Archive for June 18th, 2013

June 18, 2013

Are today’s college families buying at the top of the price chart?

by Grace

The economic realignment of education will . . . most likely take place in the next five to ten years.

According to Frank Ryan, the higher education bubble has burst.  If this is true, families with children now in college are buying at the top, just like the unlucky homeowners who bought at the peak of the last housing bubble about five years ago.

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Evidence for this pending “collapse of the education systems” includes soaring tuition costs, record student loan debt, escalating loan delinquency rates, declining college enrollment, and Moody’s negative financial outlook for the higher education sector.  There will be winners and losers in the coming years, with “marginally profitable schools, or schools with high debt loads which depend upon taxpayer support”, finding it difficult to survive.

Ryan’s outlook for the next ten years:

First, to stem declining enrollment, tuition will decrease.  Schools will struggle to maintain enrollment and in order to cover their fixed cost will be forced to reduce tuitions to encourage students and enrollment.

Second, faculty tenure and burgeoning cost of academic instruction will come under question and will be changed.  While existing tenured faculty will probably not be affected, the probability of getting tenure for other professors will be significantly more difficult, except at well-funded academic institutions.  Pay will likely decline as well.

Third, entire educational institutions will begin to file bankruptcy.  There has already been a major bankruptcy of a university in Atlanta, Georgia.  Other institutions that are not well-funded will meet the same fate.

Fourth, it is very obvious that academia will be forced to justify its cost relative to the value garnered from the education.  This will be one of the first times in history that the value of education relative to the cost will come under scrutiny.

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