Rising Debt Engulfs Colleges as Well as Students

By Don Troop

President Obama took aim last week at rising levels of student borrowing, but two graduate students in sociology say the real culprit for growing college debt is Wall Street.

In a report posted last week on the Web site of the Scholars Strategy Network, Charlie Eaton and Jacob Habinek, doctoral candidates at the University of California at Berkeley, assert that the expanding burden of tuition debt is “partly driven by the indebtedness universities have taken on.” Public research universities have passed along their own debt to students by raising tuition and fees by an average of 56 percent from 2002 to 2010, say the authors, who work in the branch of sociology known as financialization.

“Public research universities have increased their institutional debt dramatically over the last decade, and the money is not being used to make up for shortfalls in instructional budgets caused by reduced public funding,” the report says. “Instead, many universities borrow to invest in ‘auxiliary services’—the umbrella term for expensive facilities like dorms, dining halls, stadiums, and recreation centers.”

Using the federal government’s Integrated Postsecondary Education Data System, or Ipeds, the authors examined data from 155 public research universities and found that their debt-service payments had risen 86 percent from 2002 to 2010.