To: jjotto
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 Moody’s shows.

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.

19 posted on 12/30/2012 4:39:03 PM PST by VRWC For Truth (Roberts has perverted the Constitution)
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To: SeekAndFind

Is there a way to know which institutions have what debt? Like, looking up Rice Univeraity vs UT.


20 posted on 12/30/2012 4:47:23 PM PST by Mamzelle
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To: freedumb2003
Harvard has been using its endowment to pay tuition for decades! You are probably thinking of endowments set up for state or public schools ~ there may be restrictions, but not private schools like Harvard.

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!

21 posted on 12/30/2012 4:49:10 PM PST by muawiyah
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To: SeekAndFind
That’s a fancy way of saying, they aren't smart enough to understand the business model of a lemonade stand...
22 posted on 12/30/2012 4:54:12 PM PST by Chode (American Hedonist - *DTOM* -ww- NO Pity for the LAZY)
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To: freedumb2003; SeekAndFind

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?


23 posted on 12/30/2012 4:59:24 PM PST by GeronL (http://asspos.blogspot.com)
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To: Lurker

It’s always the school of liberal arts that brings down the house. A worthless degree that costs everyone else.


24 posted on 12/30/2012 5:10:39 PM PST by EQAndyBuzz (You can't bring something to its knees that refuses to stand on its own)
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To: jjotto; SeekAndFind

huh?

Harvard has an endowment of $32 billion!

http://www.usnews.com/education/best-colleges/the-short-list-college/articles/2012/11/27/10-colleges-with-largest-financial-endowments

***

Yeah, I don’t get it either.


25 posted on 12/30/2012 5:13:15 PM PST by ROTB (Live holy, forgive all & pray in Jesus' name. Trust He is willing & able & eager to ANSWER BIG!)
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To: Venturer
FromRevealing Statistics: America in Decline
26 posted on 12/30/2012 5:41:09 PM PST by daniel1212 (Come to the Lord Jesus as a contrite damned+destitute sinner, trust Him to save you, then live 4 Him)
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To: muawiyah
Harvard has been using its endowment to pay tuition for decades!

That is what I said. What do you think a scholarship is?

27 posted on 12/30/2012 5:44:17 PM PST by freedumb2003 (MOLON LABE)
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To: GeronL; muawiyah; SeekAndFind

>>Harvard and Yale would never use their funds to benefits students. They could give every student free tuition if they wanted but won’t.<<

I refer you to my FRiend muawiyah, who says otherwise.


28 posted on 12/30/2012 5:45:56 PM PST by freedumb2003 (MOLON LABE)
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To: freedumb2003
Seriously folks, they have a complex system that ends up giving students from low income families sufficient funds to attend Harvard.

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.

29 posted on 12/30/2012 6:03:01 PM PST by muawiyah
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To: EQAndyBuzz

Chemistry, physics, mathematics ~ all Liberal Arts Degrees. You get your physicians through the Chemistry department, or American history for that matter.


30 posted on 12/30/2012 6:05:02 PM PST by muawiyah
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To: freedumb2003

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?


31 posted on 12/30/2012 7:05:35 PM PST by SgtHooper (The last thing I want to do is hurt you. But it's still on the list.)
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To: freedumb2003

Recessions uncover what auditors do not.


32 posted on 12/30/2012 7:07:01 PM PST by scrabblehack
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To: SeekAndFind

How are big colleges like Harvard in such debt when they have such big endowments?


33 posted on 12/30/2012 7:09:19 PM PST by tbw2
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To: SeekAndFind

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.


34 posted on 12/30/2012 8:25:10 PM PST by Vide
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To: SeekAndFind
"What is your response to Post # 5 above?"

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.

35 posted on 12/30/2012 9:23:39 PM PST by Baynative
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To: Vide
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

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.

36 posted on 12/30/2012 10:06:06 PM PST by Kennard
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To: Kennard

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.


37 posted on 12/31/2012 7:43:18 PM PST by Vide
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