LSU may file for academic bankruptcy

Louisiana State University has drafted a plan for exigency. In response to Governor Bobby Jindal’s budget proposal that would slash higher education funding by 82 percent, LSU is preparing for possible bankruptcy.

According to and the Huffington Post, LSU’s plan for exigency has caused Moody’s to downgrade the university’s credit rating.

If the school goes through with its plan, then that may spell bad news for other universities. LSU is the state’s flagship university. Without a strong financial foundation, the university will be forced to layoff faculty and stop expansion projects.

More information gathered from shows that investors have already stopped potential development on the university’s student health center.

LSU planned to borrow more than $100 million to “refinance existing debt, pay for new and renovated student housing, and expand the student health center.”

That’s all in limbo now as the university’s leaders grapple with how to proceed regarding LSU’s financial future.

The Louisiana Legislature has a budget request in front of them to cut more than $600 million in funding from higher education. They have yet to make a decision on what they will do, however, if they choose to move forward with Jindal’s budget proposal, LSU is in trouble.

In addition to layoffs, exigency will force the LSU system to consider closing other campuses, serious and deep cuts to popular programs, a reevaluation of its mission as a research university, and an inability to recruit the country’s best students.

All of this comes on the heels of many states deciding to slash money from higher ed in an effort to balance budgets. By bothering higher education funding, students are impacted tremendously and it portends future trouble for many of the country’s top colleges and universities that depend on state funding in order to compete.

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