[NOTE FROM PATTERICO: Please welcome long-time reader JVW as a guest blogger here at Patterico. JVW's comments are always well-written and well thought out, and this post continues the tradition.]
[Guest post by JVW]
Note: As a long-time reader and commenter, I am very pleased to make a modest contribution to this fine blog. When we were discussing my contribution, Patterico specifically mentioned my longstanding interest in higher education issues, so I would like to start out by addressing some issues that I have seen percolating over the past twenty years. This post will be a general overview of the problems facing higher education, and I hope to follow up with specific posts geared towards graduate education, undergraduate education, and college budgeting and financial aid coupled with the increasingly federalized loan industry. Since I know many of you have extensive experience with higher education as students, parents, alumni/ae, employees, and taxpayers, I would welcome your comments.
Photo: Students of Kansas State Normal School (now known as Emporia State University), one hundred years ago. http://www3.familyoldphotos.com
In the aftermath of the great housing bubble pop at the end of the last decade, many economists began to point out the numerous parallels between the housing market and the higher education market: the unshakable faith that investment in the commodity would lead to long-term profitability, the incredible willingness to go deeply into debt in order to be an “investor” in the commodity, and the shortsighted anti-market interventions by the government in order to continue to prop up a scheme with obviously shaky underpinnings.
Fear of a college bubble goes as far back as the early 1970s, when Time Magazine ran an article titled Education: Graduates and Jobs: a Grave New World [linked article available for subscribers only], which reported that the huge number of Baby Boomers who had attended college and, particularly, graduate school had led to an oversupply of students with graduate degrees in proportion to the available jobs. I will have more about this in a later post. By 1987, Education Secretary William Bennett was beginning to explore the relationship between ever-increasing federal support for financial aid and loans, and the corresponding tuition increases that colleges were imposing. Fast-forward to early 2013, and even left-wing journalists who have every reason to be allies of the higher education establishment are openly noting that colleges are too big and too expensive, and produce too many underwhelming students with too much debt.
So it would seem that the existence of the bubble is fairly well established, despite the insistence of some bubble-denialists. It is thus left merely to forecast what kind of havoc might ensue from the bubble’s pop. Already we are seeing colleges reduce their enrollments or even shut their doors all together. After reaching a peak in 2011, college enrollments have dropped in both the 2012-13 and 2013-14 academic years. A 2012 report [PDF download] from Bain & Co. summarized the problem succinctly: “Institutions have more liabilities, higher debt service and increasing expense without the revenue or the cash reserves to back them up.” Less than a year later, a New York Times columnist estimated than fewer than one in eight U.S. colleges and universities seemed to have the financial wherewithal to withstand the coming turmoil.
We’ll come back to this in a bit, but in the meantime I’ll leave you with a series of questions to mull over in the comments: Is college still a worthwhile “investment” and if so, under what circumstances? Are we sending too many kids to college, and if so, what alternatives should they be presented with? Finally, what happens when the bubble pops? Do we see the growing influence of self-paced online education embodied by MOOCS [Massive Open Online Courses -- P], with perhaps traditional college classes only continuing for upper-level courses? If so, how does that affect the traditional blended role of the professor as both instructor and researcher?
POSTSCRIPT FROM PATTERICO: If you want to read more about the higher education bubble, grab yourself a copy of Glenn Reynolds’s broadside The Higher Education Bubble. It’s a long essay in an inexpensive booklet form that can be read in under an hour, and the ideas are well worth that short time investment.