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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