Tsunami Of Empty College Dorms Risks Student Housing Market Implosion
Wed, 10/28/2020 – 22:45
Fall enrollment has plunged, some colleges are shuttering operations, revenues across the entire higher education industry are collapsing, and the shift from physical to virtual education due to the virus pandemic could prick the next bubble: the student housing debt market.
Our warning about the coming implosion of the higher education industry (see here from 2014), as a whole, has become louder and louder over the last six-plus years as the student debt bubble has recently swelled to more than $1.6 trillion. Years ago, no one at the time, could’ve forecasted a virus pandemic would doom colleges and universities.
Credit rating agency Moody’s recently downgraded the entire higher education sector to negative from stable, and the American Council on Education estimates colleges and universities will experience a $23 billion decline in revenues over the next academic year.
Bloomberg outlines the increase of virtual education in a virus pandemic has resulted in an abundance of empty dorms at colleges and universities, creating a $14 billion headache for the student housing debt market.
“West Virginia State University, already hit with a 10% enrollment drop, plans to give money to a school foundation so it can meet its bond covenants for residence hall debt. A community college in Ohio is using part of a $1.5 million donation for a financially-strapped student housing project. And officials at New Jersey City University, which serves largely first-generation and lower-income students and has recorded years of deficits, are prepared to shore up a dorm there,” Bloomberg said.
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