Battling Institutional Debt at HBCUs

In the 2021 volume of the Journal of Academic Freedom, a collective of campus organizers sought to shed light on the role of institutional debt in higher education. Very few of us, they argued, understand “the impact of universities’ debt financing on organizational priorities, much less educational inequalities.” Their assertion that the “relative obscurity of debt financing has contributed to its enshrinement as a university governance tool” suggests that faculty, staff, and students might consider the subject too rarefied to broach.

The article underscores an increasingly important point: all members of a campus community ought to be deeply concerned about institutional debt. Burned by several decades of public disinvestment from higher education, colleges and universities have become increasingly beholden to a debt-financing paradigm that compels them to prioritize credit ratings and debt service over almost everything else. In the push to appease creditors, administrations are driven to court a steady supply of students who can pay—students from “credit-worthy” families who themselves demonstrate a good borrowing capacity. Institutions have financial incentives to maintain an expansive marketing apparatus that aims to protect brand value, a labor force that is flexible and disciplined yet insufficiently empowered to engage meaningfully in shared governance, and a certain proportion of trustees with ties to the financial industry. This is not a recipe for college affordability or accessibility, nor is it likely to facilitate a vibrant faculty or staff invested in the campus community.

Until very recently, I had to count myself among those in the dark on the nature and impact of institutional debt. My thinking about the debt crisis in higher education had been constrained by a much narrower focus on outstanding student loans, which will soon total a whopping $1.8 trillion. I had not fully appreciated the extent to which the indebtedness of our institutions contributes to the debt burden of our students, the rapidly changing nature of the education they receive, or how the pursuit of a college degree nowadays exacerbates the racial wealth gap.

My thinking began to change last spring. I teach at Morehouse College, a private historically Black college in Atlanta. For several years, Morehouse had been running a recurring deficit of about $5 million per year—quite significant for a small liberal arts college with an annual budget of around $100 million. The college chased private gifts or leaned on additional credit to close that annual budget gap. Like so many other historically Black colleges and universities (HBCUs), Morehouse found itself locked into a protracted state of austerity. Since the 2008 financial crisis, the college had reduced its faculty ranks. Faculty and staff salaries, already languishing behind many peer institutions, had not kept up with the cost of living. The administration, through several leadership changes, eliminated sabbaticals and increased teaching loads. Furloughs had become a reality. In 2019, the administration forced most members of the faculty and staff to take a 10 percent pay cut. All the while, in what felt like an increasingly desperate struggle for survival, we suffered through a series of governance tensions.

But much of this changed, literally overnight, when the Coronavirus Response and Relief Supplemental Appropriations Act (CRRSAA) was signed into law in December 2020 and the Department of Education was authorized to discharge $1.6 billion in capital-financing debt held by thirteen public and thirty-two private HBCUs. For Morehouse, this worked out to an immediate cancellation of about $56 million in capital debt, or $5 million in annual debt service—precisely the amount of our recurring deficit.

Since that institutional debt was discharged, and notwithstanding the lingering effects of the pandemic, the campus community is pulling out of austerity mode. The administration has restored salaries and compensated those who were forced to take pay cuts, reinstated sabbaticals, and announced plans for long-overdue raises in base pay. We have established a dozen new tenure-track faculty lines and converted several non-tenure-track lines to the tenure track. While meaningful shared governance remains as elusive on our campus as anywhere else in the corporatized academy, our faculty has begun to have more consistent and transparent engagement with both the administration and the board of trustees.

Several factors have contributed to the turning of the financial tides. Since the George Floyd uprisings, Morehouse, along with other prominent HBCUs, has benefited from unprecedented private-sector philanthropic investment. But as any administrator is quick to stress, large restricted gifts do not necessarily have an immediate impact on cash flow. And, from the perspective of the typical professor or campus worker, philanthropic support rarely feels as significant as the headlines would suggest.

