Thursday, August 18, 2005

To Dorm or Not to Dorm. . .

When I was an under- graduate at Hillsdale College, two good friends of mine purchased a house together as sophomores. They rented out several rooms which paid for their mortgage and lived there for next to nothing for the rest of their undergraduate years. During the summers in between college semesters, they made several improvements (mostly cosmetic), and then sold the house to a younger college student when they graduated. They split a handsome profit for their efforts.

Yesterday's Boston Herald has an article about what more and more colleges are doing as they struggle to replenish diminishing incoming public funds. They are embarking on a dorm building frenzy as a way to boost their bottom lines. Dorms generate incredible revenue for colleges.

Savvy parents are realizing that interest rates are hovering still near historical lows. A house can be purchased as a second home for the student to live in while going to school that has around the same (or better!) payment than one would pay living in the dorms!

As colleges' budgets get tighter and tighter, and costs keep going up and up, this is going to remain an excellent investment for students or parents of students for a long time to come. Other students are happy to be able live off campus (and pay less than living in the dorms and way less than by renting off-campus) and by renting out rooms, the parents and students are able to lower the monthly burden of getting an education.

Meanwhile, colleges (such as Boston University and Emerson) are going to keep building dorms, as the revenue derived from room in board will remain for them one of the few ways (other than begging in the form of fund drives)they can shore up the shrinking support coming from the state and federal government. There are immense tax benefits colleges reap for this as well.