Dive Brief:
- University of California System officials are considering a new formula for borrowing and financing, as a report from the Mercury News outlines the system's $17 billion debt bill, which has dramatically increased since 2008.
- Construction needs and increasing costs for pension commitments, along with reductions in state funding have made slight increases in the system's total debt servicing, which now totals nearly 4% of its operating budget.
- Officials are considering a limit to borrowing, which wold limit the system's debt service threshold to 6%, a number that some say is manageable given the size and scope of the system and its economic impact.
Dive Insight:
UC's debt now equals out to about $2,200 per student in costs passed on to the system's consumer base, which doesn't bode well for any deviation in enrollment or retention. When considering the system's controversies with leadership, and shelved plans for a global campus extension, the prevailing wisdom would be to cut costs and bring debts under control.
But in higher education, the demand to offer more for the cost of a degree is ever-present, and with California being among the more successful states in attracting out-of-state students paying some of the nation's steepest tuition bills, leaders may have other ideas in mind for erasing the multi-billion dollar debt bill, which may not involve retraction, but expansion in key revenue-bearing areas.