[lbo-talk] The cost of tuition going up ...

Jordan Hayes jmhayes at j-o-r-d-a-n.com
Mon Feb 27 16:16:57 PST 2012


... reason #N: it keeps the bond market happy.

http://online.wsj.com/article/BT-CO-20120222-716235.html

---


>> Univ Of Calif System Easily Sells $860M Century Bond
>>
>> The University of California system had no trouble selling
>> an $860 million taxable bond offering, even though it asked
>> investors to lock in their money for 100 years.

[...]


>> The so-called century bonds yielded 4.858%, or 1.65 percentage
>> point over the 30-year U.S. Treasury rate of 3.208%.

[...]


>> Moody's Investors Service noted in October that forgoing the
>> tax-exempt market gives universities "less to worry about from
>> the IRS" because taxable proceeds can be spent more easily and
>> with fewer compliance costs.

[...]


>> "Universities are among the longest-living institutions in the
>> world," said John Nelson, managing director at Moody's. "The top
>> universities can be expected to be around 100 years from now,
>> whereas many corporations and forms of government may not be."

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In the coverage in the Daily Californian, there was this statement:

http://www.dailycal.org/2012/02/23/california-state-treasury-sells-860-million-worth-of-uc-bonds/

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>> In August 2009, the UC announced that proceeds from approximately
>> $1.05 billion in federal stimulus "Build America Bonds" sold
>> to the public would help fund about 70 capital projects on all
>> ten UC campuses.
>>
>> In a press release following the 2009 bond sale, Moody's, a
>> ratings agency, explained the appeal of UC bonds in a shaky
>> economy, since the university has the ability to raise its
>> revenue by increasing student tuition despite state budget cuts.

---

/jordan



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