University of Michigan students are no strangers to high rent prices. Ann Arbor is one of the most expensive college towns in the nation, with the average rent hovering at about $2,060. For many students, housing consumes the majority, if not all, of their budget. Students tend to attribute these rising prices to a number of things — general inflation, lack of University-owned housing, a rising student population and greedy landlords to name a few. All of these are true to some extent. But there is another force quietly reshaping Ann Arbor’s rental market — private equity. Private equity is not only buying up student housing and increasing rent, but also decreasing the quality of the housing itself.
What makes this trend even more troubling is the University’s own financial entanglement with private equity. The University has already committed portions of its multibillion-dollar endowment to private equity firms, which are not on their face a bad thing, but something that demands far greater scrutiny. Private equity’s expanding role in Ann Arbor’s student housing market raises the risk that the University may be directly profiting from practices that make life harder for its own students. And with 39.4% of university endowment money invested into private equity and venture capital companies, the greater U-M community deserves to know whether the University is indirectly funding these predatory companies. The University of Michigan must be transparent about where its endowment’s private equity investments go to ensure it isn’t profiting from practices that harm its own students and that raise broader social equity concerns.
Simply put, private equity is a way for firms to invest in private companies that are not on the stock market. Firms raise capital from institutions and accredited investors, pool that money into a limited liability fund separate from the firm and use it to buy companies to resell them for profit. To maximize returns, these funds typically strip assets, cut jobs and extract fees for their own management services while saddling these companies with debt. For example, a common practice of private equity companies is to sell off a newly acquired business’s land, which is often the biggest asset of a company. Then, that same land is leased back to the company, where they are subject to uncontrollable rental prices. Many of the acquired companies eventually collapse under these pressures, but because of the legal structure of private equity, the firms themselves avoid accountability. Private equity targets a broad range of industries from retail to healthcare and in 2024, played a role in 56% of corporate bankruptcies in the United States despite accounting for only 6.5% of the national economy…