Borrowing during a time of crisis: Examining institutional debt during the Great Recession and COVID-19
Although debt is an important tool institutions use to meet strategic goals, many higher education stakeholders have only a limited understanding of the process of institutional borrowing.
Institutional borrowing, or the debt a college takes on as an organization, is an understudied but important tool for colleges to meet strategic goals. Widespread crises, such as the Great Recession and COVID-19, can impact an institution’s financial health and create instability that may alter debt-related planning and access to debt markets. This study examines how postsecondary, nonprofit institutions make borrowing decisions during times of crisis.
The authors examined changes to over 2,000 postsecondary, nonprofit institutions’ capital structures after the exogenous shock of the recession, using data from the Integrated Postsecondary Education Data System. They also analyzed changes in debt and leverage across institutional characteristics.
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