At the corner of Fifth Avenue and 14th Street in Manhattan, you can see higher education's ambitions reaching to the sky. The New School's 16-story University Center nears completion at a cost of $353 million.
The edifice is impressive. But would you want to hold the mortgage on it? That's what you have, in effect, if you buy a tax-exempt bond from the New School. Before you invest in debt backed by an educational institution, think about the precarious state of this sector of the economy.
Colleges are in the midst of a debt-fueled bubble. The college bubble is not as big now as the housing bubble was five years ago, but it is much like that one in featuring a large population of buyers who are goaded by federal subsidies and tax benefits into a borrowing binge and then wake up with a hangover.