<p>I think that debt will have more and more impact on the job search. Companies, if they don’t already, will be asking about debt. It is certainly an issue for anyone seeking a job that requires a security clearance.</p>
<p>People with huge student loan debt probably carry a pretty high balance on credit cards too.</p>
<p>@familyof3boys: "I don’t mean to sound stupid, but is this “student loan bubble” supposed to mean that a degree from an affected college would be meaningless? I can understand how the housing bubble works… but how can a degree already conferred be worthless? "</p>
<p>So correct! and this is where the huge disconnect between the “housing bubble” and the “education bubble” occurs. Mortgages are backed by the house it is bought with. Houses can be taken away! Now degrees and student loans? They aren’t backed by anything and the item you are purchasing isn’t tangible. It is a skill or experience that you are paying for. I’m not well versed on economics, but when was the last time there was a bubble on a service? Restaurant bubble? Theme park bubble?</p>
<p>People should take another look at this idea of an education bubble, because if it occurs it will be completely different than any other bubble in existence, and almost shouldn’t even be called a bubble.</p>
<p>This is very similar to medical insurance issues - and there are no easy answers, however I do think flagship state universities are the way to go unless you’re either a top 1% student or are independently wealthy. I think all students deserve a chance to go to college, but being in the middle class, I sure as heck can’t afford to fund other people much less my own kids.</p>
<p>@lmkh70,
Baylor put in me in the same situation. I only received about 20k in fin.aid and was expected to pay 30k in loans. But now I am worried that my university, University of Rochester, might be part of the colleges that will get screwed over.</p>
<p>Tuition rising is a result of inflated salaries and pensions for teachers and Admin. and all the shiny new dorms , rec centers, and other bldgs. we see on tours. They can cut
jobs… not sure what they will do about Buidling Debt/Mortgages. They will still have to be paid for~
Housing prices came down, tuition will too. I do hope that common sense will return to the Financial Aid offices at Campus’.</p>
<p>As the government puts a ceiling on the interest, that puts an upward pressure on demand. As that happens, the supply is not going up any higher; to compensate for the higher demand, the price of college tuition goes up.</p>
<p>*I agree. A preschool teacher and paramedic might make very little. It’s not fair to jump to conclusions about them.
*</p>
<p>I doubt they earn very little. They qualified to borrow $120,000. These weren’t Plus Loans that are EZ qualifying. These were private loans, you need to qualify.</p>
<p>*I don’t mean to sound stupid, but is this “student loan bubble” supposed to mean that a degree from an affected college would be meaningless? I can understand how the housing bubble works… but how can a degree already conferred be worthless?
*</p>
<p>I don’t think it will mean the degrees will be meaningless. I think it means that as people hear/learn about new grads (or parents) struggling under mountains of student debt, families will be less likely to allow these big loans and some of these schools will find themselves without enough students. </p>
<p>It can even happen within the same family. family borrrows (or cosigns) so that Child #1 can go to Pricey U, then they realize the consequences and don’t/can’t do it for Child #2 or #3. </p>
<p>RE: the story of the girl with $120k in debt. She has younger siblings. This mom obviously didn’t think about the fact that if one of the younger kids wants to chase the dream, that the mom will still be tied to older D’s loans, so she won’t likely qualify to help the others. If it was so important for Child #1 to borrow to go to Dream U, why not think about how you’re going to accomplish that for the younger kids???</p>
<p>I’m going to guess some of the schools that make the list still having spaces left might be on the same list of schools to worry about. If they already aren’t attracting enough students, that doesn’t seem to bode well.</p>
<p>Otherwise, I’m expecting a lot of smaller schools - not necessarily any in the top 50 - 100. They said they looked at 600+ colleges and 1/3rd might be in danger. I’d expect to see many of them rank in the 400 - 600 range.</p>
<p>The trend among younger people is to want to go to college in exciting cities - Boston, DC, Chicago, etc. The colleges in more isolated locations would appear more vulnerable. However, those colleges in exciting cities also typically have much higher costs because of the high cost of living. </p>
