Elizabeth Rembert & Shruti Singh (Bloomberg Law): Southern College Enrollment Boom Draws Private Money for Dorms

A slate of southern colleges — like big state universities in the Southeastern Conference — are bucking the demographic headwinds straining US higher education as schools compete for a dwindling number of high-school graduates. Surging enrollment is leading to a different challenge for this group: How to house everyone.

That’s where these deals, dubbed P3s, come in. In a typical transaction, a developer uses proceeds from a muni-bond sale — which often carries relatively lower ratings — to build or renovate dorms on land leased from the university, with student rent paying off the debt. Once the lease is over or the bonds are repaid, the university takes ownership.

At Tennessee’s flagship, the need is pressing — the school has grown nearly 50% since 2016 and is setting records for applications and retention rates. The P3 approach allowed it to add about 3,000 beds while keeping costs low for students, Cuevas said.

“We wanted housing quickly, but we also wanted to make sure it’s not adding to the cost of attendance,” he said. They’re already planning another deal to add three more dorms.