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America is facing a higher education bubble. Like the housing bubble, it is the product of cheap credit coupled with popular expectations of ever-increasing returns on investment, and as with housing prices, the cheap credit has caused college tuitions to vastly outpace inflation and family incomes. Now this bubble is bursting.
In this Broadside, Glenn Harlan Reynolds explains the causes and effects of this bubble and the steps colleges and universities must take to ensure their survival. Many graduates are unable to secure employment sufficient to pay off their loans, which are usually not dischargeable in bankruptcy. As students become less willing to incur debt for education, colleges and universities will have to adapt to a new world of cost pressures and declining public support.
The laundry list of problems that the higher education faces these days seems to grow on an almost daily basis. Hardly a day passes that I don’t come across a big article or two lamenting the unsustainability of the current model of higher education. Many writers have correctly pointed out some of the main issues that trouble the higher educational industry – from the rampant drinking culture, over obsession with athletics, to the ever decreasing teaching standards – but the ultimate cause of all these maladies is very simple: overly easy access to too much credit. Easy money is a precursor to all major investment bubbles, and the higher education is, indisputably, in a big bubble of its own.
This short book correctly identifies some of the most salient features of the current higher educational bubbly: the unchecked rise in the cost of higher education over the past few decades, the radical increase in the overall college debt, and the decreasing value of college education. There are many similarities with the recent housing bubble, with some important distinctions: unlike mortgages, under the current laws it’s impossible to write off college debt if one files for personal bankruptcy. This reduces the flexibility of borrowers to walk away from their college debts. Instead of preventing the eventual bursting of the higher education bubble, it will only make its eventual demise more painful and devastating.
This short ebook offers several suggestions for the improvement of higher education industry, but I am afraid most of those will either fall on deaf ears or not really implemented. There is a tremendous amount of inertia in higher education, and I am afraid that the painful bursting of this bubble is inevitable. It will almost certainly happen before this decade is over, and perhaps even much sooner than that. I am personally inclined to believe the more pessimistic scenarios.
In my opinion this ebook is perhaps the best account of this problem that I’ve come across. It correctly identifies all the major features of the higher education bubble, the best advice in what should be done about it (but it won’t be), and what lies ahead. However, the account is too brief and it doesn’t go into much depth. I think there is a great need for someone with deep technical economic background to write an in-depth book on this issue, including the detailed description of all the most likely scenarios and their outcomes. Hopefully someone will do that soon, because this problem will only become even more intractable in the upcoming years.
daryl1303
Posted August 2, 2012
This is a quick read, only problem with it is the right-wing rhetoric, the world need ditch diggers so don't go to college. This book was a waste of time.
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Posted March 24, 2013
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Overview
America is facing a higher education bubble. Like the housing bubble, it is the product of cheap credit coupled with popular expectations of ever-increasing returns on investment, and as with housing prices, the cheap credit has caused college tuitions to vastly outpace inflation and family incomes. Now this bubble is bursting.
In this Broadside, Glenn Harlan Reynolds explains the causes and effects of this bubble and the steps colleges and universities must take to ensure their...