GREENSBORO, N.C. – Greensboro College has offered its campus and its $12 million endowment as collateral for a $19 million loan from Bank of America, the Greensboro News & Record reported July 18.
The school also is offering four years of free tuition to incoming honors freshman as a way to increase enrollment.
Both moves come as the liberal-arts college searches for a new president and works to overcome serious financial challenges.
All of the school’s real estate is included in the collateral agreement, including the president’s house, valued at $1.2 million, and the entire main campus.
Reaction from faculty and trustees contacted by the newspaper was one of surprise.
“It is shocking,” says Richard Levy, a former trustee. “It is great cause for concern.”
One source of the debt is an expansion plan that began in 2002 and included the purchases of a local YMCA to be used as a student union and gym and a nearby hotel to be converted to a dormitory.
The school also has borrowed $3.5 million over the past two years from its endowment, which fell from a high of about $25.5 million in late
2007 to about $12 million.
With an annual debt burden of about $1.8 million, the school cut salaries by 20 percent in April.
And according to IRS records, the college was past due on almost $1 million owed to vendors as of June.