More than 1,100 universities in China had racked up a total debt of 263 billion yuan (US$40.69 billion) by the end of 2010, a senior official with the country's auditing authority said yesterday.

High indebtedness has over the years become a common dilemma at universities across the country, Liu Liyun, deputy director of the research institute of the National Audit Office of China told China National Radio.

The main reason for the huge debts was the over-expansion of university enrollment and campus construction over the past 10 years, said Xiong Bingqi, vice president of the 21st Century Education Research Institute.

Many universities are forced to borrow money every year to pay back their old debts, which encumbers the development of the universities, Liu said.

The 40 provincial level universities in northwestern China's Shaanxi Province alone had accumulated debt of more than 10 billion yuan in 2009.

The provincial government has allocated 1.65 billion yuan to help pay back the universities' debt, the CNR report said. The situation is not any better in Shanghai either.

The Shanghai International Studies University borrowed 600 million yuan to build its new campus in the suburban Songjiang University Town in 2000, which has left the university with an interest bill of 35 million yuan annually, according to Wu Youfu, SISU's Party secretary.

Wu said with an annual tuition of 5,000 yuan per student, the university's annual tuition income totals only 30 million yuan.

"Many universities, especially those with new suburban campuses, borrowed at least 1 billion yuan for campus construction, but had no ability to pay back the loan at all," said Chen Dakang, the former dean of the Chinese language and literature department of East China Normal University.

Government funding is far from inadequate. Meanwhile, universities have few ways to collect money from society apart from asking tuitions and receiving government funds, Xiong said.

Tsinghua University named one of its buildings after Jeanswest, a domestic brand of casual clothing, to collect funds for operating the building in May, but this soon sparked heated debate and wide criticism.

Chinese universities should stop expanding enrollments and shift their attentions to education, said Lao Kaisheng, an educational expert from the Beijing Normal University.

Lao said the college enrollment expansion that began in 1999 in China has plunged universities in deep debt and caused a fall in the quality of their education.