Student Housing Costs and Corporate Profits


According to an article written by Patrick Clark for Bloomberg News, companies that specialize in off-campus student housing have become one of the most profitable investments in the real-estate sector:

“Shares in Education Realty Trust, a Memphis-based landlord whose earnings report met Wall Street expectations this morning, are up 54 percent in the past year. American Campus Communities, the only other publicly traded student housing landlord, is up 44 percent. By comparison, a Bloomberg index of North American apartment landlords is up 12 percent over the same period.  . . .

“The long-term theme is that college enrollment has boomed over the past few decades, and investment in new on-campus dorms hasn’t come close to keeping up. In the short term, the shares are likely rising because investors are looking to hedge against the possibility of a U.S. recession. . . .

“That’s because kids keep going to college, and schools have run out of places to put them. Consider these striking data from the U.S. Department of Housing and Urban Development: 17.7 million students were enrolled in post-secondary, degree-granting institutions in 2012, up from 12 million in 1990. Over the same period, the number of students living in on-campus dorms increased by a bit more than 600,000.”

So, if this industry is so profitable, why are some companies contracting to build and to manage on-campus student housing:

“That doesn’t mean developers won’t eventually overbuild. College enrollment has been declining in the years since the Great Recession, even as investment in off-campus student housing has soared. At some point, there will be so many student apartments that the industry will lose its appeal as a safe haven.”

It is hardly surprising, then, that on-campus housing has increasingly become a corporate target. Room and board costs to students have escalated to the point where they equal or exceed tuition costs at private colleges and universities. Our institutions are either pocketing the revenue to offset tuition caps or freezes, or, increasingly, they are trying to plug short-term budget holes with long-term contracts that will ultimately benefit the corporations more than the institutions and certainly more than their students. But by the time that those realities become undeniable, the administrators who signed the contracts will likely be long gone.

And so as on-campus housing become increasingly privatized, a fundamental question increasingly goes unanswered: if companies can make a profit on student housing while paying both dividends to their shareholders and higher executive salaries, why can’t our institutions manage student housing more cost-effectively and yet still somewhat profitably? Our institutions have more and more administrators at every level, and yet all sorts of things that administrators used to manage have been or are being outsourced. Worse, if the promised revenues or savings are actually being realized even in the short term, no one is bothering to showcase that actual evidence of those ostensible benefits of privatization. We have, of course, seen this before in many other sectors, but the marketing of privatization has been as good as and probably better than that for even the most iconic American products.


Clark’s complete article is available at:



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