But institutional debt cancellation gives schools immediate relief—in our case $5 million per year to reallocate toward more productive ends. And it is a form of relief that cuts to the root of a systemic problem: the debt-financing paradigm itself.

Though it garnered few splashy headlines, this round of federal debt cancellation was a boon for Black colleges and universities. Faculty at HBCUs need to build on this moment and make it the start of something bigger. Here are three ideas for how we might begin to do so.

First, we need to cultivate a better collective understanding of how institutional debt impacts our campuses. The authors of the article on institutional debt I discuss above developed a simple auditing tool that is useful for starting this process. Although they designed the tool for public institutions, which make more financial information readily available, the US Department of Education’s Integrated Postsecondary Education Data System (IPEDS) and publicly accessible tax filings provide some helpful information about the debt profiles of private institutions as well. And faculty senates and councils, whether at public or private institutions, must press for more financial transparency and meaningful involvement in decisions about financial strategy, including any decisions to issue bonds or take on any form of institutional debt.

Second, we need to draw our students into the work of studying these problems. As we have seen from recent protests at Howard University and the Atlanta University Center Consortium campuses, HBCU students are eager to draw their institutions into the struggle for a better world. At its best, the college experience gives students the tools to translate their individual problems into public concerns. At HBCUs especially, we teach our students not to bottle up their emotions about the challenges they face and not to blame themselves for their struggles but to study the problems, discuss and debate them openly, and work collectively to solve them. This is so important when it comes to student debt, an issue that individuals are often ashamed to address and powerless to confront but one that affects nearly all of them. By exposing debt as a shared, public concern, students can radically transform the discourse about it through collective action. The same is true for individual institutions. Most HBCUs are financially insecure in ways that members of campus communities prefer not to discuss, but we can’t bottle this problem up or blame ourselves for the debt-financing paradigm that colleges and universities now confront. Institutional debt is a shared, public problem that requires everyone’s attention—perhaps especially that of students, both current and former.

At Morehouse this fall, I taught a new course called Debt and Democracy, which introduced students to a range of questions about how the consolidation over the past forty years of financialized capitalism—that is, the increasing reliance on both public and private debt as a structural pillar of the global economy—has affected ideas about and practices of freedom and self-determination. When I designed the course, I knew that the student debt crisis would be a consistent reference point. I did not set out to discuss institutional debt at Morehouse or anywhere else in the academy. But as students read and thought about debt, as they discussed how it affects their families and shapes their futures, they kept raising questions about their own college. After all, Morehouse is what they know so specifically and intimately in the moment. It is the place where they live and breathe and socialize but also where they worry about delays in scholarship allocations and deal with leaky roofs and overworked professors. Institutional debt is not an abstract, academic problem for our students. It is tangible and immediate and provides a generative opening for engaged scholar activism.

Third, we need to organize HBCU communities to press for further political action. In my class this fall, several students found themselves inspired by the legacy of Thomas Sankara, the famous debt crusader and leader of Burkina Faso who argued in 1987 that debt rises to the point of “crisis” only when the indebted make it so, when the “popular masses become more and more conscious of their rights” and come together to challenge the power of their creditors. At HBCUs, we ought to build on this Pan-African heritage, reject the forces of neoliberalism that have given us this debilitating debt-financing paradigm, and organize politically to usher in a new era of public investment in education and human development.

Most HBCUs are small, many are private, and nearly all are nonunionized, located in right-to-work states. But, as always, there is strength in numbers. A campaign against institutional debt at HBCUs, targeting both the cancellation of existing debts and public funding to prevent new debt, could be a powerful initiative of the AAUP’s Committee on Historically Black Institutions and Scholars of Color, of which I am a member. Such a campaign could help to draw more HBCU faculty into the push for a New Deal for Higher Education, which has already identified institutional debt as an issue to address by advocating for legislative action. The CRRSAA was a win for HBCUs. Let’s build on this moment.

Andrew J. Douglas is professor of political science at Morehouse College. His email address is [email protected].