Higher education: The coming shakeout

Tim Goral's picture

Just as markets over-built housing, mispriced mortgages and bid up prices beyond the real financial capacity of homebuyers, America's colleges and universities have over-expanded and over-priced their product. We are getting an education bubble with dynamics similar to the late housing bubble.

As more and more students find themselves with debts that exceed the salaries offered by the current job market, colleges have expanded beyond the capacity of their markets. Some kind of shakeout is coming. The question is: what kind.

During the long boom in higher education, colleges have also dramatically increased salaries and staffing levels of administrations. Some of this reflects efforts to game the rankings, which also is another aspect of the same imbalance.

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