Economist
Richard Vedder reports:
Everything created by humanity is subject to a cycle of creation and destruction. Humans live 70-80 or sometimes even 100 years; their business enterprises rarely last that long. A generation ago, there was no Facebook or Google, but Enron and Eastman Kodak were going strong. Even buildings seldom last more than 200-300 years.
Until recently, higher education has seemed immune from this reality, as few colleges or universities ever died or closed. The perpetual gain of college enrollments, combined with increasing government subsidies and private philanthropy, shielded higher education from the discipline of market forces that lead private businesses to face relatively high mortality rates. That’s changing. As tuition revenues and outside subsidies stagnate and cost-saving innovations fail to materialize, more and more schools are facing serious financial problems.
After giving many examples:
Why is this happening? Why now, and not, say, a generation ago? I think five big factors are at work.
First, we have overinvested in higher education, and the number of college graduates is growing far faster than the number of jobs in the managerial, technical and professional areas where graduates traditionally find relatively good jobs. Some estimates are that close to half of recent college graduates are “underemployed,” working as baristas, janitors, taxi drivers, and in retail stores. Students with degrees in, say, anthropology or ethnic studies often find it nearly impossible to get a good job, a problem that may afflict liberal arts colleges hard because of their lack of emphasis on seemingly more vocationally relevant majors.
Second, aggravating things, in order to finance the rapidly rising costs of attending college, students went on a borrowing spree, so now there is an extraordinary $1.2 trillion in student loan debt. The loan default and delinquency rate is greater than it was on home mortgages at the height of the financial crisis. The ratio of debt to income is precariously high for growing numbers of Americans. Prospective students are becoming aware: going to college involves significant financial risks, a perspective rarely heard even a decade ago.
You'll want to read the entire article.
