When Will The College Tuition Bubble Burst?

This is a chart from the Carpe Diem blog showing the increase in college education costs, U.S home prices, and the consumer price index. If we had a housing bubble, the skyrocketing costs of higher education is a super bubble.

How did we get here? There’s no way the value of that education has kept track with its price.

Well, private lenders are part of the story.

Private lenders cropped up marketing easy credit to students, while at the same time giving kickbacks to schools that shuttle students to these private lenders. The more these schools raised rates, the more students turned to the private lenders, and the profits for the school and the lender kept rising.

Obviously this isn’t the case at all universities, but it is at enough. Remember the big settlements Andrew Cuomo got from NYU and U Penn over accepting kickbacks from Citibank? You know that if those guys were caught, there were many more out there doing the same.

The Higher Education Bubble: It’s About to Burst [Carpe Diem via My Money Blog]

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  1. gqcarrick says:

    When my kids are ready for college, I am telling them to go to State schools, don’t go to private school like I did with the huge debt load to pay off later.

    • grucifer says:

      I went to a State school (Penn State to be exact) and I’m in the hole ~$30k. I graduated college in 2006.

      It sucks, I had a cousin who is about 10 years older than me who went to Penn State and her student loans came out to ~$100 – $200 a month after graduation. I’m paying more than double that @ ~$550 a month.

      It wouldn’t be so bad, but being underpaid out of college and then being laid off and unemployed for a year and a half I was hurtin’ for awhile. Just finally getting back to normal on these student loans on top of rent, car payments and insurance.

      • Nigerian prince looking for business partner says:

        Penn State, Pitt, and Temple are only quasi-state schools — I think they’re (or used to be) called “state related” vs. commonwealth schools (like IUP, Cal, Shippensburg…). I went to both Pitt and Penn State and graduated in the hole about $18k and that was with the GI Bill and a slew of scholarships. I took on another $12k in grad school. Many years later, I’m stilling paying down both sets of loans and have about $10k to go.

        When my kids are applying for college, I’m going to make it very clear how much I can afford to help and do my best to explain how student loan debt can be a major burden. I have a strong feeling that the economy in 15 years is going to be a lot different and the entire notion of “finding yourself” with an undergraduate education isn’t going to exist. You’ll either go to school with very clear career ambitions or partake in a trade.

        • gqcarrick says:

          Yea I think far too many kids go to school with no idea what they want to do and waste money. Trades will be a lot better for a lot of kids. Unfortunately a lot of guidance couselors push college on kids who aren’t prepared or aren’t interested as the only way to find success in the world.

      • gqcarrick says:

        Try paying 950 a month for school loans. Trust me, 30k is bad, but it isn’t THAT bad.

    • ScarletsWalk says:

      With financial aid, it was the exact same cost for me to go to state or private. It still was too much either way. It’s great for people who have the option, but not everyone can live at home and commute to a cheap, state school. :(

      • ElleAnn says:

        Same here. I got a better financial aid package at several private colleges than the one public university I applied for and the private colleges offered more scholarships instead of grants- which I preferred because you can lose your grants for subsequent years if your parents make more money. I ended up going to a very expensive private college and managed to graduate debt free due to a very generous financial aid package which I know was due to my parents’ low income and my good grades in high school.

    • Loias supports harsher punishments against corporations says:

      The University of Colorado is a State school, but practically in name only. Their tuition prices are at par with private school.

      • Ben Popken says:

        unless you get in-state tuition.

      • gqcarrick says:

        If you have in state tuition its cheap I can imagine. I know NY schools in the SUNY system are way cheaper if you are a resident. Of course when the kids are done with school they flee the state due to the high taxes and zero jobs. Thanks NY State!

        • Nigerian prince looking for business partner says:

          Many states have different tiers of “state schools” with different pricing.

          In Pennsylvania… Pitt, Penn State, and Temple are “state related” with in state tuition that is about 3 times higher than actual state (aka “commonwealth” universities) like Shippensburg, Bloomsburg, IUP, Cal, etc.

