<p>Like the housing one? Man, I know homes went crazy...but I think colleges are the next comparable item!</p>
<p>Maybe.</p>
<p>You’re talking about the ever-increasing costs of tuition, rising faster than tuition, right? The increase in home prices was fueled in part by the federal government’s desire to increase home ownership among the poor and middle class. They did that by providing incentives to lenders to make loans to buyers that would have previously been unqualified due to bad credit, or low income, or both. A home for everyone!</p>
<p>Politicians see similar political advantage to be had in promoting “college for everyone,” and in their view the way to make that happen is by creating ever-expanding programs of federally funded aid: loans and grants. Problem is, that most of the grant money just gets passed through to the colleges, who increase their tuition by a similar amount. So colleges don’t become more affordable, in any real sense, even though we keep throwing more and more federal money at them.</p>
<p>I think, too, that in today’s economy, the value of a college education may not be what it was purported to be, and many recent college grads may find themselves struggling to find work, sometimes alongside kids with no degrees. And more kids may do the math and calculate that the college degree isn’t worth the investment in time or money. If that happens, the laws of supply and demand would suggest that the lowered demand might put pressure on colleges to lower costs.</p>
<p>You might be on to something.</p>
<p>google that and you’ll find a lot of theories out there. It could happen…</p>
<p>Have been wondering this for a while. We may be buying at the peak. However, unlike your home value, colleges have an associated cost structure that may not be so flexible adjusting to the downward pressure. In this case, the reduced demand will likely cause some colleges to fail (many threads on this already) and a more stratified society, at least short term, with respect to education (many threads on this too). Maybe not so much a burst, but a hiccup?</p>
<p>I am so certain there will be a bust coming soon I wish I could bet on it.</p>
<p>It’s very similar to housing. In both cases the government has gotten over involved and provided credit to encourage people to do things that they couldn’t afford to do. This can only last so long.</p>
<p>But with college it will be worse. A lot worse. With housing, at least you had a house that you couldn’t afford. It was still a house. But probably 50% of college students shouldn’t be there. There’s been this lie perpetrated that a college degree is worth $1,000,000 over the course of a lifetime. That’s called lying with statistics. 99% of the benefit goes to the top 20%. The doctors, lawyers, top MBAs make an extra $10 million to $20 million. Not much left for the rest of us.</p>
<p>Also there’s more competition from jucos with vocational training and Internet schools.</p>
<p>And as more stories get out about college grads with $100,000 in debt taking a job at Walmart there will be still more downward pressure.</p>
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<p>This is what will lead to the bust, IMO. I think that there are always rich people available (national and international) to fill seats, but the problem is that they want to educate middle class and poor students as well. All but the riched are being squeezed out. When more stories about debt are out there, more people will rethink the amount of debt that is doable and responsible.</p>
<p>YES. I agree with the person who said %50 percent of college students shouldn’t be there. The bubble bursting will be the “natural” way of taking care of this. I think we will see a good number of small private low/lower tier colleges close when it does.</p>
<p>The preliminaries are already in place. Currently there is an estimated 570 billion in student debt, much of which is under very unfavorable terms for the students/families which owe the money. And as the economy continues to submerge for many these amounts will be unsustainable. </p>
<p>Of this the majority of the subsidized loans are largely controlled by 2-3 large companies the largest of which holds about 40% of that market (the PLUS loans for example). The situation has broken down into a conflict between government officials who can see economic disaster resultant from this and the corporate contingent whose primary base of revenue is reliant on keeping the existing situation. Especially since some of these companies are very over leveraged. One for example has even tried to move into the mortgage refinancing market. And over the last few years there has been massive government emergency payments to ensure the companies within this system have ‘liquidity’. </p>
<p>The problem is a government teetering on the brink of its own insolvency cannot extend much more to this part of the system, not when already paying billions to prop up other failed areas of financial sector. </p>
<p>And the past presence of the money obtained from student debt, was a seminal aspect of the almost exponential rises in college costs. Essentially academe became reliant upon (because other forms of governmental support were cut) this borrowers system for funds. And having become reliant upon it, soon enough academe divorced itself from the real social costs, because the effect occurred after their students had graduated. Out of sight, out of mind led to massive fiscal extravagance on the part of academe. That’s the dominant factor which has been contributing to the average 6% yearly increase in tuition. </p>
