I am glad to have graduated the youngest of my 5 children—now self-sustaining in Ohio State University’s biochemistry PhD program. Even taxpayer-subsidized state-school students like her can easily pile up $10,000s in debt for ever-growing tuition. Those going to private institutions are likely to end up with a lot more money to pay back after they complete their studies.
One year ago my high-school classmate Mark Perry, now a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan, warned about a Higher Education Bubble. Under the bombshell blurb “That’s a jump of 1,120%” [from cost of college in 1978], the latest (August 27) issue of Bloomberg Businessweek extends the Bureau of Labor Statistics in Perry’s scary chart to 2012. Given what happened in housing, this is becoming extremely alarming!
Students are paying less and less of direct college costs, relying more on government grants and loans. That has encouraged universities to jack up tuition expenses, fueling a vicious circle reminiscent of the housing bubble.
– David Hogberg, Investors Business Daily
A more graphic illustration is provided via this glimpse at a Broadside by Glenn Reynolds. View his video and weep if you have children heading for college. It’s hard to imagine that this can go on (graduates paying many $100s per month for debt) for much longer. The meager educational-returns on massive investments (loaded into huge debts) just do not seem sustainable.