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Colleges Grappling With Rising Debt

April 26, 2010

no moneyFaced with rising expenses and state budget cuts, colleges and universities are taking steps to increase revenue and reduce debt.

Many institutions are being forced to raise tuition in order to help cover costs, reports Crain's Cleveland Business: The University of Akron just approved a 3.5 percent tuition hike, as did Cleveland State University, which will also implement another 3.5 percent increase for fall. Cuyahoga Community College similarly recently announced a 5 percent tuition increase.

"The volatility of state funding has impacted the college's finances and higher education across Ohio," explained Craig Foltin, CCC's executive vice president of administration and finance, who was quoted by Crain's. "When comparing Tri-C's state funding in 2001 to expected state funding later this year, the college will receive almost $43 million less in inflation-adjusted dollars."

Diverse: Issues In Higher Education reports that according to a January report by the National Association of College and University Business Officers and the Commonfund Institute, the average long-term debt at American institutions stood at $167.8 million in June 2009.

"It's a triple whammy," noted William F. Jarvis, managing director at the institute, who was quoted by Diverse. Students, he said, "can't pay tuition, so they come asking for financial aid, which is down because of (declining revenue from) endowments."

Colleges are using several methods to try to control debt, including renegotiating interest rates, exchanging loans and issuing bonds. Other institutions have severely limited spending; for example, Howard University--which is struggling with a debt of $218.4 million--no longer allows spending over $50 without the approval of a member of its Operations Committee.

In Colorado, meanwhile, voters may soon consider allowing gambling in bars and restaurants to help defray tuition at local universities. The move could generate as much as $100 million in revenue for institutions.

"We still have basically a gap of $600 million which means there'll be no state funding no funding for any of our colleges and universities," explained state Sen. Chris Romer, who was quoted by 9 News in Denver. "That will probably ultimately mean a 40 to 50 percent increase in tuition, which is unacceptable."


Compiled by CityTownInfo.com Staff

Sources:

"Colleges Set Courses of Action," Crain's Cleveland Business, April 26, 2010, Shannon Mortland

"As Recession Ebbs, Heavy Debt Threatens U.S. Higher Education," Diverse: Issues in Higher Education, April 26, 2010, Peter Galuszka

"Voters Could Expand Gambling to Pay For Higher Education," 9 News, April 25, 2010, Dan Boniface

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