<p>For some colleges, you can find summaries of the reports of their bond ratings on-line. The bond ratings look at current debt, percent admitted, and yield among accepted students, among other factors. The rating agencies want to see that the college has no trouble filling its class, and could expand enrollment if needed for financial reasons. The lower the bond rating, the higher the interest rate for borrowing by the college. </p>
<p>It would be very interesting to see the list of colleges with the lowest bond ratings. I haven’t found it online. I’m guessing some of the colleges with the worst finances don’t bother to have their debt rated - they probably just go to local banks for smaller loans at a time.</p>
<p>Some colleges seem to only charging sticker price to the rich kids who get in on a waiting list and to the international students. Everyone else gets at least a few thousand of merit or need aid from the college - which is called tuition discounting. I wonder if these colleges would be better off reducing their sticker price, because it scares off so many middle income applicants.</p>
<p>Over the next ten to twenty years, the entire higher delivery ed model is going to change. Stanford and Harvard faculty are teaching online classes that anyone can take. There was a news story about a Stanford faculty member that taught a class that tens of thousands “enrolled” in, I think the cost was something like $100. The universities are working on ways to give credit/certification for these types of classes. Who is going to pay $50,000 to attend a second tier or lower school when classes from Harvard and Stanford are available online to anyone who wants to take them? Education, like many other things, is going to become much more of a mass produced commodity. The need to gather thousands of students in a particular location will disappear. The quality of the mass produced good will improve as technology improves. Even now, big state U’s have classes of 1500 where there is not actually a physical class, the students sit on their dorm rooms and watch a professor lecture on their computer. So, do I pay $25,000 or $30,000 for my kid to sit in his/her dorm room and watch a Big State U professor talk, or do I pay $100 per class for them to sit in their bedroom and watch HYPS faculty talk. Will people pay essentially for their kid to have the college experince, when it gets to the point where there is little or no acdemic advantage to actually attending a campus? I am not passing judgment about whether this is good or bad, I just think that it is inevitable.</p>
<p>“I’m going to guess some of the schools that make the list still having spaces left might be on the same list of schools to worry about. If they already aren’t attracting enough students, that doesn’t seem to bode well.”</p>
<p>Just as a refresher, here’s a sampling of some of the schools that appear of NACAC’s Space Availability list:</p>
<p>Albion College, Augustana College (IL), Bard College at Simon’s Rock, Birmingham-Southern College, Bradley University, Canisius College, Centre College, Drew University, Eckerd College, Guilford College, Hampshire College, Hofstra University, John Carroll University, Juniata College, Kalamazoo College, Knox College, Lawrence University, Loyola University of Maryland, Marlboro College, New College of Florida, Niagara University, Otterbein College, Randolph-Macon College, Siena College, Southwestern University, St. Johns University, Ursinus College, Xavier University.</p>
<p>There are a handful of CTCL colleges there. There are also a handful of quality Jersuit institutions. I haven’t listed them (except for New College) but you’ve also got quite a few public colleges and universities, including some state flagships not located in the Dakotas. While the focus seems to be on the private colleges, I think anyone who discounts the possibility of some publics having their gates shuttered if the loan bubble bursts isn’t looking closely enough.</p>
<p>I wouldn’t place too much value on a school’s appearance on the space-available list - one year. Any school can guess wrong and admit too few applicants. If it’s chronically on the list, that may be another matter.</p>
<p>Article about Moody’s study on college finances:
[NACUBO:</a> Business Intel](<a href=“Page not Found”>http://www.nacubo.org/Business_Officer_Magazine/Magazine_Archives/March_2012/Business_Intel.html)</p>
<p>Example of a private college experiencing a low bond rating - Sage Colleges in NY State.</p>
<p>[This</a> ‘B’ grade could be costly - Times Union](<a href=“http://www.timesunion.com/news/article/This-B-grade-could-be-costly-557593.php]This”>http://www.timesunion.com/news/article/This-B-grade-could-be-costly-557593.php)</p>
<p>The number of high school grads in the northeast US is expected to shrink. It appears that reduction is being minimized because many students from other parts of the country and international students prefer colleges in the northeast.</p>
