In the next three years, the University’s outstanding debt is expected to reach about $900 million – triple what it was in 1998.

Administrators attributed the figure to a period of rapid expansion in Foggy Bottom and on the Mount Vernon Campus. Because of a lack of donations, these projects were funded mostly by loans. Fundraising is increasingly important to alleviate the need for this debt, said Executive Vice President and Treasurer Lou Katz.

The University takes out loans before beginning major construction projects and value them based on the projected value of the property.

They also take out loans when GW-owned buildings increase in market value. This allows the school to convert the profit into cash for operations.

This year, all money for new construction and major renovations is being funded by debt – about $156 million, according to the capital budget.

University President Steven Knapp said GW needs to be careful about how much it borrows, and suggested a development staff needs to be developed to increase outside funding.

“We can afford to borrow a certain amount to fund our programs, but we have to be vigilant to make sure the total amount of borrowing remains within acceptable bounds,” Knapp wrote in an e-mail. He added that “big ideas” from deans and faculty will encourage more people to donate money.

Katz said the primary reason the debt is so high is because of a surge in expansion over the last 10 years. He cited several projects – including Ivory Tower, Townhouse Row, New Hall, Potomac House, the Elliott School, 1959 E Street and Duques Hall – as the largest contributors.

About 42 percent of the debt is created by University housing. The second-largest contributor is investment properties – such as 2000 and 2100 Pennsylvania Avenue – which account for 39 percent of the debt.

An Economics professorssaid he is worried how the University will deal with future expansion, given the recent approval of the 20-year Campus Plan.

Anthony Yezer, a professor of economics, explained that funding growth with debt is not uncommon, but the University should be careful about relying too much on this source of monetary value.

“When (GW) builds new buildings, it would be nice if someone gave the University a lot of money and put their name on it. If they don’t, you generally finance it with debt,” Yezer said.

“However, we haven’t been very successful with that and we are spending a huge amount of money per square foot,” he said.

Construction costs have forced the price of new dormitories to spike. A new residence hall on F Street – the most expensive in GW history – will cost almost twice per bed than Ivory Tower built three years ago.

“The price we are paying for building is way out of control. The price for bed is way too high,” he said. “If you build slower and cheaper you will be able to operate longer.”

Katz said although the University does not have huge donors for new projects, creating a more attractive campus will garner more active alumni in the future.

“The biggest driver of (our debt) during this period of time is our facilities,” he said.

GW combats the debt through rental income and taking out loans based on a building’s increased value. Debt payment has not increased at the same rate as total debt, however.

In 1998, the debt was $257 million, according to the capital budget. That number is expected to triple in three years, but the money available to pay off that debt is only projected to go from $25 million to $67 million annually.

“We’re going to be much more reliant on fundraising (in the future),” Katz said, “We would like the cost of our buildings to be paid for more by fundraising than debt.”

University President Steven Knapp has already expressed his interest in drastically increasing fundraising efforts. Since 2005, donations have increased by 50 percent to $81 million.

Yezer said it is important to direct any new money in the appropriate direction – which is not always new physical structures.

“We are going to tend to have large classes and a lot of adjuncts, rather than fewer classes and fewer adjuncts,” Yezer said.

Even though GW has made a financial commitment to campus development, the improvement seen throughout campus is beneficial to students and faculty alike, Katz said.

“We’re dependent on debt, but we’ve used it – we believe – in a positive way,” Katz said, “The financial resources that we have available to us keep improving.”

Eric Roper contributed to this report.