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Tech bubble, busted. Housing bubble, busted. Education bubble, coming soon to a university near you.
The Battalion ^ | 07.26.2011 | Taylor Wolken

Posted on 07/26/2011 9:38:10 AM PDT by tysonbam

Imagine a product where sky-rocketing prices outpace the growth of inflation and personal income. These prices are fueled by government subsidies, favorable taxation and cheap credit. The peddled product is highly priced and considered a signal and source of middle class prosperity. Those who have it are successful. Those who don't have it are left in the dust and both political parties in Washington, D.C. push relentlessly to expand the products availability to all Americans. No, this is not about the housing bubble. This is the higher education bubble.

According to the College Board, tuition and fees at public universities increased 130 percent from 1988 through 2008. Inflation adjusted median income over the same period actually declined slightly. This explosion in costs is disturbing in and of itself but more so when observed with other indicators.

When you look at high school graduates in 1988, 87.1 percent of Americans ages 16 to 24 received a high school diploma or some equivalent according to the National Center for Education Statistics. That number rose to 92 percent by 2008, which, at face, value would seem like a good thing.

In 1988 the National Assessment of Educational Progress showed 17-year-olds scored an average 290 in reading but by 2008 that score declined to 286. In 1990, average math scores were 305 (1988 scores not available) and 306 by 2008, virtually unchanged.

At the same time the National Assessment of Educational Progress shows that in 1988, 58.9 percent of high school graduates went on to college. By 2008, that number had climbed to 68.6 percent.

Over a period of 20 years of spending countless dollars and attempted reforms, academic achievement arguably declined while high school graduation rates increased five percent and college enrollment jumped almost ten percent.

What about the quality of college students over this time period? Developmental education expenses, mostly remedial education for students not ready for college, have dramatically increased.

The Texas Higher Education Board reports, "General revenue appropriations for developmental education increased from $38.6 million in the 1988-89 biennium to $172 million in the 1998-99 biennium." Their latest numbers estimated total developmental education expenditures for the 2010-11 biennium to reach $392 million (this includes state appropriations, student tuition, fees and additional university expenditures).

That's right, high school graduation rates are up, high school educational attainment is at best flat, college enrollment is sky high and we are spending more money than ever on students who are in college but not prepared for it.

Universities are digging deeper into a pool of less qualified high school students who would never have been admitted to college in the past, while the costs of a college degree are increasing at a considerable rate.

An abundance of college graduates combined with a stagnant recovery pushed the unemployment of Americans with a bachelor's degree or more to an all-time high of 5.1 percent last November.

The New York Times ran a piece this week titled, "The Master's as the New Bachelor's." So is the bachelor's degree the new high school diploma? Probably not yet, but it's looking like a serious possibility in the near future.

Many graduates are finding themselves peddling résumés from their parent's house while working as servers and baristas. Student loans, which don't even die in bankruptcy, are coming closer to being due. Without serious economic growth, the higher education bubble could be careening toward a devastating pop.

This is terrible news for current students and recent graduates who have paid astronomical prices for an education in a terrible job market. While some majors would be hit harder than the rest, the overall picture isn't pretty.

If the bubble bursts, many degrees may not pay for themselves. This isn't your mom and dad's America. College degrees aren't a golden ticket to a house in the suburbs, a white picket fence and two kids.

It's looking like the main difference between a high school diploma and a college degree could soon be mountains of debt.

TOPICS: Business/Economy; Education
KEYWORDS: bubble; collapse; college; default; economy; education; public; tuition

1 posted on 07/26/2011 9:38:18 AM PDT by tysonbam
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To: tysonbam

“Universities are digging deeper into a pool of less qualified high school students who would never have been admitted to college in the past, while the costs of a college degree are increasing at a considerable rate.”

At the U of Washington they are skipping over in-state Valedictorians to go after lesser kids from out-of-state. Higher tuition from them. Makes me mad to think of my tax dollars going to the UW, but my straight A kid may not get in.

2 posted on 07/26/2011 9:46:11 AM PDT by 21twelve (Obama Recreating the New Deal:
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To: tysonbam
I have a graduate degree. It comes in handy for maybe 5% of the work I do. Another 10% or so utilizes my university education. 85% of the work which I do utilizes skills I learned in high school or earlier.

I think my case is typical of most of the work force.

