Posted by Tina
Frank Ryan over at The American Thinker believes the education bubble has burst and cites startling information to back up his claim. The New York Federal Reserve’s 2012 report finds that the debt for student loans has topped out at $1 trillion dollars ($1,000,000,000,000.00). Only fifteen million borrowers are under age 30…the total number is 39 million! The average amount owed is $25 thousand with delinquency rates ranging from 10% to 20%. Personal wealth losses, a lousy economy, a poor jobs market, higher expenses for new doctors with substantial loan debt, high unemployment for young people and other negative economic factors haven’t helped this situation.
But there’s more bad news for those seeking higher education according to the article. High tuition costs (up 32-42%) and the discouraging thought that a diploma isn’t worth the cost of higher education has caused lower student enrollment at a time when colleges are facing budget problems or insolvency:
Concurrently, Moody’s in 2013 gave a negative financial outlook for all universities. Recent studies have indicated that over 50% of all colleges and universities are projected to close, merge, or shut down in the next 50 years.
The consolidation, failure, and decline have already started, and the pace will accelerate.
The causes of the insolvency for universities include:• Continued escalation in college tuitions and fees compared to the overall rate of inflation.
• Limited growth in incomes of parents and students in recent years and continued high levels of unemployment of graduates.
• Extensive outstanding student loan debt already amounting to $1 trillion.
• Development of alternative education systems such as remote classes and internet systems.
• Growing debt of colleges and universities.
• Extraordinarily high fixed costs of colleges and universities, making the education system very susceptible to losses from reduced enrollment.
• Growing trend to “discount” tuition at major universities. This is very similar to the problem that faced hospitals with “contractual allowances.”
The sum of all these factors will cause a collapse of the education systems as we know it.
This could be the start of a messy meltdown for higher education. But it will also signal a chance for smart reforms in education and provide a great opportunity for those who are interested in delivering quality education at a reasonable price. According to EDTECH, more than six million students are currently taking at least one online course and the addition of MOOC’s to the college experience is poised to become a new standard. (MOOC – Massive Open Online Courses). 74% of colleges now offer online courses. 83% of schools would consider joining an online education group. 67% don’t think MOOC’s will replace traditional college…but 33% say these classes will, 28% say it will within 6 or more years and 5% within 5 years. I remember when people thought computers would never be in private use! Those who cling to safe spaces and tenured security better hold on to their hats! This new generation is charging ahead on the wings of technology.
Students and parents are hungry for an affordable path to higher education and diplomas that are worth the price to acquire them. When this bubble goes the result may be felt as a gradual oozing rather than one big whoosh but never fear, the solution is right around the corner!
It was Obumble’s bright idea to take over the student loan program, and look where it is now.
Students are caught in a vicious circle. Take out a loan, college increases fees, add to the loan, college increases fees, and so on and so on.
Smart students look at what their loan is going to cost them before choosing a college. Those even smarter are getting their basics at a junior or community college before heading to the high-dollar campuses.