The concept of the higher ed bubble is simple, and it closely parallels the economy-wrecking bubble in the housing market: easy access to higher education fueled by cheap debt—we call them “student loans” instead of “subprime mortgages” this time around—has triggered a boom that will ultimately prove unsustainable.
Seems fairly intuitive to me. Still, the bubble theory isn’t popular with a few crucial groups, including:
• Students. My peers aren’t too eager to hear that they’re caught up in a degree-chasing mania, especially when they are taking on tremendous debt burdens to finance what they believe is a solid investment.
• Parents. There are cheaper ways to get the kids out of the house than to send them to college. Parents are unknowingly helping inflate the bubble because they sincerely believe a higher education will improve their child’s future.
• Academia. Things are good for those on the inside right now; the University of Michigan, for example, is playing with a $5.6 Billion budget this year alone. Higher ed is big business. Why would anyone involved, from administrators to professors to the armies of facilities maintenance personnel charged with keeping university grounds perpetually manicured, want to change the game?
• The political establishment. Rising education costs increase reliance on federal student loans, and politicians deftly use this dependence to build voting blocks.
Clearly, there’s a lot of incentive to maintain the educational status quo, which means ever-higher tuition prices for ever-larger numbers of students. Unless we end federal subsidies for higher education and allow market forces to bring costs under control, there’s no telling how long the vicious tuition-loan-debt cycle will continue.
Whether you’re a die-hard believer in the unshakable value of a college degree or a bit of a skeptic (albeit a college-attending skeptic) like myself, the New York Magazine article above is worth a read. You may as well educate yourself on the issue now: it’s only going to be receiving more attention down the road.