Is the Higher Education Bubble About to Burst?
In newspapers this past week were a number of interesting (and troubling) articles on the growth — or demise — of higher education as we know it. One of the articles that caught my attention was asking the question, “Is higher education’s bubble about to burst?” In this article, Glenn Reynolds compared the higher-education bubble to real estate. “The buyers think what they’re buying will appreciate in value, making them rich in the future. The product grows more and more elaborate, and more and more expensive, but the expense is offset by cheap credit provided by sellers to encourage buyers to buy.” Are we talking about the real estate market or the higher education market? The answer is both. When the cost of housing shot skyward, two things happened — people were priced out of the market, or people over-borrowed — and both had devastating results.
Despite all our talk about access to higher education, we are now on the verge of pricing higher education out of the reach of many families.
Money magazine reported that, “After adjusting for financial aid, the amount families paid for college has skyrocketed 439 percent since 1982…” Just like we did in the housing market, we are willing to pay for future gain. Students and families are continuing to take on more debt that will need to be repaid after graduation, but now we introduce one new catch — the jobs to pay for that debt are no longer there. Many graduates are starting off in entry-level jobs, if they have a job at all.
To avoid the debt, some students are opting for community college or smaller universities where the tuition and costs are lower. This is creating still another dilemma. Many of these institutions are experiencing double-digit enrollment growth, but with states cutting higher-ed budgets, they may not be able to accommodate the growing need. Add to that the federal Department of Education’s proposed regulations that could cut off federal aid to for-profit colleges whose graduate cannot earn enough to repay their loans — and we may be nearing a breaking point.
Time is short. We need be open and honest with about the current state of higher education and do what we can now — before the bubble bursts.