‘Fears of a bubble in educational spending are not without merit’ – Moody’s

by Grace

Mike Riggs at Reason writes about Moody’s recent report on student lending.  The situation is looking very similar to other recent industry bubbles.

“These subsidies are kind of like propping up the auto industry with cash for clunkers, or the housing industry with cash for first-time buyers . . . We have this financial aid system that is keeping the system alive.”  —  Howard Horton, President of the New England College of Business and Finance

The future for today’s colleges and their students?

To his credit, Kantrowitz anticipated a future in which would-be students shy away from expensive higher educations, due to the double-whammy of high debt and and gloomy job prospects. But he puts that future at least 20 to 30 years away, when today’s college graduates are likely to still be paying back student loans and thus reluctant to extravagantly finance their own children’s educations as well. Moody’s sees that problem coming to a head possibly within the next decade, and anticipates that the aftershock of declining demand for higher education will hurt both college towns and big cities, which rely on students (and their borrowed money) to keep businesses afloat during down times.

My grandchildren’s* college experience may be completely different from the one their parents have.

* Not that I’m assuming grandchildren in my future!

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