<p>And as the economy declines there will be increased impetus and emphasis upon more education and training. But for most, it will be impossible when costs have risen to the extent that now, a college degree costs more than many peoples houses are worth. </p>
<p>So yes, the bubble is close to a burst. Insofar as the debt loads from past educations are going to be unsustainable and for current students the costs are unlikely to be recovered whilst facing a bleak economy. It won’t be a matter of everyone should go to college (which too often has been a questionable marketing tactic by both government, private enterprise and academe which collected the tolls) it will be a matter of who can still go to college.</p>
<p>I don’t think it will burst, but there will certainly be a correction and it will be painful for many people who have over-extended for college and for colleges who have overspent. </p>
<p>I have followed the graduation plans of local seniors for several years. At our mainly middle-class high school, they are remarkable consistent - 25% go directly to work (many having completed a technical program in high school), 5-10% go to the military or prep school, 35-40% go to a community/technical college, and the top third end up at four year schools. We normally have at least that many “honor grads”, so that seems appropriate to me. </p>
<p>I think the “sales job” was done on the parents, and not in a good way. I listen to alot of parents with unrealistic ideas of what they’re going to need to send their kids to college. We all want to believe that our kids are going to be highly successful people. But we need to understand, and plan for, success in a different way. I have never understood how burdening these kids, or ourselves, with massive debt for an undergraduate degree is going to set them up for success. This year I hear more parents saying no to high priced choices and that can only be a good thing in the long run.</p>
<p>I still see though that no one wants to be the non-college person.</p>
<p>I’m a no-college person, if that’s what the student wants and/or is planning! My nephew didn’t want to go to college this year, joined the Marines right out of high school, and loves it. I can already see him making plans for a career there. My son is a smart kid who doesn’t like school, other than athletics, and never really has. His grades are all over the place - straight A’s in subjects he likes, C’s in the others. But he’s a good worker, and likes to be productive and earning. He’ll start his training as an electrician over the next two years and then enter the union training program as an apprentice when he graduates or go to a community college for more specific training, depending on whether he wants residential or industrial. Either way, he’ll have no debt for his education. I think they’ll both be as successful as my daughter, who’s starting a PharmD.</p>
<p>"I think the “sales job” was done on the parents, and not in a good way. I listen to alot of parents with unrealistic ideas of what they’re going to need to send their kids to college. We all want to believe that our kids are going to be highly successful people. But we need to understand, and plan for, success in a different way. I have never understood how burdening these kids, or ourselves, with massive debt for an undergraduate degree is going to set them up for success.'</p>
<p>sk6trmom, Quite correct about the sales job. And weirdly enough the sales job of college now and forever was quite espoused in the programs which train the people who teach the primary and secondary age children. The education programs were the ones who really push such concepts as 'lifelong learner". </p>
<p>The debt and success paradigm for an undergraduate degree or for that matter a graduate degree has rapidly become a chimera and quite a few have begun to comprehend that concept. Even within academe many are beginning to doubt the wisdom of having everyone collect some degrees, or that some of these degrees have a substantive value. It worked for them (at least the non-adjuncts) but because of burgeoning costs and debt many profs feel that they will be the last generation who’ll be able to keep that status. </p>
<p>And this condition is especially detrimental in the CC’s , and schools established to serve marginalized populations. When Ruskin, BT Washington and groups like AIHEC set up their colleges one of the core intentions was to use higher education as a means of elevating those populations. In addition they were and are attempting to provide economic stability and access to the great ideas which provide moral, political and social power. </p>
<p>But the fairly recent development of the education for debt phenomenon fostered by the government and corporate cronyism is rapidly ending the potential for higher ed to be a social stabilizer and elevation. As such when the collapse does come, their billions will have been a seminal influence in ensuring those populations which have struggled and strove to improve their lot, will lose much of what they had gained. </p>
<p>And it will cause resentment, and justifiably so. I think its a matter of time before the lords of the education debt industry, both academic, government and corporate have the disaffected haunting their palatial homes, as many are doing now concerning AIG and other barons of the financial sector. </p>
<p>And that will wreck academe because once we are perceived as remote and socially predatory entities, its over…</p>
<p>Great responses everyone, sad as it is. My kids will be split, one will have debt one will do the hopscotch method of CC forst, then who knows he sounds very much like sk8termom’s boy. Seems like the grad classes of 2010-2020 will be hammered in the worst way, the way of obtaining the American Dream is adjusting.</p>