Colleges and universities are entering into risky deals with Wall Street and have created a debt bomb in the higher education. The dramatic increase in a number of debts incurred makes an unnecessary rise in the higher education budget needs putting universities and colleges in a huge financial risk.
Roosevelt Institute conducted a case study over 19 education institutions. These institutions were from different higher education sectors such as Ivy League schools, state universities, and smaller state local community colleges. University of Michigan, Harvard University, and Columbia were just some of them.
The study result showed that these universities are into deals with Wall Street creating dramatically the huge amount of $2.7 billion unnecessary fees for schools. The sad truth is that this big amount of money is passed on to the students in different forms. Some are in the form of federal and state funding decrease while others are in the borrowing costs.
However, this huge amount of money that universities acquire from Wall Street deals does not actually pay for colleges and universities' increase in the higher education quality. Instructional materials and classroom construction are given a budget, but a majority of the amount acquired from Wall Street deals is placed on other projects which are not necessarily into the improvement of the education quality.
The tight competition between campuses on who can provide the best amenities and facilities is putting the pressure on these universities to invest more in the physical development of campuses which is not if taken in proper context, The Education Dive reported.
A University of California Berkeley sociologist's study revealed that only 25 percent of the universities' borrowed amount goes to the improvement in education while the other 75 percent is spent on the construction of amenities such as recreation center, stadiums, and cafeterias. These borrowings have created such financial struggles beyond these universities' expectations, The Time reported.
Watch this video for more about colleges and universities' debts.
