The Higher-Ed Bubble

the source: “Will Higher Education Be the Next Bubble to Burst?” by Joseph Marr Cronin and Howard E. Horton, in The Chronicle of Higher Education, May 22, ­2009.

After the collapse of the dot.com and housing markets, will the next irrationally inflated bubble to burst be higher ­education?

Educators Joseph Marr Cronin and Howard E. Horton think it might. With tuition, fees, and room and board at dozens of private institutions now topping $50,000 a year, some parents are questioning whether it is worth $1,000 a week to send their kids to college. The middle class has traditionally paid for higher education through loans, but home equity has withered and jobs are at risk. Congress recently raised the Pell grant limit from $4,731 to $5,350 a year. Potentially a big deal for the federal budget, the increase doesn’t even cover an extra week at some private universities.

College tuition and fees have increased 440 percent over the last quarter-century, more than four times the rate of inflation. And even demographics are conspiring against the current college finance model. The ­“baby-­boom echo” that flooded so many colleges over the past few years crested with this year’s high school senior class. From here on, enrollment is downhill for the foreseeable future. The state of Vermont expects to turn out 20 percent fewer potential college fresh­men by 2020, report Cronin, former Massachusetts secretary of educa­tional affairs, and Horton, president of New England College of Business and ­Finance.

Cheaper alternatives to tra­di­tional higher education are in­creasingly available. The Univer­sity of Phoenix now teaches up­ward of 300,000 students a year, half of them ­online. Applications to community colleges and other public institutions have already risen dramatically. Some former college presidents are proposing ­year-round school so that expensive facilities get used 52 weeks a year, instead of only about 30, and others are calling for three-year ­degrees.

Critics have highlighted the mounting costs of higher education for 30 years without having much impact. Maybe, the authors say, the economy is now in dire enough shape that the warnings will take.


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Reprinted from Summer 2009 Wilson Quarterly
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