Friday, December 9, 2011

Will We be Ready When the Bubble Bursts?

Bubbles 2If you care about higher education (and if you belong to a Lutheran Church Missouri Synod congregation, you should care because the LCMS owns and operates 12 colleges, universities, and seminaries), you have to read this article by Glenn Harlan Reynolds in the Washington Examiner. Here are the first few paragraphs to get you going:

A couple of years back, I suggested in these pages that higher education was facing a bubble much like the housing bubble: An overpriced good, propped up by cheap government-subsidized credit, luring borrowers and lenders alike into a potentially disastrous mess.

Subsequent events have proved me right as students have begun to think twice about indebtedness and schools have begun to face pressure over tuition. For higher education, costs have skyrocketed even as the value of their product has been declining, and people are starting to notice.

Just last week, the New York Times, normally a big fan of higher education, ran an article on "The Dwindling Power of a College Degree." In our grandparents' day, a college diploma nearly guaranteed a decent job.

Now, not so much: "One of the greatest changes is that a college degree is no longer the guarantor of a middle-class existence. Until the early 1970s, less than 11 percent of the adult population graduated from college, and most of them could get a decent job. Today nearly a third have college degrees, and a higher percentage of them graduated from non-elite schools. A bachelor's degree on its own no longer conveys intelligence and capability."

I've been jumping up and down about this for a few years now. I will continue to here on this blog, and elsewhere if given the opportunity.

The higher education bubble will burst. And just like the bursting of the housing bubble did not cause all housing to cease to exist, and the tech bubble / dot com bubble did not cause the Internet and all computers to disappear, the higher education bubble will not vaporize higher education. But the ensuing disruption will change the structure of higher education.

Are our colleges going to charge HIGHER tuition when the government restricts or eliminates student loan guarantees and grants, when it will be more difficult to afford? What will happen to enrollment when more people realize that it's not worth spending five or six figures to graduate and become a waitress or a bartender, when you can just do that right out of high school (or you can get an Associates Degree at a tech school, spend way less money, and become cashflow positive two years sooner than someone who earns a bachelor's degree)? We can't stick our heads in the sand and pretend that we can just keep going on like we've been. We know change is coming - we need to be ready for it. What are we doing to prepare?