3 posted on 07/26/2011 10:00:52 AM PDT by Vigilanteman (Obama: Fake black man. Fake Messiah. Fake American. How many fakes can you fit in one Zer0?)
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To: tysonbam
Here is a link to an interesting article on the coming revolution in education (from Wired Magazine)...

How Khan Academy Is Changing the Rules of Education

4 posted on 07/26/2011 10:01:44 AM PDT by RoosterRedux
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To: tysonbam
NIA - College Bubble Jan. 2011

College Conspiracy - NIA video May 2011

5 posted on 07/26/2011 10:07:58 AM PDT by OB1kNOb (Financial answers a lot of about it on
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To: tysonbam
The first deflation should occur by capping or limiting the amount of funds available via the student loan program. This program should be reduced in a structured way by first deciding how much money will be placed at risk and then work backwards to a total volume of funds available for student loans. The second step of this program is to provide student loans on a competitive lowest cost to highest cost basis. By that, I mean that a student applying for a community college degree would get his student loan application processed first and the student applying to a state college next and lastly, students applying for out of state or very expensive college would be processed last or not at all. As part of that effort, limit student loans to US citizens and LEGAL immigrants who have already been legal residents for four years.

If a cap is placed on the total number of dollars available to the student loan program, then this will create a naturally competitive environment between colleges to contain their tuition rates.

The second deflation would come by way of the Pell Grant. This should be used only for US Citizens who are pursuing degrees that are of “hard” classes and can demonstrate through testing, their preparedness for college. Also, these would be given only to students pursuing professional degrees such as medical, engineering, computers, science and mathematics. No more Pell Grants for liberal arts, poly sci, business, education, etc. I would also require that those who receive Pell Grants be available to fill government jobs for 4 years if there is a need that is not being filled. Sort of a repayment program based upon the need to fill critical government jobs in exchange for the government paying for the degree.

The third deflation would be more of a structural change by allowing businesses to provide tuition assistance to their employees and take 100% of the cost as a business deduction without a cap or limit of the deduction. This will create a natural tendency to align the education programs with the needs of business. This will allow businesses to shop between college vendors and create a far more financially minded customer base. This will further push colleges to be competitive with each other by competing for the business customer.

It will also lay the ground work for moving the deduction to 105%. The additional 5% deduction would be offset by reductions spread across Pell Grants and Student loan risk program. The goal should be to move the population to seek employment and take advantage of their employers benefits.

6 posted on 07/26/2011 10:09:20 AM PDT by taxcontrol
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To: taxcontrol

How’s that Doctorate in Social Justice working for you, job seeker?

7 posted on 07/26/2011 10:12:14 AM PDT by pabianice
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To: 21twelve

Don’t be so mad. The out-of-state students return a profit for the university, allowing in-state students to attend more cheaply. My concern would be the effect of lower-quality students on the academic reputation of the school.

8 posted on 07/26/2011 10:12:25 AM PDT by dangus
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To: tysonbam

My question is what do the universities look like after the bubble? Will universities close? Will they scrape ever deeper?

9 posted on 07/26/2011 10:14:55 AM PDT by dangus
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To: tysonbam

Government bubble.

10 posted on 07/26/2011 10:15:53 AM PDT by Brilliant
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11 posted on 07/26/2011 10:22:11 AM PDT by Matchett-PI ("I used to think Obama was an empty suit but now I think he has filled his pants." ~badgerlandjim)
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To: RoosterRedux

Khan Academy is nothing short of incredible....

12 posted on 07/26/2011 10:38:55 AM PDT by ConservativeDude
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To: tysonbam

A degree at one time was an investment. Since they started proliferating, the investment is devalued (monetarily, anyway- people derive whatever benefits they wish from their education.) A lot of young people would be better served by going into trade schools, apprenticeships, or just plain picking up a mop. The idea that everyone should go to college is idiocy. Probably less than a third of a random group of 100 people is actually should. And if this bubble should pop, well, maybe we can get back to a point where someone can go to college and actually work their way through.

13 posted on 07/26/2011 10:42:32 AM PDT by GenXteacher (He that hath no stomach for this fight, let him depart!)
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To: dangus

I was going to pose the same question....let me know when you/we get a definitive answer.....

14 posted on 07/26/2011 10:57:44 AM PDT by ConservativeDude
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To: tysonbam

Easy money in the form of student loans is what is causing the cost of college to skyrocket and the quality/value of a college degree to plummet.

We now owe more student loan debt than credit card debt.

Americans owe almost $1 trillion in student loan debt... and as the article says, it’s almost impossible to get out of paying them back.

