Is The College Bubble Next?

From The Chronicle of Higher Education:

Is it possible that higher education might be the next bubble to burst? Some early warnings suggest that it could be.

With tuitions, fees, and room and board at dozens of colleges now reaching $50,000 a year, the ability to sustain private higher education for all but the very well-heeled is questionable. According to the National Center for Public Policy and Higher Education, over the past 25 years, average college tuition and fees have risen by 440 percent — more than four times the rate of inflation and almost twice the rate of medical care. Patrick M. Callan, the center's president, has warned that low-income students will find college unaffordable.

Meanwhile, the middle class, which has paid for higher education in the past mainly by taking out loans, may now be precluded from doing so as the private student-loan market has all but dried up. In addition, endowment cushions that allowed colleges to engage in steep tuition discounting are gone. Declines in housing valuations are making it difficult for families to rely on home-equity loans for college financing. Even when the equity is there, parents are reluctant to further leverage themselves into a future where job security is uncertain.

Is this more doom and glooming? Or is this something to worry about? Your thoughts?
via Andrew Sullivan's Daily Dish


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  • max says:

    The internet is making college irrelevant. Colleges are like Playboy magazine. Why pay when you can get it online for free.
    An odd analogy but an apt one.
    Goodbye greedy elite edumongers. Hello free education for all.

  • Lura says:

    Yes, the education bubble is about to burst.
    The actual education you get in college is a standardized commodity. Is there really a difference in Econ101 at Harvard vs. Econ 101 at a community college? No, probably not.

    Additionally, average Colleges were spending far too much on ivory towers and perfectly manicured quads. Not every school is an ivy-league school… so why look like it; and more importantly: why pay for it?

    The marginal value of one school vs. another is in the other students and access. If you go to Yale, you might gain entree into Skull and Bones. But, if you are honest with yourself, probably not your kid. Your kid isn’t that stellar & doesn’t already have the social connections that would get him/her into the elite social groups anyway.

    As an aside: the biggest mistake I ever made was spending as much on my education as I did. I was $100K in debt with two MAs in history on my wall. What a waste! I work in IT now. I love it, but I also had to… I would have never been able to pay that debt by working in the field of history.

    Education is great… overpaying for it is stupid.

  • Sandra Foyt says:

    It took way too long, and cost way too much, but I earned a BA and graduate degree from Columbia University. I treasure that experience, and wouldn’t deny a similar experience to my kids if the opportunity presents itself.

    However, I will encourage my kids to consider other options, including non-traditional education options. It’s certainly possible to learn a lot, and gain valuable experience, without ever stepping foot on a college campus.

  • Rob Moore says:

    This whole “bubble” debate only focuses on one type of institution (private elites) and ignores a whole raft of other factors, including a tuition discount rate that averages nearly 35% nationally, a lifetime-earnings ratio of 1.75/1 when comparing baccalaureate holders with those whose education stopped at high school, and the plethora of strategies for gaining a good degree at an affordable cost. To call it a bubble equates it with mortgage-backed derivatives, Bernie Madoff, and other examples of irrational exuberance in the market — when, in fact, a college degree is still the best path to financial security (not to mention the possibility of a broader perspective) that anyone has. And I speak as the holder of three degrees — all from mid-tier public universities. For more comments and links, see my blog at http://www.lipmanhearnecommons.com.

  • Mark says:

    The internet currently doesn’t do one thing universities do, and that is certify that the student has completed a program of study. We will see a major change in university education in the next 10 years, with less dependence on buildings, more on technology, and a movement to better teach critical thinking skills and offer a broad education. We do have to get our costs under control while still offering a useful product.

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