    • Sparty999 says:

      a kid in 5th grade right now, to go to a state school will cost over $165,000 for four years…

    • MsFab says:

      I went to public schools for both undergrad & grad school, and I still paid a ridiculous amount. My undergrad raised tuition 15% each year that I was there, because the state kept slashing funding.

      • junip says:

        I also went to a state college, and at one point the governor tried to privatize us so he could *completely* cut all our funding. All our students held a protest by wearing bright red shirts for a day that read “neighbor” on the front and “artist” on the back (it’s an art school). All classes for the day were held in the city’s park for high visibility, and we also passed out cups of coffee in the business district that said something about the low cost of funding education on them.

        Not sure if that helped enough to make a difference, but they never privatized us. Tuition continued to go up each year though, school funding continued to be slashed, and the financial aid department continued to have less and less funds available to students in need.

    • ElizabethD says:

      They should apply wherever they want. Some private universities are extremely well endowed and have generous financial-aid packages, heavy on grants, not loans. With financial aid, a private institution may actually end up costing you less, particularly if your loan burden is small.

      It’s ALWAYS worth a shot. Manage the kids’ expectations by saying the final decision will be a financial one. Also, if a private college doesn’t give you as much aid as you need, push back. Call the financial aid office and tell an officer that your kid LOVES the school, wants to go, but we need $X,000 in additional grant money to make it work.

      I have nothing against state schools. Just want to point out that you should first check what the actual options before, then make the decision with your kid(s).

      • chargernj says:

        I’m a financial aid counselor at one of those excellent but still overpriced private colleges. While there is an appeal process it favors returning students over newly admitted freshmen. It also favors student’s whose situations are such that the FAFSA doesn’t give a complete picture into the families financial situation. Things like recent loss of employment, serious illness, death of a parent.

        There are a few reasons for that. But the main one is that student retention is more important that bringing in new students. We are a prestigious enough institution that if you child can’t attend, there is another to take his place. Federal aid reporting requirements actually do take into account how many of your students actually graduate, and how many default on their loans. So we would rather save the students we have than bring in new students with questionable ability to pay for school.

        My biggest piece of advice is do very well in high school. Most scholarships are actually awarded by the admissions office, they pay close attention to what you did while in high school. That and you should apply for private scholarships, I know they are extremely competitive, and most aren’t that much money. But if your kid really has his heart set on a particular institution that would be out of your reach financially, they will need to work very hard to do it.

        Too many kids show up on move in day and ask me if they can have more money. It breaks my heart, but I usually have to tell them no.

  2. Angus99 says:

    That chart just blows my mind. I graduated with my Masters in 1988; I feel lucky to have missed this insanity. Great post and great article. Between the job market and this cost burden I don’t know how this can possibly continue.

  3. MamaBug says:

    My eyes are going. I read “The more these schools raised cattle…”

  4. chefguru says:

    Meanwhile, there’s a SERIOUS shortage of trade workers because everyone is forcing their children to go to college, and once a kid has been brainwashed to go to college… because that’s the only way they’ll get a good job (so they’re told)… then trade work is beneath them.

    Screw that, find something you love to do with your hands, go to a trade school for a year, apprentice under someone who knows what they’re doing for a few years, then go work for yourself making twice what the average corporate drones who went to college are making.

    • Bativac says:

      You are absolutely right. I went to college and have little in the way of non-office-related marketable skills. My dad on the other hand was a sign painter in the 1970s and from there became a freelance decorative artist. Maybe more of an art than a trade but he’s always able to find work, and no college degree on earth would help him.

      I think high schools need to focus more on trades and pull back a little on college prep.

    • Loias supports harsher punishments against corporations says:

      Is THAT why my plumber and electrician charge so much?

