I wonder if the student loan/debt bubble will hit these towns hard (if it turns out to be a bubble). Spending on higher education seems like its gains are unsustainable.
It is unsustainable. US higher education costs have risen faster than health care. The fraction of graduates who are behind or deferring their student loan payments has been rising. Queue Admiral Ackbar: It's a trap!
Students and their parents need to have some difficult conversations: 1) How well prepared is the student for a given major? Remedial classes add cost but not credits toward the degree. 2) Does the student have a track record of finishing what they start? 3) Will the starting salary for graduates with that degree permit the student to pay their living expenses and their loan debt? 4) Are the time-to-finish estimates realistic? IIRC, the majority of students in 4 year programs actually take 5-6 years.
I grew up in one of these towns in the Midwest, and this is exactly what I fear for its future. The college tuition costs nearly as much as Harvard but the educational value is worse than that of a public university in many ways.
Valid counter to the article's premise, and leads me to a dumb question: why haven't more colleges attempted to cut costs in recent years, as tuitions and student debt continue to spiral?
First, the market clearly does not reward cheap education. A lot of prospective students and their parents are enamored with pricey colleges either for the status or for the perceived value. This is probably a result of cultural expectations lagging behind actual reality by a few decades.
Second, all the intermediary parties have no incentives to control cost. Student debt cannot be discharged under bankruptcy, so why would the lenders ever say no to any debt? They don’t care that the college is overpriced by a factor of 10 and the student will never pay off their debt fully, they’ll still pay 6-11% interest for the rest of their lives, which is highly lucrative for the lender.
Students and their parents need to have some difficult conversations: 1) How well prepared is the student for a given major? Remedial classes add cost but not credits toward the degree. 2) Does the student have a track record of finishing what they start? 3) Will the starting salary for graduates with that degree permit the student to pay their living expenses and their loan debt? 4) Are the time-to-finish estimates realistic? IIRC, the majority of students in 4 year programs actually take 5-6 years.