College dorms are becoming financial albatrosses

Students getting used to online learning during COVID

IVY-COVERED DORMITORIES nestled around grassy quads have long been the classic image of college life, especially in Massachusetts. Perhaps not for much longer. During the COVID-19 pandemic, dormitories are costing colleges a lot of money – money they don’t have as they struggle to adapt to expensive new technologies and declining student fees. As colleges begin to recover and plan for a post-COVID world, they should examine the role of dorms with a critical eye.

As traditional colleges face a world of competition from dormless for-profit schools, they find their residence halls are money pits. Most are old and require a great deal of maintenance. New ones must be financed, adding to the already heavy debt load of colleges. They sit vacant during the pandemic, and students are getting used to online learning. Could dorms stay empty or only partially occupied?

The classic campus image was never really true beyond the most elite schools. American students are predominately commuters. Today, less than 16 percent of all undergraduate students live in dorms, a number that drops to below 5 percent for community college students. And even at elite schools less than half of first year students live in dorms.

Fixed costs, to which dorms contribute, are a lode stone around the necks of traditional colleges. They represent yesterday’s decisions that must be paid for today and tomorrow. As college presidents survey their campuses, studded with dorms, they count the cost of all the repairs they can’t afford to make. Case in point: the UMass system has deferred $3.6 billion in maintenance needed on dorms and academic buildings.

Colleges can defer maintenance, but they cannot defer the interest on construction bonds. These bonds make up most of the outstanding debt of universities, both public and private. As an example, Boston University has over $1.7 billion in debt (almost all of it for construction), which amounts to $100,000 per student.

State colleges in Massachusetts owe the state building authorities a combined $1.2 billion for existing residence halls. The UMass system, which has its own building authority, has invested close to $350 million on dorms since 1999, and a new capital investment of $530 million on residences was approved for 2017 to 2021. On top of that is the millions of dollars in interest payments needed to finance these buildings. There are also heavy administrative costs of running what is essentially a hotel business. When you add the cost of maintenance and repairs, the economics of dorms are problematic – at best.

Even before the pandemic, the trend of declining student populations left many dorm rooms empty. At the University of Texas, off-campus, two-room apartments were 59 percent cheaper than living on campus, according to a 2015 study. Discounted room and board, and recruitment of out-of-state and foreign students, has become the norm.

All of this would be worth it if dorms substantially increased academic performance, but the research on this question is inconclusive. Who can blame students for being distracted as colleges pursued the Disneyfication of their campuses with dorms that offer beautiful views from skyscraper heights, tempting cuisine, five-star gyms, exciting athletic competitions, and urban attractions?

In the age of online learning, colleges will need fewer and fewer dorm rooms as students choose to live at home or rent off-campus apartments. These trends already exist, but they will be greatly amplified. Only the wealthiest universities will be able to maintain their ivy-covered image.

Meet the Author

Bob Hildreth

Founder, Hildreth Institute
College trustees need to examine their on-campus strategy with a sharp pencil. The enthusiasm with which they greet each new dorm project as adding luster to their campus would be better aimed at understanding its cost and even its usefulness in an age of online learning.

Bob Hildreth is the founder of the Hildreth Institute, Inversant, and other nonprofit organizations with complementary missions to get low-income students to college.