American Colleges Are Over $205 Billion in Debt, Harvard is $6 Billion in Debt

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.”

  • PAthena

    Alas, the road to hell is paved with good intentions. President Lyndon Johnson instituted the federal student loan program, so that "no poor student" would not be able to go to college. The loans are pegged at the tuition of the college or university. So – the colleges and universities raised their tuition fees astronomically. When I went to college in 1951, the total cost of tuition, room, and board was $1500.00. That same college now charges over $60,000.00 a year.

    • Snow White

      Everytime the fed. govt.comes up with a new plan to help "the poor" pay for college tuition The cost of higher education goes up in direct proportion. Govt. grants, Pell grants, Hope Scholarshps, student loans. All precipitated increases that gob bled them up immediately. Just Proves Adam Smith's theory that "the price will be what the trade will bear." is right.The thing that bothers me about this government fiasco is that white students are having to sell themselves into indentured servitude while minorities and other favored groups are given government grnts which do not have to be repaid. Looks like in addition to reparations, the white man is being enslaved by our government which is more concerned with redressing real and imagined past grievances than it is about treating everyone as equals.

    • objectivefactsmatter

      "Alas, the road to hell is paved with good intentions. President Lyndon Johnson instituted the federal student loan program, so that "no poor student" would not be able to go to college."

      Give them an inch…

  • Thomas Wells

    That what the colleges get for degenerating into Marxist cheerleaders.

    • objectivefactsmatter

      "That what the colleges get for degenerating into Marxist cheerleaders."

      That what the colleges get for degenerating into Marxists.

  • objectivefactsmatter

    "That’s a fancy way of saying, “We’re morons.”"

    That’s a fancy way of saying, “We’re delusional," thanks to leftist communist indoctrination. The result is more or less the same as if the entire population of liberals were in fact morons, but there is a small distinction to be made there: In theory the delusional fools could wake up some day.

    • Guest

      By printing more and more money the Federal reserve can steal everyone's profits by devaluating the dollar. Like a BIG Siphon hose that extends down into everyone's pockets and bank accounts with a bunch of bankers at the top that SUCK!!

  • Questions

    This isn't about "Marxism"; it's about aggressive optimism. Higher education got cocky. The people who run our colleges and universities thought alumni donations were a bottomless pit and that tutition hikes, fees and grants would cover the rest. Well, they bumped up against limits. Eventually, the bills will come due.

    • Thomas Wells

      Marxism,which is being pushed in today's colleges, is not a valid economic theory. Being a cheerleader for Marxism, leads to other unsound economic practices, such as piling dept on top of dept. Both are related to a fundamentally delusional idea that the state should and will bail you out.

    • objectivefactsmatter

      "This isn't about "Marxism"; it's about aggressive optimism…"

      Rooted in the ideology of Marx, whether or not you recognize this.

      "The people who run our colleges and universities thought alumni donations were a bottomless pit and that tutition hikes, fees and grants would cover the rest. Well, they bumped up against limits. Eventually, the bills will come due."

      "Optimism" so "aggressive" that reality didn't matter? That's what we call delusional you silly troll.

      Definition of DELUSION

      1: the act of deluding : the state of being deluded

      2 a : something that is falsely or delusively believed or propagated
      b : a persistent false psychotic belief regarding the self or persons or objects outside the self that is maintained despite indisputable evidence to the contrary; also : the abnormal state marked by such beliefs

      — de·lu·sion·al adjective
      — de·lu·sion·ary adjective

      I'm sure many of them meant well. Give them a hug for me, will you?

  • SuicidePrevention

    Little picture: In an era of ultra low interest rates Harvard has an endowment of $30.7 billion and $6 billion in debt. Seems reasonable.
    Big picture: private sector balance of payments + government sector balance + trade balance = $0
    This is a truism. It means, for example, that if households are reducing debt, and the trade balance is constant, then government debt must be increasing. (Similarly, the sum of national trade balances in the world must be zero. If there are 3 countries in the world A,B and C, and A exports $100 billion more than it imports and B exports $200 billion more than it imports, then C must import $300 billion more than it exports.)
    The money supply expands when private sector debtors defualt on money owed to the goverment, or when counterfeit money enters circulation. The money supply contracts when cash is burned or otherwise removed from circulation.

  • SuicidePrevention

    The Peterson Institute is the source of most of the handwringing about government debt. It steadfastly refuses to recognize these accounting identities. Meanwhile no attention to real issues like crumbling infrastructure and depleting natural resources.

  • Laura Knight

    Sure, there are schools (like people that obtain wageday advance easily for some non-emergencies) that over borrow and over extend themselves, but I’m not sure its fair to indict all of academia. The associated graphic of debt as a percentage of total assets shows relatively stable levels of debt until the financial crisis, where schools borrowed to maintain services and standards in response to falling endowments and state funds. Since the bump a few years ago, the clear trend is downward, reverting to the norm. I agree that colleges and universities need pressure to be more efficient, but I don’t see any evidence of this “ballooning debt” as anything but a response to the fiscal crisis.