The College Bubble: Is it Headed for Bust?


There is talk that just as we saw the housing bubble burst, so too will the higher education bubble blow up. As more and more college graduates find themselves with student loan debt that exceeds starting salaries, I found myself looking at some of the factors that may have lead us to this point:

  • Today's students want nice amenities. Student centers have fitness facilities that rival any commercial fitness center (campus rock walls don't come cheap!). Some residence halls resemble fancy hotels ("ridiculously amazing" is how a student described the relaxation room with spherical nap pods at Saint Leo University), and students want flexible meal options, like the dining choices at High Point University, that include Chick Fil A and Starbucks.
  •  Colleges are paying more in administrative salaries, severance packages and housing deals. Consider that several college athletic directors and coaches are now making in excess of one million dollars a year and several administrators have multi-million dollar packages, including the highest paid, Penn State's former president, Graham Spanier.
  • Students, faculty and parents want colleges with the latest technology. Universal wi-fi comes with a high initial price tag, and keeping up with hardware and software has campuses constantly lagging behind.
So, what's a family setting out to explore colleges to do?

    Paying for College Tuition
  1. Be aware of the amount of college debt you agree to take on. In a recent poll, Cost-Conscious College Graduates Study, 50% of new graduates were surprised by their levels of college debt and 39% said they would have made different choices if they understood those debt levels.

  2.  Discuss priorities in advance. Are you okay paying $52,000 per year for college when classes are being taught by adjuncts, while the athletic director makes an annual salary of $800,000? It's fine if you are, just be honest with yourself about where your college money is going.

  3. Choose fit over prestige. The highly selective colleges tend to offer more of the perks with the higher sticker prices to match. Make sure the college is a good fit- academically, socially, emotionally and academically.
On an uplifting note, Wilson College is reducing tuition by $5,000 per year and will pay up to $10,000 toward a student’s federal Stafford loan debt (if the student meets prescribed academic and service requirements). This is their effort to follow corporate practices by creating a strong value proposition for their students.

Refreshing...College is expensive and the system only works if the consumer finds the product valuable.

There are thousands of colleges in all different sizes, shapes and price-points. Taking the time to consider your values and priorities, and then finding a college supported by that foundation, may make writing those tuition checks a little easier...