Jun
The Cost of Higher Education
This article by Glen Reynolds sums up what may be the next bubble to burst.
College has gotten a lot more expensive. A recent Money magazine report notes: “After adjusting for financial aid, the amount families pay for college has skyrocketed 439 percent since 1982. … Normal supply and demand can’t begin to explain cost increases of this magnitude.”
Consumers would balk, except for two things.
First — as with the housing bubble — cheap and readily available credit has let people borrow to finance education. They’re willing to do so because of (1) consumer ignorance, as students (and, often, their parents) don’t fully grasp just how harsh the impact of student loan payments will be after graduation; and (2) a belief that, whatever the cost, a college education is a necessary ticket to future prosperity.
Part of the problem is that government subsidies made college more affordable and therefore the price rose at an accelerated rate; reaching the ridiculous cost that we see today. In 1981 you could go to a private school for $6,000 for everything; room and board included. The same school today is over $32,000 for the same thing! And that is not the most expensive; some are $12,000 to $60,000 per year.
College in and of itself is not the path to prosperity, and much of what is taught is of questionable value at best. A liberal arts education may be nice as an adjunct to something else; usually of the science or math types, but in and of itself may not be worth the expense. People would be warned to consider well before jumping into debt to obtain a college education.
Read the whole thing.
