ACUHO-I News Blog

Those Golden Gophers from Minnesota are the the first college in the country to use Build America Bonds to help fund new campus constrution projects. According to InsideHigherEd.com, these bonds were created to help state and local governments raise money for building projects by making it significantly cheaper for them to issue taxable bonds.

Among the intended projects listed in the official release from the school, was a new residence hall on the university’s Crookston campus. The article also discusses how the University of West Florida is taking advantage of additional changes in tax law that will open more funding options for their much-needed new residence hall; receiving a $15 million loan that would not have been possible just three months ago.

The Chronicle of Higher Education‘s current issue offers an article that’s unfortunately timely and appros. Debt Bomb is Ticking discusses an unfortunate confluence of events: higher education institutions borrowed a lot of money to build and renovate structures (including residence halls). Thanks to the lackluster economy, the value of the assets held by the institutions have plummeted, leaving the institutions with a risky debt-to-assets ratio. An unbalanced ratio may violate the terms of the institution’s agreement (or covenant) with the bond holder or bank. In these circumstances, the loaning institution can demand repayment of all or part of the loan.

As with other elements of the declining economy, the effects can cascade. The US Department of Education uses financial data to determine institutions’ eligibility for federal student aid. Some of the debt swaps institutions made to hedge against rising interest rates on their debts have now become problematic, and unless interest rates change considerably by June, these transactions will have to be labeled liabilities in year-end financial statements.

According to this Inside HigherEd story, some colleges are beginning financial literacy classes for their students. Some are a part of the counseling that comes with accepting federal student loans, but they go beyond the basic you-must-repay-this message required by federal loans. Some schools are offering the classes as a part of their general curriculum.

Hardly anyone could argue that such courses aren’t a great idea; not only are young adults graduating with breathtaking debt to their names, both in educational loans and other areas, such as credit cards. Oddly, many young people plan to live comfortably, if not in wealth, but seem ill-equipped to manage the transition from student to financially secure adult.

Does your institution offer such classes? Are briefer sessions a part of your residence programming?