Calvin College announced last Friday that it had reached its goal of raising $25 million in debt relief—three years faster than its 2017 target. In a press release, college president Michael Le Roy called the response humbling.
The $25 million for debt relief is one of the strategies the college announced earlier for addressing its debt situation. In late 2012, shortly after Le Roy became the president, news came out that the college was facing a debt of $116 million in 2017 that would require nearly 10 percent of its operating budget to service. Much of that debt was caused by building project costs that exceeded the amount of money raised for them, non-core real estate purchases, and risky investment strategies.
The college has since updated and tightened its investment policies and is selling off non-core real estate. The school also spent several months prioritizing its spending on academic programming.
“It was quite clear that we could not go and ask our donors and friends for help if we were unwilling to first look at ourselves,” Le Roy said. “More work is ahead of us . . . but the community has pulled together and accomplished a great deal in a short time.”
Le Roy said that if the college adheres to its strategy to achieve financial sustainability, that debt in 2017 will be $70 instead of $116 million, and that the debt service payments could come down to as low as 5 percent of the annual operating budget.
The college announced that it has received $34 million in pledges for the 2013/2014 fiscal year, the third-highest total in the college’s history.