“But while much smaller debt loads would be seen as risky and perhaps life-threatening for less-well-off institutions, these universities have top-notch credit ratings and could probably borrow more if they wanted.
“The Ivy League colleges plus Duke University, the Massachusetts Institute of Technology and Stanford University had $26.42 billion in debt at the end of the 2012 fiscal year, according to figures reported by the Cornell Higher Education Research Institute.
“In an article for Cornell Alumni Magazine, which is operated by the alumni association independently of the university proper, the institute’s director, Ronald Ehrenberg, and research assistant, Ross Milton, argue that the figures alone don’t tell the full story. Instead, they argue, observers need to look at why and for what a college borrows.
“Of the institutions they examined, Cornell had the highest ratio of debt to endowment size — $1.8 billion in debt and a $4.4 billion endowment.
“The real issue to me is, what is the impact of each of these debt-financed projects on the operations of the university?” Ehrenberg said in an interview.
“Cornell’s annual debt service payments ballooned to 7.3 percent of operating revenue in 2010 from just 3 percent in 2009, just before the financial meltdown. The annual payments now amount to about 5 percent of Cornell’s operating budget and are expected to continue to shrink. Still, Cornell’s administration curbed debt-financed spending, particularly on what it considers nonessential capital projects.
“Ehrenberg said he was ready to write an “exposé” of Cornell’s borrowing but he came away mostly reassured by his examination, which included e-mail exchanges with university executives and close looks at university data.”