    • smartmuffin says:

      Amen, brother. My family is filled with non-college success stories. I joined the military. Many of my cousins work retail and through hard work have risen to management positions. I’ve got other cousins who are cabinetmakers, auto mechanics, and construction workers. They’re all doing OK, even in the recession. Nobody is homeless, on welfare, or dependent upon the family to survive. Many have children and own homes.

      It bothers me when people act like college is a requirement for success. It isn’t. Maybe it’s a requirement for success without hard work, but I wouldn’t know :)

      • Moweropolis says:

        HUGE misnomer there. You can usually not have success, even with a college degree, without hard work. It just isn’t physically hard labor.

    • rengreen says:

      Or nursing, radiation tech, pretty much any medical job which takes about two years to finish and pays pretty good.

      • woahmelly says:

        Nursing does not take two years. In most Associates programs there is a year worth of pre- requisite classes (or two or three depending on how many you take every semester), plus wait lists. The average amount of time to complete an Associates in Nursing across the country is three and a half year. It is neither fast nor easy.

    • hotdogsunrise says:

      Not only that, but some people just aren’t cut out for college. Why force someone who would be fabulous at a trade to go to college? Yes, some colleges do provide training in trades, so that’s not what I’m saying. But going to college does not always mean you’re life is going to be so much better because of it. Especially when it’s so freaking expensive.

    • ARP says:

      For profit colleges have started to fill in that gap, by offering trade based degrees. The problem is that they’re expensive (they’re for profit). But I think the states and community colleges can get in on the action and make it affordable. For example, England has a program, where after high school, you either go to uni or you take another year or two of school and learn a trade. I think that model can work here supported by community colleges and some state/federal programs.

      • Dallas_shopper says:

        Dallas County already has that model and it works quite well.

      • lymer says:

        uh… All colleges is for profit.

      • lymer says:

        uh… All colleges are for profit. Every last one of those money grabbing bloodsuckers.

        • coren says:

          Not state schools. They primarily try to break even and have a surplus for coming years

          • cowboyesfan says:

            That surplus is needed to pay for the football team.

            • Conformist138 says:

              HAHAHA! Do you know why schools just love a good football team? Those things are cash cows! Bragging rights be damned, schools know there is serious money in college sports. They don’t scout and court athletes just to be nice, they want increased ticket and merch sales.

            • coren says:

              Sure! My college is undefeated in football since 1967.

              Guess how?

              (and we have decently successful programs for volleyball and basketball which are the only two sports we actually do field teams in)

      • dadelus says:

        Agreed! The Community College in my area has some great trade programs. Auto Mechanic, HVAC, Plumbing, Nursing, etc… All for about $60/credit hour + books.

        • Jevia says:

          I understand that a lot of places (hospitals, etc.) have started requiring 4 year nursing degrees.

          • NickelMD says:

            Not even close. I would say that 70% of the RN’s I work for don’t have BSNs (and that’s in the ER where you have some of the top quality hospital nurses.) What you may be thinking of is the difference between LVN/LPNs and RNs. Your statement would be true if you were talking aboyt the difference between those.

            • Verdant Pine Trees says:

              There is pressure, though, from some quarters in nursing, to make the BS degree required for RNs. I recall author Holly Lisle writing about it some years ago (she is a RN without a degree).

      • Bohemian says:

        We need to look at how some other countries do higher education. It is heavily subsidized, public sector some of it an extension of high school. Having an entire generation held down by heavy student loan debt that can’t be forgiven is not an economically sound picture for the future.

    • Warren - aka The Piddler on the Roof says:

      Good point. I went to trade school right out of high school because I wasn’t sure what I wanted to do. Got a 2-year degree in electrical work (which kept me from starving a few times). Couldn’t find a job in my town so I enlisted in the service. Went to school at night and earned a Bachelor’s degree. I have no student loans to pay and I didn’t even have to take SATs. Hah!

      P.S. I graduated near the bottom of my class from high school but I have a great job with great benefits, thanks in part to my BS degree. Guess it’s never too late to grow up and fly right, eh?

