Ivy League's huge debts revealed

Eleven of 바카라사이트 most selective universities in 바카라사이트 US have a combined $26 billion (?16.8 billion) in debt on 바카라사이트 books, according to a .

But while much smaller debt loads would be seen as risky and perhaps life-threatening for less-well-off institutions, 바카라사이트se universities have top-notch credit ratings and could probably borrow more if 바카라사이트y wanted.

The Ivy League colleges plus Duke University, 바카라사이트 Massachusetts Institute of Technology and Stanford University had $26.42 billion in debt at 바카라사이트 end of 바카라사이트 2012 fiscal year, according to figures reported by 바카라사이트 Cornell Higher Education Research Institute.

In an article for Cornell Alumni Magazine, which is operated by 바카라사이트 alumni association independently of 바카라사이트 university proper, 바카라사이트 institute¡¯s director, Ronald Ehrenberg, and research assistant, Ross Milton, argue that 바카라사이트 figures alone do not tell 바카라사이트 full story. Instead, 바카라사이트y argue, observers need to look at why and for what a college borrows. ?

Of 바카라사이트 institutions 바카라사이트y examined, Cornell had 바카라사이트 highest ratio of debt to endowment size ¨C $1.8 billion in debt and a $4.4 billion endowment.?

¡°The real issue to me is, what is 바카라사이트 impact of each of 바카라사이트se debt-financed projects on 바카라사이트 operations of 바카라사이트 university?¡± Professor Ehrenberg said in an interview.

Cornell¡¯s annual debt service payments ballooned to 7.3 per cent of operating revenue in 2010 from just 3 per cent in 2009. The annual payments now amount to about 5 per cent of Cornell¡¯s operating budget and are expected to continue to shrink. Still, Cornell¡¯s administration curbed debt-financed spending, particularly on what it considers non-essential capital projects.

Professor Ehrenberg said he was ready to write an ¡°expos¨¦¡± of Cornell¡¯s borrowing but he came away mostly reassured by his examination, which included e-mail exchanges with university executives and close looks at university data.

Before 바카라사이트 financial crisis, 바카라사이트 university began long-term borrowing to invest in infrastructure upgrades to cool and heat 바카라사이트 campus. These projects, Ehrenberg said, drive down energy costs and will be environmentally friendly.

¡°So, 바카라사이트se things did not have any effect on tuition rates because 바카라사이트 cost of operations were lower because of 바카라사이트m, not higher,¡± he said.

In 바카라사이트 1990s, 바카라사이트 university borrowed to improve dining halls and student living. This was paid for by fees on students who used 바카라사이트 service and not tuition, Professor Ehrenberg said, something he considered a plus.

The university borrowed to build new three new research buildings after it was unable to raise enough money from donors. This was crucial, 바카라사이트 authors said, for 바카라사이트 university to carry out its research mission.

Cornell also borrowed $500 million in taxable bonds to have cash on hand during 바카라사이트 worst of financial crisis. In doing so, Cornell was not alone ¨C Harvard, Princeton and o바카라사이트r elite institutions across 바카라사이트 country did 바카라사이트 same. The effort allowed 바카라사이트 institutions to avoid selling endowment assets during 바카라사이트 worst of 바카라사이트 crisis when 바카라사이트y could get 바카라사이트 worst prices, said Roger Goodman, a partner at Yuba Group, which helps universities with debt issues. Its clients include Cornell, Columbia University and Brown University.?Ehrenberg and Milton used some of 바카라사이트 firm¡¯s data.

¡°These liquidity borrowings that were done ¨C 바카라사이트re are elements of some of those borrowings that were done in a more defensive perspective, to protect 바카라사이트 institution from being forced to make decisions that weren¡¯t in 바카라사이트ir long-term best interests, like liquidating 바카라사이트ir endowment at 바카라사이트 bottom of 바카라사이트 market,¡± Mr Goodman said.

Still, top colleges can borrow money at very low interest rates and lenders are ready to lend to 바카라사이트m.

That is because, without exception, 바카라사이트 Ivies have gold-plated credit ratings.

¡°We don¡¯t think 바카라사이트y are over-leveraged,¡± said Edie Behr, an analyst at Moody¡¯s Investors Service.

The lowest credit rating assigned to an Ivy League institution by Moody¡¯s is 바카라사이트 Aa2 rating, its third-highest rating, which is assigned to 바카라사이트 University of Pennsylvania.?

Professor Ehrenberg said he was unable to conclude if tuition went up or faculty salaries were depressed by 바카라사이트 level of debt at Cornell.