Editorial: University debt as alarming as lack of state support

Colorado’s major research universities have gone on a construction spree during the past 10 years, building new dorms, new apartments, new gyms and some classrooms. The problem, of course, is that each of these schools have had to borrow heavily to make this happen.

In fairness to the schools, they’ve been given virtually no support by Colorado lawmakers and taxpayers, who’ve been unwilling to provide desperately needed cash to our higher-education system.

Consider the following:

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The University of Colorado has doubled its debt load, which now stands at $1.5 billion, up from $750 million 10 years ago.

Colorado State University’s indebtedness has increased more than sixfold in ten years, to $743 million. It soon could reach more than $1.1 billion.

It’s a similar story at Colorado School of Mines, where debt has tripled to $211.9 million, up from $70.9 million.

Earlier this year, BizWest documented dramatic increases in salaries and hiring over the same period, as well as increases in tuition costs for students and their families. It is this group that is bearing the brunt of these university expenses.

Apparently, no end is in sight. So high have debt loads grown that Standard & Poor’s rated universities the weakest institutions in the public finance sector late last year.

As voters, we need to put an end to this shameless neglect of higher ed. Colorado consistently ranks among the lowest states nationwide for public support of its universities. Unfortunately, a lack of oversight and easy money in the bond market has allowed schools to accumulate a hair-raising debt load as a result.

Some of this debt is needed. As Colorado State’s Chief Financial Officer Richard Schweigert said, his school is getting $20 million a year to maintain and upgrade facilities he estimates are worth $3.3 billion. That’s clearly inadequate.

Other school officials said they’ve borrowed heavily because interest rates are low, and they’ve been able to save some cash by doing so.

College affordability advocates are deeply concerned at the lack of incentives to contain costs, the lack of state support for education and demographic projections that show future generations of college scholars are shrinking. CU Boulder’s student population has remained essentially flat during this time, with 29,800 students enrolled last year, up from 29,300 in 2004.

These students are the schools’ primary source of cash. Without them, making these debt payments is going to become much more difficult. Combine the staggering debt students have had to take on and add to that the institutional debt load that now exists, and it could become, as others have pointed out, the next big financial crisis for Colorado.

There are some bright spots. Of the four schools BizWest examined, the University of Northern Colorado was the only institution that has managed to keep its debt load stable. Others need to do the same.

This state has too many bright, dedicated educators and lawmakers to allow this freewheeling financial activity to go on. Universities must learn to contain costs and to live on less debt. They need to focus more on helping students lower their tuition bills.

But voters have perhaps the biggest task here. And that is to ensure that our lawmakers understand we need and are willing to tax ourselves to ensure our universities are successful and our young people can afford a top-line education here at home.

Correction: An earlier version of this editorial misstated the growth in debt at the University of Colorado. Debt doubled for the entire CU system, not just CU Boulder.