With the cost of operating a public college or university skyrocketing during the COVID-19 pandemic and the prospect of decreased government funding, Virginia Gov. Ralph Northam has a plan to refinance debt related to construction on college campuses — a move he said will save public colleges $300 million over the next two years.
“As colleges and universities navigate a new world of online learning, hybrid schedules, and health measures, they’re facing added uncertainties as well as expenses,” Northam said, during a Tuesday announcement at George Mason University, in Fairfax, Virginia.
“One side effect of the pandemic has potential to help our public colleges — that’s the low interest rates that we’re seeing right now,” Northam said, noting that families locally, and across the country are refinancing home mortgages. “But that’s something that can benefit public institutions, as well.”
Schools have had higher operating costs related to increased cleaning, virus testing, housing limitations prompted by social distancing requirements, while losing the revenue from athletics and other sources. That revenue is typically used for bond payments.
“The colleges and universities can use the savings for other operating expenses, or to offset losses, at a time that they most need it,” Northam said about the refinancing the debt.
The governor said the state will take advantage of low interest rates by refinancing bonds issued by the Treasury Board of Virginia and the Virginia College Building Authority.
Northam said colleges would not have to make any principal payments on any Virginia College Building Authority bonds through fiscal 2023.
The following savings are expected, according to the governor’s office:
- Christopher Newport University: $14.4 million
- George Mason University: $58.3 million
- James Madison University: $43.7 million
- Longwood University: $8.2 million
- Norfolk State University: $8.2 million
- Old Dominion University: $29.8 million
- Radford University: $5.1 million
- Richard Bland College of William & Mary: $320,000
- University of Mary Washington: $9.3 million
- University of Virginia: $344,000
- Virginia Commonwealth University: $23.1 million
- Virginia Community College System: $9.7 million
- Virginia Military Institute: $2.8 million
- Virginia Polytechnic Institute and State University: $40.1 million
- Virginia State University: $12.8 million
- William & Mary: $33.7 million
The Associated Press contributed to this report.