Empty dorm rooms pose financial problems for Pennsylvania public universities

Editor’s note: The original version of this story understated the total cost of the combined projects. This update reflects the higher, actual figures.

As the Pennsylvania State System of Higher Education finalizes the details of a historic consolidation, officials on the campuses of eight of its 14 universities are struggling to deal with another consequence of declining enrollments: entire wings and floors of dorms sitting empty.

That prompted system Chancellor Dan Greenstein to propose allocating $12.5 million this year to help pay the debt on the buildings. The schools, Greenstein told the board, “have debt on residence halls that is not easily repaid with the number of residents in those halls.”

The newer dorms — suite-style residence halls featuring private bathrooms and kitchenettes — replaced traditional residence halls where students typically lived two to a room and shared communal bathrooms.

They were part of a building boom financed with bond debt.

University leaders said the schools needed to upgrade facilities and that the stunning new “green” buildings would be a boon to enrollment.

At Indiana University of Pennsylvania, officials at the time proudly boasted of hosting the largest “residential revival” of any college in the nation. The project spanned from 2006-10 and came with a $250 million price tag. It replaced all but one of its aging dorms with facilities that have since won awards as model green buildings.

Soon after the launch of IUP’s residential revival, Edinboro University announced a $115 million building project to replace dorms and dining facilities.

State System records show about $1.39 billion in debt remains on residence halls at 13 of 14 universities. Only tiny Cheyney University did not participate in the building boom.

In all, student housing projects across the state-owned universities added about $1.6 billion in debt — much of it carried off the books in deals brokered between university foundations, affiliated student associations and private developers.

It was a heady time at the schools tasked with offering Pennsylvanians a low-cost, high-quality college education.

Enrollment was swelling toward a record 119,500 students in 2010 as a wave of new high school graduates born in the 1980s fueled the increase.

But that was about to end.

State records show births in Pennsylvania, from which the universities draw 80% to 90% of their students, fell 15% between 1990 and 2000.

By last fall, enrollment statewide had declined by 25,800 students — down 22% from that high point a decade earlier.

Although the numbers in Pennsylvania were exacerbated by the state’s graying demographic profile, few colleges escaped declines last year.

Across the nation, the National Student Clearinghouse reported college enrollments declined 3.5% between spring 2020 and spring 2021, the largest year-over-year decline in a decade.

Across Pennsylvania, some universities fared better than others at filling dorms.

In fall 2019, one year before the pandemic, Bloomsburg, Cheyney, Millersville, Shippensburg, Slippery Rock and West Chester posted occupancy rates from 90% to 100% in university-owned and -affiliated housing.

Elsewhere, the picture was grim. Systemwide, about one in five beds were empty.

At IUP’s residence halls, occupancy had declined to 68%. At Edinboro, occupancy was 42%. Elsewhere, it ranged from 56% at Lock Haven to 85% at East Stroudsburg.

Privately, some say officials simply ignored population trends and overbuilt. Several faculty members at IUP recalled rosy chatter a decade ago that predicted enrollment would grow by another 10,000 students.

But recruiting campaigns were no match for the declining pool of new high school graduates and growing concerns about college costs that had some hesitating to trade student debt for a degree.

With some debt relief on the way, university and State System officials are casting about for solutions to their problem.

Any proposal to sell the buildings would have to address complicated ownership structures. In many instances, the universities turned to their foundations to issue bonds for the residence halls, some of which are on state land leased to foundations and developers.

There are few models for alternative uses that might help pay for such facilities.

Although some universities have experimented with retirement villages on campus, they have been limited to pricey upscale developments rather than congregate housing.

Last fall, The New York Times detailed how private developers snapped up unused college dorms in Tucson, Ariz., and Manhattan and converted them to apartments in high-demand neighborhoods. Some developers predicted that pattern would repeat as other universities looked to erase debt.

But in the small towns where Pennsylvania’s state universities are, some of the university properties already are competing with private landlords who also are having trouble renting units around schools with declining enrollments — some as much as 30% and 40% — and with downsized faculty and staffing.

At IUP, before the pandemic, university spokeswoman Michelle Fryling said the school made vacant rooms available to visitors during homecoming and parent weeks. But there are no plans to open hostels on campus.

At the state system, where the administration is shepherding a plan to consolidate six struggling universities into two mega institutions with six campuses by fall 2022, underutilized residence halls are a vexing challenge.

As of now, 11 aging, underutilized buildings at Edinboro, IUP, Lock Haven and Mansfield, constructed between 1952 and 1978, have been targeted for demolition at an estimated cost of $21 million.

“At the system office, what I can say is that the system has pursued a strategy with the universities of demolition, and we’re open to other ideas,” PASSHE spokesman David Pidgen said.