The American dream of higher education is facing a harsh reality for many students – a crushing burden of off-campus housing costs. Universities, struggling to keep pace with growing student populations, haven't built enough dorms, leaving students at the mercy of a booming private student housing market. This market, fueled by skyrocketing rents and a reliance on student loans, is squeezing students financially and raising concerns about basic living standards.
Clemson University in South Carolina exemplifies this national trend. With a dwindling on-campus capacity, private developers are stepping in, constructing off-campus housing options. While this might seem like a solution, it comes at a hefty price. The once-affordable option of off-campus living has morphed into a financial nightmare for many students.
Nationwide, rents for off-campus student apartments have skyrocketed nearly 30% in the past decade, according to CoStar, a commercial real estate data company. This surge surpasses the cost of on-campus dorms at many universities. A Wall Street Journal analysis of data from Moody's Analytics and the Education Department revealed a shocking median off-campus student apartment rent of $801 per month at over 70 large public universities in 2023. On-campus dorm rooms, while not cheap, came in at a median monthly rate of $800 – a difference that barely registers when faced with the mounting financial pressure on students. The gap has narrowed significantly since 2019, when dorms held a clear cost advantage.
This affordability crisis is fueled by a critical shortage of on-campus housing. The large public universities analyzed housed less than two-thirds of their full-time undergraduate population in 2023, with a combined capacity of under 613,000 beds for a staggering 1.8 million students. While universities only added a meager 8,000 beds between 2019 and 2023, private firms swooped in, aggressively expanding the off-campus market with over 44,600 new beds.
This boom in private student housing isn't driven by altruism. Investors see students as a captive market, ready customers who can rely on student loans to cover exorbitant rent. "Students can take out loans for housing," Shangxuan Tan, CEO of Chicago-based private equity firm OC Ventures, bluntly stated in an investor presentation. This reliance on debt raises ethical concerns, pushing students deeper into financial hardship to secure basic housing.
The consequences of this unchecked growth are being felt in communities surrounding universities. Overwhelmed by a surge in student apartments, at least five localities have enacted temporary bans or regulations on student housing development.
Clemson University serves as a stark example. In 2002, it could house over half its undergraduate population. Today, that number has plummeted to just over a third, forcing students into the expensive private market.
Private equity firms are cashing in on this student housing gold rush. In 2022, Blackstone, a behemoth in the investment world, acquired American Campus Communities, one of the largest student housing landlords, for a staggering $13 billion. While Blackstone claims to invest in areas with strong demand and prioritize the renter experience, students facing exorbitant rents and windowless rooms might beg to differ.
Austin, Texas, recently the nation's hottest housing market, exemplifies the disturbing trend of prioritizing profit over student well-being. While landlords reap hefty profits, students are forced to choose between overpriced windowless units and a significant financial burden. A University of Texas professor revealed the shocking reality of over 1,000 windowless rooms being rented to students at premium prices in Austin. Blackstone's recent acquisition of American Campus Communities included a 343-bed apartment building in Austin, the Crest at Pearl, where a staggering 10% of the bedrooms have no windows. Despite the ethical implications, American Campus Communities justifies these practices as a way to increase housing inventory.
The future of affordable student housing remains uncertain. The current system, dominated by profit-driven private developers and a reliance on student debt, is unsustainable. Urgent action is needed. Universities must prioritize building more on-campus housing, while policymakers consider regulations to ensure basic living standards in the private market. Students deserve a chance to pursue their education without facing an insurmountable financial burden for basic housing.
