New College, new debt

Terms of a proposed loan deviate from Florida State Board of Governors guidelines.

By Nic Steinig

Original Air Date: Nov. 3, 2026

Host: Today, the Board of Trustees of New College met to approve a request to take on millions of dollars of debt for the takeover of the USF Sarasota-Manatee campus. The proposal is not run-of-the-mill, as WSLR News reporter Nic Steinig explains.

Nic Steinig: New College of Florida trustees voted today to borrow $47.5 million, with the college’s student housing facilities and other revenue streams held as collateral. The loan structure is unorthodox. $40 million will come from BankUnited, with the rest coming from a private investor the college won’t yet name. The loan terms propose a razor thin-margin debt schedule that breaks the Florida State Board of Governors guidelines in three ways.

From left to right: Don Patterson, Dr. Lance Karp, Richard Corcoran, Ron Christaldi, Bill Galvano and Debra A. Jenks. | Photo: Steinig

For most of the $47.5 million, the college will initially pay interest-only payments with no principal, with principal payments added later. Even with the low principal payments, the annual housing costs will more than double by the school year 2027-2028. To compensate, the college is planning to raise student housing fees about 27% and fill beds to 95% occupancy in all student housing. To secure the loan, New College also had to refinance their existing $15.6 million debt from Truist under worse terms with BankUnited.

It all comes to a head in six years; at that time, the biggest loan comes due, and they must find a way to refinance all three. If the college can’t, the unnamed investors portion kicks into high gear and installs the principal in full force, which would sink their projected housing revenue-to-debt ratio into the red. If New College fails to meet a payment, BankUnited can pull from a $500,000 operating reserve and compel the college’s foundation to meet the difference. 

USF’s Sarasota-Manatee campus. | Courtesy USF

The proposed plan goes to the Board of Governors next week, who must approve the plan or reject it on November 12-13.

USF Sarasota-Manatee originally borrowed the $28.5 million to build Atala Hall using tax-exempt certificates sold to bondholders at an interest rate commensurate with their A1/A+ bond rating. Those certificates cannot be paid off until 2032. Federal law effectively mandates that any deal that defease those bonds before their 2032 call date cannot be tax-exempt. As a result, the offer they got from BankUnited held a costly premium, since the bank pays the tax, not the borrower. New College plans to punt the ball down the road and hope for more favorable terms in six years, absorbing the considerable damage in the meantime and prolonging their debt schedule.

Richard Corcoran

Here’s what New College President and former GOP Speaker of the Florida House Richard Corcoran told WUSF about the loan last Friday: “Once we can go back out in 2032 and get tax free, hopefully, those numbers get you there.”

New College currently pays $1.78 million to service its existing $15.6 million in debt. Since 2024, the college has been cash flow negative on its student housing, losing over $11 million to cover their expenses. That was because a mold outbreak forced students out of many of their on-campus dorms into hotels while the administration simultaneously pushed for student enrollment growth. With Governor DeSantis’s support, the legislature awarded one time funds to New College to cover their short-term housing needs. As they assume Atala Hall, they now have to transition to fully covering their own costs through school revenue, as the Board of Governers guidelines mandate.

The terms they approved today are going to make that difficult. Their existing debt went from an annual interest rate of around 3% to around 5.5% with BankUnited and around 6.25% with the unnamed investor. The Atala hall debt from USF Sarasota-Manatee jumped from 5% to 7%. New College will pay about $700,000 more for their existing $15.6 million debt by 2032—and pay more than $3 million more than USF would have paid on Atala Hall.

By 2027-2028, the annual payment will be around $4 million, double the existing debt schedule—and that’s before interest is phased in.

When the college moves students out of hotels and into Atala Hall, the margins become workable for the bank’s requirements but not cushy enough for the Board of Governors. If all goes according to the college’s plan, they will bring in roughly 10% more revenue than the debt costs to service until 2032. The Board of Governors demands 20% of wiggle room, which is why they are requesting an exemption. They also need an exemption for the anonymous investors’ junior loan and for their debt payments rising over time instead of staying at the same level. The Board of Governors has granted similar exemptions before, but next week is the last chance for New College to assume the USF Sarasota-Manatee campus, as their contract requires them to arrange a new payment before the end of the year.

Reporting for WSLR, Nic Steinig.

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