Posted by: crudbasher | June 23, 2010

Why the surge in college enrollment is not a good thing

On the surface this sounds like good news.  College enrollments are at a 40 year high.  Great right?

Well, let’s rewind the clock 6 years.  In 2004 spurred on by very low interest rates set after the dot-com bubble burst, and with no money down required, home ownership hit it’s highest level ever at 69.2%. (source)  This caused home prices to skyrocket.  Eventually, like all bubbles, it burst.  This year the rate is back down to 67.1%.

When the bubble burst, millions of people got stuck in homes they couldn’t pay for, and billions of dollars of wealth evaporated.  It is also important to note that many of these home loans were made to people who ordinarily couldn’t get into a home because of their economic circumstances.  These bad loans are being eaten by the tax payers, hugely adding to the national debt.

Ok so back to college enrollment rates.  What are the conditions?  Loans are at very low rates.  The country is awash in easy money.  The government recently took over the student loan business and has a stated goal of increasing college enrollment rates.

Why are these people going into college?  Did we all of a sudden have a surge of college suitable high school grads?  No.  They are going into college because they can’t find a job. What is the result?  Well, like the housing market, prices will soar for college.  Just last week University of Central Florida down the street from me raised tuition by 15%. 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.”

I know this could be considered controversal but not every high school grad will succeed in college.  So let’s jump ahead 2 years and look at the headlines shall we?

“Record number of students dropping out of college”
“Record number of student loan defaults”
“Government needs 40 Billion dollars for student loan bailout”

We will be damaging a whole generation of kids with this.  The only good news is with this coming collapse, the conditions may arise that finally will let some alternate educational paths flourish.

For more stories of the Higher Ed bubble, see these:

Glenn Reynolds: Higher education’s bubble is about to burst.
Randall Sherman: Another Bubble?

  • College enrollment surges

    tags: education, bubble

    • Newly released government figures show that freshman enrollment surged 6 percent in 2008 to a record 2.6 million, mostly due to rising minority enrollment. That is the highest increase since 1968 during the height of the Vietnam War, when young adults who attended college could avoid the military draft.
    • “The nation is moving beyond whether minorities have access to post-secondary education,” said Richard Fry, a senior researcher at Pew who wrote the report. “The question increasingly is not ‘which youth go beyond high school?’ but ‘who goes where?'”

Posted from Diigo. The rest of my favorite links are here.

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Responses

  1. […] This post was mentioned on Twitter by e-learn.net, Andrew Barras. Andrew Barras said: Comments welcome!: Why the surge in college enrollment is not a good thing. http://bit.ly/b0fbnN #edchat […]

  2. Not to mention “Thousands of college grads can’t find jobs” Where will they all go when they graduate? Will there be a job somewhere for all of those “highly qualified” graduates?

    • Yep, and the whole college thing could drop really quickly. Home starting rates just dropped 33% in one month. If hiring doesn’t pick up pretty fast (and I have no reason to think it will) then college starts to look like a pretty expensive investment that won’t pay off.

  3. […] of loans over 90 days late has spiked. Why is this? Two years ago in June, I wrote a post called Why the surge in college enrollment is not a good thing. In it I wrote […]


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