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I think you have identified the cause. When I was on the Board of Governors at Guelph s a phd student I noticed that the annual interest payments on the debt (from various capital projects) made up most of the university's structural deficit.

The one issue though, is that those capital projects, that were the source of the debt, also increased revenues because they allowed Guelph to take in more students. So it could be possible that in a counterfactual world without capacity expansion they would still be in deficit.

Livio - interesting. A couple of other factors
- pension plan deficits due to contribution holidays in the '90s/2000s, low rates of return in last 5 or so years, promises made to people retiring at the top of the (stock) market.
- lingering effects of the big decline in the value of endowments a few years ago, also impacts of lower than anticipated rates of return on existing endowments. This second one is a bigger issue for the endowment heavy universities e.g. Queen's.

Another factor to think about is that these revenue numbers include things for, e.g., medical research, that arguably add a dollar on the cost side for every dollar they contribute on the revenue side.

Why were there such sharp rises for all three institutions for the year 2012? If you took out this observation the trend would not be as clear. Maybe there is an explanation?

The double cohort was an event that caused a lot of Universities to create more space. Even though it was really only a one year increase in applications the ripple effect lasted for at least a year after. Maybe this sparked an increase in construction (residence, etc.) which is showing up in the debt now?

I notice for many of the USA's top public engineering schools, the tuition is $10000/r for in state students and $26000 for out of state. This is inefficient as teenagers aren't generally adapt or financially secure enough to move in state.
There are a number of ways to make this regional, so out of state students can still study in a field at a top university in which they are motivated to excel in. A top biomedical school is in Georgia: why is Mississippi screwed? Georgia pays the public expenses. But certainly there are benefits to housing the school in one's state. Same situation in Cali and Nevada: latter are stuck dealing BJ instead of attending a top materials science school 4 hours away.
There ought to be partially shared costs. For importing nurses from the Philippines into Canada, Canada was considering paying The Philippines some cash for hawking their graduates. Here, if a State like Nevada sends a student to Caltech perhaps Nevada could send California some cash, but not the full $16000 difference as there is an advantage to housing Caltech and the research parks and maybe the graduate's subsequent residence. Right now that $16000 is an incentive for an individual not to go to an out of state school that may have unique faculties his own state college doesn't possess. If the cost were instead $6000-$10000/yr to the State, a future sustainable tax base would be built. Ideally at these low federal interest rates, would be a federal initiative. I dunno about the law here (there I mean).

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