Posted by: crudbasher | March 18, 2014

Evidence Of The Higher Education Bubble

Here’s how I see the higher education system currently.

  • Tuitions have skyrocketed the last 30 years.
  • Student loan debt has also skyrocketed to almost a trillion dollars.
  • Jobs have been much harder to come by the last 5 years.
  • Many universities have used the incoming tuition money to creating new facilities which increase overhead.
  • They have also drastically increased the amount administrators. In fact in the University of California system now there are now more administrators than teachers.
  • States have reduced subsidies recently.
  • A lack of jobs for new graduates has made each freshman class more sensitive to ROI.
  • This is causing some to postpone college or to stay closer to home in a community college.
  • This causes market forces to discourage further tuition costs.
  • Lower state subsidies plus lower enrollments plus high fixed costs means many colleges have very little financial margin.

If I am right we should be seeing a) students being much more price sensitive and b) staff being laid off.

Exhibit A. (H/T American Interest)

More bad news for colleges: The number of students choosing not to attend their first-choice school for financial reasons has hit an all-time high. An annual UCLA report found that more students than ever before consider price and availability of financial aid “very important” when making decisions.

Exhibit B. (H/T Inside Higher Ed)

Laying off faculty should be the last course of action for struggling institutions, and professors should play a role in determining whether those layoffs are necessary — and, if so, how those layoffs happen, according to recommended and common shared governance practices. But faculty members at two institutions that have terminated otherwise well-performing professors in recent weeks say they’re still in the dark as to how those decisions were made, and whether they were really necessary.

According to the article, one of the professors laid off had 20 years of experience and apparently did a good job. So why did he get laid off? As a guess, I would think it was because he was expensive. They can get rid of the higher paid staff and replace them with associate professor or adjunct. If you don’t care about the actual instructional content then this makes perfect financial sense. Of course, I don’t know for sure, that’s just a guess.

We’ll have to see if more of this happens.




  1. Excellent observations.

    At the last university I attended, the phrase “retrenchment” had even the long-standing tenured faculty in a tizzy.

    You are spot on to pinpoint financial matters as at the heart of American Higher Ed’s inevitable contraction.

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