Elite colleges go on $4 bn debt spree after Donald Trump's threats

Harvard University, the face of the fight, has boosted its debt load 16% after a bond sale in April

Elite American universities have secured over $4 billion in additional debt since March that will help protect their finances as the Trump administration takes aim at their budgets.

 

Harvard University, the face of the fight, has boosted its debt load 16 per cent after a bond sale in April. The Massachusetts Institute of  Technology  ramped up its liabilities 18 per cent to $5.2 billion. Top-tier schools have sold taxable bonds, taken out private loans, and increased capacity for commercial paper, according to data compiled by Bloomberg.  

 

Colleges are using a recession-style playbook to respond to the Trump administration’s large-scale funding freezes and proposed research spending cuts. House Republicans also hiked the endowment tax in a bill that now moves to the Senate. And the fight is ramping up with the US ordering its embassies worldwide to stop scheduling interviews for student visas as it weighs stricter vetting of applicants’ social-media profiles. The nation’s wealthiest colleges are getting a taste of the financial pressure that has long hit small colleges in the wake of the pandemic as they struggle to boost enrollment and stay afloat.

 

 

“The colleges that had been doing really well were the big name public universities and wealthy private colleges — but that got all scrambled when federal research funding was challenged in investigations against the elite colleges,” said Robert Kelchen, a professor studying higher education at the University of Tennessee at Knoxville.

 

The A-list schools haven’t explicitly spelled out what they’re using the money for. But taxable debt can be used for a wider array of purposes than the tax-exempt bonds that universities typically sell. A spokesperson for Brown University, which took out a $300 million private loan, acknowledged “the uncertainty regarding future federal policy related to research and other important priorities.” And a representative for MIT said it tries to manage for a “wide range of conditions” and the bond deal would help it do that.