    • evnmorlo says:

      Aren’t apprenticeships more like 10 years?

    • mmeetoilenoir lurktastique says:

      This is so, so true. My grandfather was a plumber/electrician and made money hand over fist, plus saved lots on home repairs. My grandmother was a beautician. They had so much money that they could jaunt to the Bahamas for the weekend on a moment’s notice.

      I know two girls right now who are beauticians, and they’re both making good money. Plus, they always look good. :)

      Really, though, the reason you hear a lot of people push for college is this: many folks don’t want to admit that they followed the crowd and made a bad deal. They maybe wanted to become a massage therapist or a motorcycle mechanic (know one for BMW…yep, money hand over fist), but they fell for the propaganda and didn’t do what was best for themselves. It’s hard to get through school, and folks are attached to the persona that comes with that degree. It’s a bit much for people to admit that they didn’t need to conform in order to find success.

      Plus, folks need to remember that many of those white collars job can be done over the Net by a coder/admin/tech in Bulgaria. However, good luck outsourcing a fix for your busted faucet, sprained knee, cavity, or bad home dye job.

    • openbox says:

      I wish it was against the law to go right into college out of high school. There should be a mandatory 1-year waiting period for these young people to orient themselves to the real world, travel, try some crappy jobs, whatever, and put some thought into what they could be passionate about.

      I am a big fan of REAL trade schools that teach REAL trades. I’m even a fan of having a fast food trade school where people train how to count real change… you know coins and cash… those things some of us still use to buy lunch? But people who ascend to leadership positions in fast food restaurants can make a respectable living and be pretty damn happy.

    • webweazel says:

      Many trade jobs are needed almost anywhere in the country. If you’re a plumber, you can find work in NY city, Boise, Idaho, or Sweetwater, Texas. You could live wherever you wanted to in the country, and make a good living. There is ALWAYS a need for someone with a trade.

      A relative works in the boating industry, and the yards are ALWAYS looking for pipefitters, welders, mechanics, etc. There’s just not enough of them around. Starting pay is usually $16-18/hr. That’s pretty good pay for southern states. Engineers? Nope, don’t need those.

  5. Etoiles says:

    I always hear “should have put yourself through college by working and not taking out loans,” but I worked 20 – 30 hours per week during semesters and 40 – 60 hours per week whenever class wasn’t in session. There was absolutely no way on god’s green earth that my $7.50 an hour (I made $8 by my senior year, but $6.10 as a freshman) was going to make a significant dent in $17,000 – $23,000 a year (my freshman and senior year bills) in college expenses. And that was for a major that didn’t require lab fees, and I was an in-state student at my state university. And sure, I applied for plenty of scholarships. Got $500 whole dollars per semester. Wow.

    So, yeah. Loans it was.

    • Jesse says:

      $20k of debt isn’t that bad. That’s about where I was at when I graduated and I’m able to comfortably make my loan payments.

      If I would have gone to the private university in my city and financed 100% of the tuition, I would easily be over $100k in debt.

      • grucifer says:

        Well assuming he didn’t graduate in one year @ $20k a YEAR he’d be $80k worth of debt at least. (Not sure if the numbers include room and board or not)

        • Etoiles says:

          She. ;)

          And yes, those figures included room and board for my first three years. My senior year I moved off-campus and put that money towards rent, which actually worked out about $35 per semester cheaper than living on-campus would have.

          • grucifer says:

            My mistake.

            And yea, I did the same. Living on campus was more expensive than putting that money towards rent/groceries.

    • Nigerian prince looking for business partner says:

      I suspect I went to school many years before you but I was in a similar situation. I had the GI Bill, worked (maybe 20 or 30 hours a week), had a laundry list of scholarships (amounting to $2k or $3k/year), in state tuition and lived in poverty. I still wound up with about $18k in loans.

