Higher Ed is passing the hat around

Elite universities go on a borrowing spree, but don't worry, everything is fine. I'm not crying, you're crying.

• higher ed bond issuance kicks off at a record pace

• what’s the rush? get it, while the gettin’s good

• veritas lost

• accountability for the bankers (not who you think)

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Lighter publishing this week, due to some other commitments. For today, a polemic-warning, but this topic really grinds my gears.

Higher Ed is passing the hat around

There is at least one class of borrower that’s eager to take on lots of new debt.

Universities have started off the year with a new record high in bond sales:

Bloomberg

$10B in higher ed municipal bond sales to start the year.

America’s most prestigious colleges are rushing to the debt market at the fastest pace on record . . .

Municipal bond sales for higher education are up more than 40% so far in 2025 compared to the same period a year earlier, reaching nearly $10 billion and eclipsing the prior record start to a year in 2017 . . . The sector is outpacing the broader market even as issuance of state and local government debt as a whole runs hot.

For higher ed issuance, that’s 40% higher than this time last year, and higher than the previous all-time record, previously set in 2017.

In the early innings, it’s the elite schools that’re raising debt (e.g. Harvard, Penn, and Stanford), but more schools are set to follow suit.

Veritas is just a word old dead white guys would use

Why is this happening?

Well, the most banal reason is that schools raised very little money in ‘21-’23 and now they’re doing a little catch up. I’m sure there’s some truth to that.

The other reason is that universities are a bit anxious, and they’re doing what they can to get it while the gettin’s good.

Why are they anxious? Let me count the ways:

• endowment returns on private capital investments are paltry;

• fundraising has taken a major dive, as donors have wizened to the culture and (anti)virtues that these institutions have been cultivating;¹

• government subsidies have been pulled for similar reasons, and other taxpayer-subsidized preferential treatment may also be on the chopping block (e.g. un-taxed endowments, and tax-free bond issuance);

• the cash cow of foreign students may be tapering;

• demographic tailwinds have become headwinds, and more and more young people are realizing that four years of play-acting at life + hundreds of thousands of dollars of debt, may not be worth either the real costs or the opportunity costs.²

Look, if you take multibillion dollar, world-class, talent-agglomeration brands—and the privileged status that come with them—built through centuries of careful commitment to excellence, rigor, and virtue, and use that largesse to create insular slop-factories dedicated to mediocrity, indulgence, and vice, via a process that’s so recursive and self-replicating such that there’s basically no one left who’s even aware that mediocrity, indulgence, and vice weren’t always the point . . . well, then, eventually, reality may catch up to you.³

But before then, sell those tax-free bonds!

I mean, look at this extraordinary self-awareness: