Colleges Are in Debt, but Students Pay for It

Colleges Are in Debt, but Students Pay for It

Colleges Are in Debt, but Students Pay for It

Cuts to public funding have passed universities’ financial burden on to students through rising tuition and fees. Should President Biden cancel campus debt too?


In the summer of 2019, construction workers broke ground on a $10 million capital improvement project at Holyoke Community College. By 2024, the 7,000 students enrolled at the two-year college in western Massachusetts will get to enjoy renovated academic buildings that have needed maintenance for years. That seems only fair, considering that those students will be paying 37 percent of that $10 million.

That statistic was uncovered by the Massachusetts Campus Debt Reveal Project, a coalition of faculty and student organizers that has calculated the costs and consequences of university capital debt. In August, the group published a comprehensive statewide report on campus debt. It found that, on average, each public university student in Massachusetts pays over $2,500 in fees annually to help finance their school’s debt service. Massachusetts is a wealthy state, yet it has the fastest-growing tuition and the second-fastest-growing student debt in the nation.

“The campus debt problem is a symptom of the larger problem of austerity and neoliberal economics over the past generation,” said Max Page, president of the Massachusetts Teachers Association. “When you start to cut funding for public institutions, then those institutions have to start doing all kinds of creative and often destructive strategies in order to survive.”

One of these strategies involves borrowing money to finance delayed construction projects. Dr. Patricia Gentile, former president of the Massachusetts Association of Community Colleges, testified to the state legislature in 2019 that the state’s community colleges have amassed $1.3 billion in deferred maintenance, or necessary capital projects that lack adequate funding to complete. In total, the Massachusetts public university system owes somewhere around $4.5 billion.

It’s not just Massachusetts. Universities have accrued inordinate capital debt since the early 2000s as state funding has waned. American public higher education is mired in a deep state of debt.

It’s a catch-22. Colleges borrow in order to fund building repairs and modernize their facilities so they can attract out-of-state and international students who can afford steep tuition costs. Of course, the cycle of debt spirals, as it creates more need for out-of-state students while plunging schools further into fiscal crisis. Over the past two decades, in-state tuition at public universities has increased by 211 percent, faster than private university tuition and vastly outpacing inflation.

The soaring cost of a public college education is no accident. Students shoulder the burden for campus debt. At the University of California, the largest public higher education system in the country, 50 percent of the core budget, or $5.1 billion, is financed by student tuition and fee revenue.

Meanwhile, the student debt crisis has tanked university enrollment. Tyler Risteen, a sociology major at Framingham State University, said matriculation rates at her college have been on the decline. “Personally, and [for] a lot of my friends I go to school with, they chose these state schools because it’s supposed to be cheaper,” Risteen explained. “The government is supposed to be helping us, but in reality, it’s just the schools taking out loans and then us paying for those loans.”

Campus debt undermines education as a public good by increasing the cost of public higher education. It has a snowball effect on students. It does not only restrict enrollment; students who are able to matriculate have to work to pay off the university’s debts that have been thrust upon them. Many students take on multiple jobs to pay for their education, diverting attention from their studies and forcing them to take on additional expensive semesters to complete required course work.

State governments have steadily defunded higher education, while student bodies have become more diverse, enrolling more low-income students, students of color, and first-generation college students than ever before. But when tuition fees rise, universities becomes less accessible to historically marginalized students, reinforcing white supremacist power structures.

Today, students across the country collectively hold $1.6 trillion in loan debt. The burden doesn’t end when they leave school. The astronomical surge in student debt turns college graduates into long-term debtors beholden to creditors for decades, preventing graduates from becoming homeowners and having children.

Campus debt also destabilizes faculty and staff by limiting university budgets and cutting instructors, librarians, and course offerings. Rich Levy calls this side effect “instructional harm.” He’s a professor emeritus of political science at Salem State University, and one of the lead organizers of the Massachusetts Campus Debt Reveal, which is part of a national movement. He’s found that when public universities borrow money, they also relinquish institutional control to financiers and creditors.

“Financiers, both by orientation and pressure from credit rating agencies, focus on return on investment rather than the educational integrity of a university,” Levy said.

In the long term, debt financing de-democratizes public higher education by allowing private financial institutions to determine university funding priorities. It alters the structure of university boards of trustees, as trustees are appointed based on their financial affiliation rather than their educational expertise. STEM departments get top priority, while the liberal arts get shafted. Credit ratings also actively reinforce anti-union and anti-tenure hiring policies that undercut faculty autonomy.

To put it plainly, public universities have become financial institutions with an education component.

Like many other national issues, the campus debt crisis has worsened during the pandemic. There’s no moratorium on capital debt payments, and they must be paid before other educational costs. When students weren’t living in the dorms, the loss of revenue brought campus debt to the attention of educators and activists.

At the same time, the pandemic has shone a floodlight on structural inequalities, catalyzing a flashpoint in the American labor movement. Over the past year, union membership has grown at the fastest rate since the 1930s, spurring unprecedented labor victories for workers at corporations like Starbucks and Amazon.

