News Release

Colleges Feeling a Housing Crunch

Military housing privatization has reduced costs and sped up delivery of new units, universities should follow suit

Los Angeles (January 26, 2007) – Rising enrollment and tight budgets are creating housing shortages at colleges across the country. Many schools are ill-equipped to build new units or renovate aging dormitories and a recent survey finds over half the nation’s universities do not have enough housing.

A new Reason Foundation study demonstrates how colleges can use the military’s highly successful housing privatization model to meet the demands of growing student bodies.

In the 1990s, the U.S. military faced a similar dilemma: existing Department of Defense-owned housing was in poor condition and rapidly declining. There was also a severe shortage of affordable housing units off-base.

In 1996, President Clinton signed a bill that included the Military Housing Privatization Initiative allowing the private sector to help the military build new housing faster and cheaper.

The Department of Defense owns over 250,000 family housing units, approximately 60 percent of which needed to be renovated or replaced. The DoD expected to spend $16 billion on the upgrades, modernization and new units. But thanks to privatization the total bill has been cut to $14 billion, a $2 billion savings. Additionally, all “inadequate” military housing will be eliminated by the end of fiscal 2007, years ahead of schedule.

A 2006 Senate Appropriations report praised the privatization efforts: “The Department is to be commended for utilizing the private sector in a manner that improves the daily lives of Department personnel, while maximizing limited resources, merely through innovative thinking and inventive Federal contracting.”

“Military housing privatization has proven to be a great success,” said Geoffrey Segal, director of government reform at Reason Foundation and co-author of the report. “Luckily for schools the lessons learned in military housing are easily translated to dorms and college housing.”

A 2005 survey of 73 universities found that 16.6 percent of new residence halls will be owned by private developers or foundations and 15.3 percent will be privately managed.

“Universities that take advantage of the private sector’s expertise will be free to focus their attention on providing a high quality education,” said Leonard Gilroy, a Reason Foundation policy analyst and co-author of the report. “Schools that stick with the old, out-dated notion that they should be involved in the construction and management of university housing will waste precious education funding and struggle to meet the needs of their students.”

Full Report Online

The full study, Privatizing University Housing, is available online at Reason’s privatization research and commentary is available at

About Reason

Reason Foundation is a nonprofit think tank dedicated to advancing free minds and free markets. Reason produces respected public policy research on a variety of issues and publishes the critically acclaimed monthly magazine, Reason. For more information, please visit


Leonard Gilroy, Senior Policy Analyst, Reason Foundation, (713) 927-8777
Geoffrey Segal, Director of Government Reform, Reason Foundation, (202) 306-0795
Chris Mitchell, Director of Communications, Reason Foundation, (310) 367-6109