An amendment to an appropriations budget authorizes an increase in state debt to pay for state university construction projects. But some experts see a "higher education bubble" on the horizon and said more taxpayer debt for more buildings is a bad idea.

House Bill 4112 is the appropriations budget for the 2012-13 fiscal year. On June 19-20, the House and Senate voted nearly unanimously to add language to the bill that "authorizes increasing government debt by $81.5 million to pay for proposed state university and college construction projects," according to 

Some of this funding will go to universities with some of the highest endowments in the nation. 

This expansion of building funds comes a year after a similar bill passed a year ago. House Bill 5541 of 2012 approved $304.5 million in state funds for colleges and universities in the state. The bill allows $613 million in new government debt for 18 state university projects, passing overwhelmingly in the state House and Senate. 

Two college professors who have written extensively about the topic of college costs and affordability said this extra spending and debt is probably a bad idea.

An analysis of whether a college education is worth its price is challenging, said Professor Antony Davies of Duquesne University. 

"If the answer is 'yes,' then the government doesn’t need to subsidize higher education (and I’m including in 'subsidies,' government grants, below market interest rates, taxpayer-backed debt, and all other special favors to higher education)," Davies said. "If the answer is 'no,' then the government has no business subsidizing higher education."

Stay Engaged

Receive our weekly emails!

University of Tennessee Law Professor Glenn Reynolds, who also is author of "The Higher Education Bubble," addresses the matter bluntly: "The single best piece of advice for anyone confronting a bubble is to avoid debt." 

For Reynolds and others, placing public dollars in education now is tantamount to buying top dollar real estate in early 2008. Once the bubble deflates, not only are colleges left with buildings that seldom see use, but taxpayers are stuck with obligations that could result in higher taxes and painful cuts. 

"Higher education is a bubble, which shows signs of deflating," Reynolds said. "I think it's probably a bad idea for colleges to be borrowing a lot of money now, and several have already gotten in trouble that way."

University of Michigan officials disagree.

"Universities are not in a bubble and respond in market sensitive ways," said Cynthia Wilbanks, vice president for government relations at the University of Michigan.

"Capital outlay funding has been rather episodic, not routine, " she said, adding that university resources benefit the entire state.

Davies said using tax dollars also is a matter of fairness.

"If new construction is such a good idea, why aren’t the colleges and universities taking on the debt themselves rather than asking Michigan to force taxpayers — many of whom will never go to college — to incur the debt instead?" Davies said.


See also:

Subsidies Drive Up College Costs

Commentary: College Subsidies Redistribute From Poor to Rich

Five Reasons the Government Shouldn't Subsidize Higher Education

States and Federal Government Should Stop Funding Higher Education

Commentary: Bailout of Student Loan Debt Is Not the Answer

Commentary: Arbitrarily Low College Loan Interest Rates Harm Students, Taxpayers

Do You Need Government Money to Attend College?

Other Big State Universities Tighten Their Belts — U-M Has Much To Learn

Related Articles:

Unions Try to Kill a Private Trade School

Energy Debt for Colleges, No Special Permit to Carry

Charter Schools, Developer and Grocery Store Subsidies, University Debt, more

Friday, October 28, 2016 MichiganVotes Weekly Roll Call Report

Prompt Government Transparency is Vital to Democracy

State Government Up to Its Eyeballs in Pension Debt

Stay Engaged

Simply enter your email below to receive our weekly email:


Detroit Prep is a top-rated and economically and racially diverse charter school in the city. It's growth means it needs to move out from a church basement and into a new location. Nearby is a former Detroit Public Schools building, sitting empty for years. But, worried about competition, the public school district refused to sell. For years, district and local government officials in Detroit had worked to block public charter schools. They pushed legislation at the Michigan Capitol to hinder them, refused to sell to them, transferred surplus buildings from the district to the city government and imposed deed restrictions on property sales to private developers. All of it was aimed to hinder or even prevent charter school choice outside the confines of the Detroit school district.

Related Sites