Also blogged at the BetterAt blog.
Much has been written about the education bubble in the past few years. I whipped up this chart based on the New York Federal Reserve Data (inspired by this article/chart from Atlantic Monthly) that demonstrates the magnitude of the situation a little better.
Student loan debt has increased more than 5 fold in the last 10 years, and shows no sign of abating. Not only is there a necessity to find alternative, inexpensively means of delivering instruction, but also assessing and certifying skills in ways other than degrees, classes, and certificates from higher education institutions.
All this college debt could put the U.S. on a slower growth path in the years to come. As Americans grapple with high student loan payments for the first few decades of their adult lives, they’ll have less money to spend and invest. All that money flowing into colleges and universities is being funneled away from other industries where it would have been spent in future years. Of course, this would be a rather unfortunate irony: higher education is supposed to enhance a nation’s growth, but with such an enormous debt burden, graduates might not be able to spend and invest enough to allow that growth to occur.
The American Association of State Colleges and Universities reports:
Students are deeper in debt today than ever before…The trend of heavy debt burdens threatens to limit access to higher education, particularly for low-income and first-generation students, who tend to carry the heaviest debt burden. Federal student aid policy has steadily put resources into student loan programs rather than need-based grants (see graph), a trend that straps future generations with high debt burdens. Even students who receive federal grant aid are finding it more difficult to pay for college.
An editorial in the Economist had this to say:
This academic model may work in the best universities, where the tenured elite attract first-rate graduate students, and where the consequent atmosphere of scholarly excellence benefits everyone on the campus, including undergraduates. But it is surely a disaster for many lesser universities. It is surely time to disaggregate “the university”, and adopt different models, governed by different rules for promotion, for different sorts of institutions.