The system is ripe for an upheaval. Cheap online courses seem poised to deliver it. Traditional colleges at opposite ends of the glamour spectrum will probably survive. At one end, community colleges could deliver bankable skills in fields like nursing and computer network installation. At the other end, elite institutions like Princeton will carry on for a few more centuries.
In between? “It’s going to wipe out high-cost mediocre private schools without big endowments,” Vedder says.
“The U.S. higher education sector has hit a critical juncture in the evolution of its business model,” said Eva Bogaty, Moody’s assistant vice president, in a statement. “Even market-leading universities with diversified revenue streams are facing diminished prospects for revenue growth.”
Since 1978, the price of tuition at US colleges has increased over 900 percent, 650 points above inflation. To put that number in perspective, housing prices, the bubble that nearly burst the US economy, then the global one, increased only fifty points above the Consumer Price Index during those years. But while college applicants’ faith in the value of higher education has only increased, employers’ has declined. According to Richard Rothstein at The Economic Policy Institute, wages for college-educated workers outside of the inflated finance industry have stagnated or diminished. Unemployment has hit recent graduates especially hard, nearly doubling in the post-2007 recession. The result is that the most indebted generation in history is without the dependable jobs it needs to escape debt.
What kind of incentives motivate lenders to continue awarding six-figure sums to teenagers facing both the worst youth unemployment rate in decades and an increasingly competitive global workforce?