Elite Prep Schools Unleash Debt Wave Sparked by 2023 Bank Crisis

Just down the road from Stanford University, a roughly $200 million campus upgrade is underway at one of the Palo Alto area’s elite private schools, with plans encompassing state-of-the-art classrooms, an aquatics center and a recording studio.

It’s a massive financial undertaking for Castilleja School Foundation. Its leadership considered loans from banks before turning to the municipal bond market, which is more often used to finance roads and bridges than projects at private institutions charging more than $60,000 a year in tuition.

Castilleja, an all-girls school that opened in 1907, wound up selling about $106 million of tax-exempt debt ...