Bowdoin took steps to secure its financial stability over the next century when it sold $128.5 million  worth of taxable bonds this past summer. The College will repay these bonds at a historically low interest rate of 4.69 percent, and the payment is due on July 1, 2112.

The $128.5 million will be put to several uses. Bowdoin owes roughly $98 million that has to be repaid by 2039. The newly acquired funds will go towards covering this debt, leaving Bowdoin with, in effect, a $30 million loan.

Before the century bond sale, Bowdoin faced the possibility of having to dip into its endowment to pay off the 2039 debt, a step the College was not eager to take.

“You don’t want to leverage your endowment,” explained President Barry Mills.

In an article published on the Bowdoin Daily Sun, Mills wrote, “We are going to use the extra $30 million over the next five years to complete a number of small capital projects on campus and to upgrade our technology.” 

These projects include the renovation of the Longfellow School—which the College will transform into a space for dance and visual arts—improvements to the Stowe House, the construction of a small administrative building, technology upgrades, and the construction of a storage facility at the former Brunswick Naval Air Station.

Having secured financing through the bond sales, the College has started to move forward with these projects. 

“They are underway,” said Senior Vice President for Finance and Administration & Treasurer Katy Longley. “An architect has been hired for the renovation of the Longfellow School and an architect has been hired for the design of the new administrative building.”

Longley says the century bond transaction comes with relatively little risk.

“Assuming the College continues doing well with its endowment and fundraising and is fiscally prudent with its spending, I would think this borrowing fits in well with our financial health,” she said.
Mills agrees with Longley’s evaluation, especially in light of the low interest rate of 4.69 percent.

“If one concludes that, over the long term, we can earn in excess of 4.69 percent on our endowment while taking into account the likely inflation over the period, this transaction should be very good for the College over the long term. It is simply a superb hedge against future inflation,” Mills wrote in the Bowdoin Daily Sun.

Bowdoin is the first small college to sell a so-called “century bond,” but several large universities have already done so. 

The Chronicle of Higher Education reported that MIT, which secured $750 million through a century bond earlier this year, would use its funds for large new capital projects, including a new environmental studies center and  a performing arts center.

The Ohio State University will finance the construction of a new hospital with funds raised from a century bond, according to the Wall Street Journal.

Bowdoin will resist the urge to spend large sums on new buildings, despite projects going on elsewhere in the NESCAC. The construction of a new library is underway at Williams College, and Amherst College has broken ground on a science center, estimated to cost $200 million.

Mills said that projects at Bowdoin’s peer schools would not prompt the College to spend lavishly on new buildings.

“I don’t care. We’re not in an arms race,” he said. “We need to be innovative without building new buildings.”

Longley acknowledges the possibility of new buildings in the future, but says the century bond sale has nothing to do with them. 

“There will be planning, invariably, for the next big projects. What those projects are hasn’t been defined yet,” Longley said. “Still under consideration is the need for a new humanities building, what to do with the Brunswick Apartments—whether to renovate them or replace them. Those are two things that often get mentioned that were not funded by this bond.”