Pierce: The answer is generally no. Student-housing operators as an industry do unit inspections quarterly, so if there was damage, we find it quickly, and we bill back for it just as fast. People ask us, “You bill it, but do you collect it?” We do—we have a bad-debt expense net of only half of 1%, and we have parental guarantees. The students don't want us to contact their parents.

The buttress to that is that Internet and cable service (Internet underscored) is included in the rent provided by the landlord, and we can turn it off if they don't pay their bills. Coming full circle on that, the other element is there's perhaps no stronger word of mouth than there is in student communities, and as such, if you did damage and you got a nice hefty bill for the damage you did, and you have to pay it, that word spreads quickly.

As a result, we don't have a lot of damage, despite perhaps common perception. This is unique to purpose-built student housing because of the quarterly inspections, parental guarantees and landlord-provided Internet. There are lots of apartments near universities that are not purpose built that are not run by student-housing companies and don't have these measures in place. In those, let the buyer beware. This industry is only 20 years old, and the purpose-built product leased by the bed only started being delivered in the mid-1990s and really started to take off in the 2000s. In the scheme of CRE, it's a new industry. The movie “Animal House” was based in the early '60s, so the impressions still linger, but the conditions have changed.

GlobeSt.com: How do you deal with empty units during the summer breaks?

Pierce: Students sign a 12-month lease. Also, after their freshmen year, most students decide to stay at their community near school since they now have new-found freedom for the first time. Many stay on campus working part time, enjoying the summer, since their rent is paid and they have many more amenities and independence they would have living back at home. The flip side is the supply—there are high occupancies in university markets, so landlords require a 12-month lease. If a parent or resident decided they wanted the resident to go home for the summer, there are limited options to be able to do so.

GlobeSt.com: Some people believe universities are slowly going out of business because of online learning and degree programs. Is this true?

Pierce: Not true. Students—or people in general, who want to stay on top of their profession to gain additional knowledge—will take online courses. It is absolutely not a factor, since the number of students who continue to enroll at colleges and universities across the country is consistent and very high.

It even goes beyond that—it continues to grow. College enrollment in the decade of the 2000s grew 38%, and in the next decade forward are projected to grow another 14% or 1.4% per year, so the enrollments are in fact growing.

Students at traditional universities will undoubtedly take some online courses, but it won't change the fact that they will be residential students. And the real big game-changer for higher education and the internet is expanding access to those who may be place-bound—people who don't have the resources or abilities to move from where they're at to where education is delivered in person. These include students living in a foreign country or those who live remotely from where they want to take courses. The Internet provides that because it's ubiquitous. We will see lifelong learning proliferate even more because those working full time can fit in education at a time that meets their needs, and those in foreign countries can access the highly desired US education system. Online courses will not put traditional education out of business, but traditional education will grow to whom it can serve. The small liberal-arts school looking forward into the future is at risk, so there will be consolidation in higher education, but the strong will get stronger.

SAN DIEGO—From student debt to destruction of property, many people have false beliefs about issues related to student housing,” Pierce Education Properties L.P.'s president and CEO Fred Pierce tells GlobeSt.com. Given his extensive experience in the student-housing sector and as the head of a successful on-campus-housing development and management company, we spoke exclusively with Pierce about the four most common misconceptions people have about student housing and what the truth is about this sector.

GlobeSt.com: Is it true that most students graduate with heavy “student debt,” as we've been told?

Pierce: It's true for some types of universities, but not true for the traditional university as most people know it. By way of example, at America's public universities, which are non-profit universities, approximately 50% of the students graduate with no debt, and the other half have an average balance of approximately $25,000. Where the debt load resides is largely with America's for-profit universities. It's also not at America's non-profit private universities. Those are also the ones people are also familiar with—not the Ivy League schools or religiously affiliated nonprofit schools, but highly concentrated in the for-profit universities. And at the for-profit private universities, compared to the non-profit universities, graduation rates are lower, as are the job-placement rates. So, students accumulate more debt with lower likelihood of getting the job they want.

GlobeSt.com: Do students trash the properties, as is commonly believed?

Pierce: The answer is generally no. Student-housing operators as an industry do unit inspections quarterly, so if there was damage, we find it quickly, and we bill back for it just as fast. People ask us, “You bill it, but do you collect it?” We do—we have a bad-debt expense net of only half of 1%, and we have parental guarantees. The students don't want us to contact their parents.

The buttress to that is that Internet and cable service (Internet underscored) is included in the rent provided by the landlord, and we can turn it off if they don't pay their bills. Coming full circle on that, the other element is there's perhaps no stronger word of mouth than there is in student communities, and as such, if you did damage and you got a nice hefty bill for the damage you did, and you have to pay it, that word spreads quickly.

As a result, we don't have a lot of damage, despite perhaps common perception. This is unique to purpose-built student housing because of the quarterly inspections, parental guarantees and landlord-provided Internet. There are lots of apartments near universities that are not purpose built that are not run by student-housing companies and don't have these measures in place. In those, let the buyer beware. This industry is only 20 years old, and the purpose-built product leased by the bed only started being delivered in the mid-1990s and really started to take off in the 2000s. In the scheme of CRE, it's a new industry. The movie “Animal House” was based in the early '60s, so the impressions still linger, but the conditions have changed.

GlobeSt.com: How do you deal with empty units during the summer breaks?

Pierce: Students sign a 12-month lease. Also, after their freshmen year, most students decide to stay at their community near school since they now have new-found freedom for the first time. Many stay on campus working part time, enjoying the summer, since their rent is paid and they have many more amenities and independence they would have living back at home. The flip side is the supply—there are high occupancies in university markets, so landlords require a 12-month lease. If a parent or resident decided they wanted the resident to go home for the summer, there are limited options to be able to do so.

GlobeSt.com: Some people believe universities are slowly going out of business because of online learning and degree programs. Is this true?

Pierce: Not true. Students—or people in general, who want to stay on top of their profession to gain additional knowledge—will take online courses. It is absolutely not a factor, since the number of students who continue to enroll at colleges and universities across the country is consistent and very high.

It even goes beyond that—it continues to grow. College enrollment in the decade of the 2000s grew 38%, and in the next decade forward are projected to grow another 14% or 1.4% per year, so the enrollments are in fact growing.

Students at traditional universities will undoubtedly take some online courses, but it won't change the fact that they will be residential students. And the real big game-changer for higher education and the internet is expanding access to those who may be place-bound—people who don't have the resources or abilities to move from where they're at to where education is delivered in person. These include students living in a foreign country or those who live remotely from where they want to take courses. The Internet provides that because it's ubiquitous. We will see lifelong learning proliferate even more because those working full time can fit in education at a time that meets their needs, and those in foreign countries can access the highly desired US education system. Online courses will not put traditional education out of business, but traditional education will grow to whom it can serve. The small liberal-arts school looking forward into the future is at risk, so there will be consolidation in higher education, but the strong will get stronger.