According to Max Page of the MTA, campus debt is a labor issue at its core, affecting each worker at every public university in America. “It’s been an invisible cancer in public higher education,” he said. Page is an architecture professor at the University of Massachusetts–Amherst, a university that spends over $100 million per year on capital debt. “The entire campus’s operating budget is limited because they’re paying off Wall Street banks rather than using that money for raises or for hiring people or keeping programs going.”

Unlike the student debt crisis, campus debt has remained normalized. “I think people treat campus debt like the weather,” Page remarked. “Like there’s nothing to be done about it and there’s no way around it.”

But educators and unionists across the country are beginning to raise public consciousness, motivate lawmakers to author anti-austerity legislation, unite labor unions, and maybe even activate a movement to cancel campus debt.

“At their best, unions represent the collective power of workers—and they can even fight for the common good of the communities of which they are part,” said Sofya Aptekar, an urban studies professor at the CUNY School of Labor and Urban Studies and organizer within the national debt reveal movement. “When it comes to institutional debt taken on by defunded public colleges and universities, unions can play a key role in mobilizing worker, student, and community power.”

This past July, the Labor Notes Conference brought 4,000 workers and labor activists to suburban Chicago, a record number for the convention, which first convened in 1982. The Massachusetts Campus Debt Reveal Project gave a talk about its research, offering a Debt Audit Tool Kit to anyone interested in calculating their own university’s debt. The tool includes a worksheet that calculates, using key university financial figures, the average student debt service fee and the average impact of debt service on student loan totals. It also quantifies instructional harm by calculating how much campus debt payments are diverting funds from instruction.

“The purpose is to empower faculty, staff, librarians, students, and community members to better understand their university’s debt, how it affects their university, and how to use that information to organize towards a better public university,” explained co–lead organizer Joanna Gonsalves, who teaches psychology at Salem State University.

“This is a possible-world exercise,” said Gonsalves. “What if campuses weren’t servicing debt to banks? How could freed-up funds be used?”

The debt reveal is the second that the Massachusetts group has published. It plans to release another in April 2023. Apart from providing first-of-its-kind research, Gonsalves said that she sees the project as a political tool to galvanize labor organizers across the country. Thanks in part to the interest they received at Labor Notes, her coalition has forged partnerships with educators in New York, Indiana, Oregon, Florida, and Puerto Rico.

Debt is an especially poignant issue in an outpost of American imperialism like Puerto Rico. “It’s a form of extraction that governs the globe, forcing flows of resources from impoverished communities to further enrich the rich,” said Sofya Aptekar of the City University of New York. “The debt of Puerto Rico is a way to shut down democratic governance and streamline disaster capitalist extraction of wealth from this US colony.”

Other unionists who joined the discussion at Labor Notes are working to re-democratize their universities’ leadership. Andrea Haverkamp of the American Federation of Teachers in Oregon explained that public colleges in her state moved away from a state-governed board of trustees about a decade ago.

“Since then, they have been run like private for-profit enterprises, with rapid expansion and skyrocketing tuition,” Haverkamp said.

Over the next year, her union will be organizing toward legislation that would reform and reshape Oregon university boards of trustees with a long-term goal that they include democratically elected student, faculty, and staff board members with full voting power. “We think this would fundamentally shift the dynamic over the next decade and create a positive policy feedback loop,” Haverkamp explained. “The current regime got us into this debt mess.” 

The Campus Debt Reveal Project is also focused on state legislation. In Massachusetts, there’s a docket of bills and amendments that could be passed this year to increase public support for higher education. The Fair Share Amendment, which is on the November 2022 ballot, would generate $1.3–2 billion in yearly support for transportation and public education by taxing high-income households.

Gayathri Raja, an economics major at the University of Massachusetts–Lowell who supports the amendment, said it’s up to the state to “step in and help with the unbelievable amount of debt that state colleges are in.”

The amendment would increase the tax rate by 4 percent for those making more than $1 million a year and put those funds toward education. “The Fair Share Amendment is really a once-in-a-generation chance to make our tax system more progressive,” said Max Page of the MTA.

But the group’s goals are also national in scope. “We are building a movement to fight campus debt that is linked to the movement to cancel student loan debt,” said organizer Rich Levy.

A decade ago, the Debt Collective called for the cancellation of student debt. As the nationwide organizing project picked up speed, activists seized the moment and urged the president to take action. In August, Biden finally fulfilled his campaign promise, announcing his plan to forgive at least $10,000 in debt for borrowers making less than $125,000.

Now, it’s time to follow the links of the debt chain upward to the institutional level and advocate for the cancellation of campus debt through a national anti-austerity movement. If the federal or state governments helped pay off campus debt—or canceled it outright—future debt for all students would be reduced, funding for educational needs would be secured, and generations of striving students could legitimately look at education as a tool to improve their lots in life.

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