<p>Many universities have been making high net profits off of their law students and non-technical grad students. Law school applications fortunately are down for many mediocre law schools - some of them should go out of business. It will be interesting to see how the ending of federal interest rate subsidies for new graduate school loans will affect grad school enrollments. That change takes effect in the fall.</p>
<p>Here’s some more related links:</p>
<p><a href=“http://www.forbes.com/2010/04/19/college-tuition-private-personal-finance-tuition.html[/url]”>http://www.forbes.com/2010/04/19/college-tuition-private-personal-finance-tuition.html</a></p>
<p>It notes Centenary College in NJ as a college with a very low bond rating.</p>
<p>The following link tried to predict colleges that will have pressure to have unusually high increases in tuition in future years:</p>
<p><a href=“The College Tuition Risk List”>The College Tuition Risk List;
<p><a href=“http://www.forbes.com/2010/04/19/college-tuition-risk-public-personal-finance-tuition_2.html[/url]”>http://www.forbes.com/2010/04/19/college-tuition-risk-public-personal-finance-tuition_2.html</a></p>
<p>Note - Some of this info is based upon data that is 2 or 3 years old, or more.</p>
<p>nepop, you beat me to it. We are unquestionably approaching a threshhold in higher education (all education, really) after which the ability to get real degrees through online courses at substantially less cost will become the norm, not the exception. Interactive learning technology is improving by leaps and bounds–so traditional colleges will face the double whammy of fewer customers able to afford their prices and competition from valid alternatives for those who can. </p>
<p>Only the very strongest will survive.</p>
<p>I am wondering, do the schools that still have space available, offer huge discounts? Sort of like the stores do the sale to move unwanted merchandise</p>
<p>Some indicate that financial aid is available, some say it is not available, some say “limited” aid is available.</p>
<p>So what does it actually mean to say “…when the student loan bubble pops?” What is is actually going to pop? Will the banks quit offering student loans? Will Congress quit funding them? Will students smarten up and quit going $50K - $100K in debt to get their degrees? All these things? </p>
<p>I agree with the author that there are under-capitalized colleges that would be seriously hurting if the loan money stream dried up. And leading this list are the for-profit schools whose primary business model and entire reason for existing depends on harvesting an ample crop of student loans (and I say good riddance to most of them, especially the deceptive, predatory ones) . But other than the vague notion that the current system is “unsustainable” what calamity in the current loan system do people see happening that will cause this particular bubble to burst?</p>
<p>There have been many posts elsewhere about the difficulty in particular LACs may have on getting their enrollment right given the massive growth in apps with the Common App and international students. I also would not put too much stock in a school having space available for one year. I believe that Lawrence, for example, enrolled its largest freshman class in its history last year. And my sense (based on a recent visit, junior son is interested) is that Lawrence is doing just fine. I think schools like Lawrence can continue to do well–with the merit they tend to give, actual COA even for most “full payers” ends up being approx $10,000 more than some flagship state Us. Not chump change, but maybe not enough to cause me to send my kid elsewhere if I believe in that kind of education (I do). I think a lot of the not top 25 but still highly ramked LACs are able to operate on a lot thinner budgets that some of the larger schools, they don’t have the big time sports and palatial facilities to worry about. I wonder about say the Northeasterns of the world–really expensive, not great on meirt aid, no big endowments to fall back on, not highly enough ranked for me to be willing to mortgage my life to pay for it, really the same type of education that one gets at a flagship state U. Who is spending $50,000 to send their kid that type of school when the kid can get the same quality and type of education for half the price at State U?</p>
<p>I think (and hope) what will happen is that people will smarten up and stop borrowing huge amount of money to get an education of questionable value. I think it is already starting to happen. A lot of people I talk to say things like “My son was admitted to Fancy U but it was too expensive. So he went to the State U instead.” That’s from the upper-middle class family who could easily borrow money to finance Fancy U, but made a rational decision not to.</p>