Is the higher education bubble about to pop? The answer is a resounding yes, according to Martin Hutchinson (h/t Instapundit). Hutchinson, himself a graduate of Cambridge and Harvard, has decades of experience as a market analyst. He sees all the signs of an industry that has peaked: costs are soaring, returns are plummeting, and legitimate challengers to the established model are proliferating.So who does benefit from the current model? Certainly not the students, says Hutchinson:
Within the colleges themselves the ranks of college administrators have exploded (as is also the case in the medical profession, equally insulated from market forces). So have their earnings – according to the New York Times, in the decade between the 1999-2000 and 2009-10 college years, the average college president’s pay at the 50 wealthiest universities increased by 75%, to $876,792, while average professorial pay increased by only 14%, to $179,970. (Average college tuition costs increased by 65% and consumer prices by 31% during that decade.)
The only way most students have been able to afford these extortionate increases in tuition is through bank loans and government support. With total student debt now above the $1 trillion mark, Hutchinson sees change right around the corner:
Provided policymakers have the sense to stop subsidizing student loans with state guarantees and special provisions to survive bankruptcy, the banks will become much less willing to encourage the young and feckless to over-extend themselves in this way. Students will once again exert pressure on colleges to reduce their fees, and will choose cheaper state schools and programs that allow them to work their way through college.
Nobody knows what the future of higher education will look like, but it is clear that the current model is horrendously inefficient. The pressure for reform will only increase as technological innovation combines with financial necessity to encourage greater experimentation. While the rest of the world is trying to copy the old American academic model, the United States is moving on to create a new and better approach.Read the whole thing.