GW has taken out about $45 million to finance construction of its new business school building, causing the University’s debt to climb to $680 million.

The University’s debt is up 4 percent from last year, which officials attribute to the building of new facilities.

“We’ve had significant construction recently,” said Donald Boselovic, associate vice president for budget. “If you look at some of the buildings we’ve put up over the last couple years, that’s a significant amount of activity financed by debt.”

While the numbers may appear high on paper, Boselovic said GW’s level of borrowing is on par with other schools of its size and that loans provide a way to balance expenses over time.

“It makes sense to borrow because hopefully we’ll have these buildings around for a long time and we can spread the cost over that period of years,” he said.

A loan will finance about 80 percent of the business school building, Ric and Dawn Duques Hall, currently under construction. The Duques’, GW alumni, donated $5 million towards the building.

GW also incurred debt to finance nearly a dozen recent construction projects including the Media and Public Affairs building, the Health and Wellness Center, Townhouse Row and 1957 E St, which cost about $200 million.

Boselovic said such projects were necessary to generate interest in the school and competition is a driving force behind University expansion. Colleges across the country are also constantly trying to improve their amenities and facilities.

“It’s just like any other business, like any other market, and they have to be competitive,” said John Pulley, assistant money and management editor at the Chronicle for Higher Education. “There’s a little bit of an arms race going on.”

While many of GW’s most recent projects were focused on academics, Boselovic acknowledged that “about half” of recent buildings and improvements were geared more towards student life.

“To remain competitive and to offer the kinds of programs and services that attract students here we have to have good residence halls we can house them in,” he said.

“We need to have good recreational facilities like we put in at the Health and Wellness Center and the Mount Vernon Campus to attract and retain students,” he added.

The University spent about $18 million on new athletic facilities at Mount Vernon, according to University documents.

Pully said that many colleges feel the need to build lavish recreational facilities.

“Today’s students expect a lot of amenities,” he said. “We’ve seen construction of new dorm rooms that are much nicer than what people were accustomed to a generation ago and new workout facilities that are on par with what you would see in the private sector.”

GW’s five-year budget forecast has earmarked about $200 million to cover the construction of approved projects, between 80 and 90 percent of which will come from loans taken out on an as-needed basis, Boselovic said.

Last year the University devoted $35 million to paying back its debt, which officials said they hope to retire in the next 30 years.

While relying on endowment to cover expenses is a university’s ideal option, GW’s donations are not sufficient to finance large projects. Endowment is the money and property outside donors gift to a university.

“We don’t have that kind of cash lying around,” Boselovic said.

“Unless someone were to receive a considerably large donation for all these capital projects, there would be no other way to finance them but by debt,” he added. “Part of the fundraising strategy is to get donations that can be used for capital projects.” Borrowing is not uncommon for growing universities, said financial analysts, who noted that colleges rarely have enough in endowment money to cover multi-million dollar expansion projects.

“Every institution is going to be building significantly and they don’t have a lot of resources to necessarily pay for these types of large scale projects,” said Damon Manetta, director of media relations for the National Association of College and University Business Officers.

Boston and Emory universities, two market basket colleges to which GW compares itself, have debts of $822 million and $1.2 billion respectively, according to the universities’ Web sites.

Institutional debt has been a major burden for smaller universities. Last year, Standard & Poor’s, a top credit ratings agency, predicted that many small colleges, having taken out too many loans, and could end up closing their doors or merging with other institutions.

Standard & Poor’s most recent credit ratings report, which was issued in 2001, gave GW an “A” grade and issued it a stable outlook, on par with American and Catholic universities and slightly better than Georgetown University.

“Most of the larger institutions, certainly those on the scale of GW, have the resources to pay that kind of debt back,” Manetta said. “They’re not going to get into the type of fiscal situation that would affect a smaller institution.”