The Higher Education ‘Bubble’

Is the current ‘value’ of higher education artificially inflated and unsustainable? In other words, could higher education be the next ‘bubble to burst’? The Chronicle of Higher Education looks at some of the early warning signs that seem to be suggesting so, and offers a couple of solutions to this apparently looming crisis.

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. […]

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.

Consumers who have questioned whether it is worth spending $1,000 a square foot for a home are now asking whether it is worth spending $1,000 a week to send their kids to college.

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