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January 25, 2012 6:52 PM Private Dorms?

By Daniel Luzer

The New York Times reports that state colleges, increasingly strained due to budget cuts and increased enrollment, are contracting out dormitories to private companies. As Ronda Kaysen writes:

States found that companies that specialize in student housing could build residence halls more rapidly and cheaply than universities could. They can ease the burden of being a landlord. And perhaps most important, these partnerships free capital for facilities like classrooms and laboratories.
Public universities that have entered into or are considering such partnerships include the University of California, Irvine; Arizona State; Portland State; the University of Kentucky; and Montclair State in New Jersey, which in the fall opened the Heights, a two-tower complex with 2,000 beds and a 24,000-square-foot food court that officials say is the largest residence hall complex in the state.

The private dorm at Montclair State, which seems to reflect agreements at public colleges across the country, works like this. Kaysen:

Capstone developed the Heights, enlisting the Provident Resources Group, a nonprofit organization, to finance the $211 million project with tax-exempt bonds issued by the New Jersey Economic Development Authority. Capstone will manage it for the next 40 years or until the bonds are paid off and the title reverts to the university. The university will retain authority over student conduct within.

This contracting out of shelter is saving the institutions money, and also providing students with some very, very luxurious living spaces. What the private dorms aren’t doing, however, is saving the students money.

Kaysen reports that a room in the private residence hall costs about $1,000 more a semester to occupy. The average student graduates from Montclair State $24,226 in debt, one of the higher rates among New Jersey college students

Another problem is that these private companies want really long leases. Because they sometimes cover the entire cost of construction, they require multi—decade leases in order to be sure to recoup costs. This helps the institutions save money, but there’s no assurance the company will still be around, or functioning in the same manner, 40 or even 80 years in the future.

But institutions often feel like they have few options as far as housing goes. While the private dorms may not always be in the students’ best interests, it’s a relatively easy way for the colleges to get new buildings on the cheap.

The University of Kentucky, Kaysen reports, is considering farming out all of its student housing Education Realty Trust, which would demolish most campus dormitories and replace them in a $500 million construction binge.

The treasurer of the institution, Angela Martin, said UK is considering moving forward because housing isn’t the university’s job. “They can build it cheaper,” Martin told Kaysen. “They can build it faster and they can operate it leaner than we can. This is not the university’s core business.”

Martin has a point; until recently most colleges didn’t have dormitories at all. Students either lived in fraternities and sororities or rented space in boarding houses in town.

But then, in the aftermath of World War II, colleges began to build residence halls. They did this because the vast increase in the student population during that period required the colleges to build affordable housing for them, or the students wouldn’t enroll.

So no, it’s not the university’s core business, but it is one of the things it currently does. It did this, originally, in order to keep costs down, for students. Kentucky can’t say the same thing about the development corporations.

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer

Comments

  • joel eisenhower on March 21, 2012 5:58 PM:

    Nice article. I wrote a series of stories for the The Rearguard, a student publication at Portland State University, about the new private residence hall on campus, University Pointe. I got to take a look at the contract, and the terms are clearly skewed in favor of the private sector. Here's a link:

    http://www.therearguard.org/vol-13-iss-5/news-politics/univ-pointe-part-iii