Not that anyone should be able to walk away from their obligations, but they should be well-aware of what they are getting into before signing on the dotted line. And that goes for the co-signor on student loans too! They are treated the same when it comes to repayment.

Defaulted federal student loans will haunt you forever.

We are literally turning our kids (and many of their parents) into indentured servants of the government. They are indebted to the gov’t for 100s of billions of dollars in student loans... all in order to finance the liberal elite’s lifestyles.

15 posted on 07/26/2011 11:14:18 AM PDT by Painesright
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To: ConservativeDude

Yep. I’ve been brushing up on my math and learning to program (python) with his videos and absolutely love the way he teaches. He is the best teacher I have ever had.

16 posted on 07/26/2011 11:15:35 AM PDT by RoosterRedux
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To: tysonbam

From the article: “This isn’t your mom and dad’s America. College degrees aren’t a golden ticket to a house in the suburbs, a white picket fence and two kids.”

Not as many young men & women strive for the American Dream as described. IIRC, the median age for marriage and childbirth has increased from early 20’s to late 20’s.

When the economy was humming along.

Young, single adults borrowed money for college.
Young, single adults borrowed money to buy homes.
Young, single adults are losing their jobs, their houses and returning to their parents’ homes. With no spouse or children to support; this depressing situation could last for a long time.

17 posted on 07/26/2011 11:31:47 AM PDT by sodpoodle
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To: tysonbam

And here is another bubble about to bust that no one is paying attention to. Not even our congresscritters.

18 posted on 07/26/2011 11:34:59 AM PDT by 353FMG
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To: pabianice

Looks impressive hanging on the wall in the toilet.

19 posted on 07/26/2011 11:37:18 AM PDT by 353FMG
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To: Painesright

My college experience was from the early 80s’. The money racket for the schools then wasn’t so much from the student loan side but from the financial aid angle. At the beginning of the term there was always huge lines at the financial aid office. What was notable was that the faces always changed with each new term. The majority of those getting the free money rarely lasted to the end of the first term. Looking back, I think the school had a strategy to target financial aid “worthy” students to get the cash knowing full well that most wouldn’t last but a few weeks.

20 posted on 07/26/2011 11:43:17 AM PDT by WinMod70
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To: tysonbam
Consider this for a moment:

After a many-year hiatus from my last degree, I have returned to college to earn my Masters.

There are “developmentally disabled” college students working the sign in desk at the main student gym.

Yes, I wrote “developmentally disabled” and college student in the same sentence.

They struggle to get you checked in to use the equipment, but I am always patient with them.

I was talking to a friend of mine who runs a business near the campus, and (because he is a really decent guy) he hires “developmentally disabled” individuals where he can. He says most of them are in college, working on a degree.

He said it’s great for their self-image, and that they get plenty of financial aid and tutoring.

Education bubble? You make the call………

21 posted on 07/26/2011 12:44:09 PM PDT by arfan (Think Critically... Act Decisively... Reflect Constantly...)
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To: tysonbam

We have a long way to go downward. Tuitions will fall. There will be inflation only in necessities, and in the near future, imported, useful, manufactured products.

22 posted on 07/26/2011 1:07:01 PM PDT by familyop ("Nice girl, but about as sharp as a sack of wet mice." --Foghorn Leghorn)
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To: RoosterRedux
Pretty awesome.....

The NEA won't like it...And will probably sue him.

23 posted on 07/26/2011 1:36:57 PM PDT by Osage Orange (HE HATE ME)
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To: 21twelve

State funded schools have to get a lesson from the parents and taxpayers. They do not exist to make the school bureaucrats wealthy with gold plated retirement packages. The reason these bureaucrats bring in out of state students and foreign students is for the money, only. State funded schools are to provide for children of the state’s citizenry, it is described in many of the charters that created the schools in the first place.

So as long as citizen abdicate their duty to keep the government bureaucrats reigned in, you will see the continuing theft from the state’s tax monies to fund educating everyone but the people they are supposed to serve. They will continue to add to the tax and tuition burden of the state’s citizens, until education at these establishments is out of reach for everyone but the wealthiest foreigners.

UC Berkeley prime example for where California state education is headed.

24 posted on 07/26/2011 1:38:41 PM PDT by hedgetrimmer
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To: tysonbam

And Hopefully the government bubble is next..............

25 posted on 07/26/2011 1:43:41 PM PDT by PeterPrinciple ( getting closer to the truth.................)
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