The college-cost calamity

Our take: As colleges and universities have been trying to make themselves more appealing for students, staff and investors, they have been delving ever deeper into debt. This article in the Economist discusses the problems that are going to afflict the cost of higher education if this pattern of incurring debt continues.

"With its leafy avenues and Gothic buildings, the University of Chicago seems a sober, solid sort of place. John D. Rockefeller, whose money built it, said it was the "best investment I ever made." Yet Chicago and other not-for-profit American universities have been piling on the debt as if they were high-tech start-ups.

"Long-term debt at not-for-profit universities in America has been growing at 12% a year, estimate Bain & Company, a consultancy, and Sterling Partners, a private-equity firm. A new report looked at the balance-sheets and cashflow statements of 1,692 universities and colleges between 2006 and 2010, and found that one-third were significantly weaker than they had been several years previously."

Read more about The college-cost calamity on the Economist.