Fair enough. Let's assume they are getting $27,500,000 (adding the private loan with the federal loan) and let's assume they will repay $70,000,000 after 20 years. We still come up with an effective interest rate of 5%. Still not a bad deal.

Except where did they plan to come up with that money? School budgets don't tend to grow that fast and building a new school adds additional costs. I'm not arguing that new schools shouldn't be built but taking on large debts without clear plans.

According to http://credittrends.moodys.com/ right now long term corporate bond rates are 4% or so.

If the school district does not have bad credit, 5% probably is a bad deal in today's market.

Poway is on San Diego's sprawl frontier and the region has been growing apace in recent years, so they may be planning on growth.