      I really don’t understand how so many people graduate debt free Even living as cheaply as possible, my jobs could only pay my bills and not even dent my tuition. I applied my GI Bill towards tuition and that only covered a part of it.

    • damageddude says:

      I went to City University of NY during the 1980s. I could earn my semester’s tuition by working extra hours during the summer and winter breaks. Of course, CUNY was not as good back then (something I discovered when I went looking for a job and then later when I was taking a few graduate classes for work and had to sit through a remedial class in each course on how to write a research paper — I complained to the department heads about that one).

    • chargernj says:

      if you were willing to start out in County.Community college, its pretty doable.

    • chocolate1234 says:

      Tell me about it. My husband graduated with almost 25K in debt, and we went to a state school. His last two years, he worked full-time during the school year as well as during the summers. And as far as scholarships? He definitely got some, but really didn’t get many scholarships, even though he graduated as number 14 out of a 500+ graduating class.

    • junip says:

      That kind of “work your way through school” advice usually comes from people who either never went to college or people who are uninformed of the current cost of an education. My mother tried to give me a speech at one point about how, being in college, I should also be working 3 jobs to handle all my expenses. She really said 3. She never went to college, and she didn’t contribute anything to my school expenses. Silliness.

    • Laura Northrup says:

      I was reading something in my alumni magazine, I think it was, about a student in the ’60s who would spend his summers working in a factory, and earn enough to pay for his year’s tuition. In order to do that now at the same school, he would need to earn about $45,000 in that summer. The inflation in education is completely mad.

  6. PunditGuy says:

    Can’t get to the story (damn Websense)… someone tell me if they’re tracking what the colleges officially charge or what the students actually pay. I know that scholarships haven’t kept up with tuition increases, but they may lower that curve slightly.

  7. ianmac47 says:

    Its unlikely to to pop until the states better fund their public universities. Tuition at public universities continues to increase while at the same time quality has not improved because state governments continue to cut back on funding. As a result, public universities are still a bargain compared to private schools– but that just means private schools get to charge even more.

    Part of the problem is the rise of the rankings of US News and World reports that stress a point system that rewards expensive campus perks and amenities rather than the value of an education. To compete on the ranking, universities need more money, and thus charge more.

    A few years back I recall an article about small private liberal arts colleges attempting to boost enrollment and improve their US News ranking. The best option they came up with was raising tuition. Customers– er, students– saw higher tuition as a sign of exclusivity of a premium brand, like a Macbook over a netbook. Higher tuition also meant more money to spend on all the fancy things that US News ranks, like computer networks and science labs and volumes of library books. Finally, the best part was, most of their students didn’t end up paying more; many students received scholarships for the difference, excepting the students who could afford to pay. The promise of scholarships for prospective customers lead to more students applying to the school, which lead to a higher rejection rate, and thus a higher ranking on US News.

    • selkie says:

      The per student funding gap is huge in some states. Adjusted for inflation, the state of Florida gives each university $5,000 less per college student than it did 20 years ago. And schools getting creative with adjuncts, budget cutting, economies of greater scale, etc. can only make up part of that gap, so you get to the point where you have to raise tuition significantly in order to maintain a basic educational quality standard.

    • banndndc says:

      It seems counter intuitive but it’s true. The school increased tuition and got more applications. Evidently, along with the mistaken belief that cost determined value the other reason was that parents liked to brag about the size of the scholarship. Thus, $30k tuition + a $10k scholarship was more desirable than a flat $15k tuition for the same product.

    • FrankReality says:

      I don’t buy that public universities are underfunded – they are so full of bureuacratic bloat and waste, trying to be all things to everyone and aren’t accountable one whit to the tax-payer.

      Most have way too many degree programs which have low demand for graduates and other degree programs for which graduates will never generate enough income to pay off their loans. Why do they even offer such worthless degrees, when people can’t get jobs with those degrees?

      And every state university has to have all the same or more programs as the others – a fancy game to be the best and largest – can we say waste by duplication?

      Universities are excellent examples of bureaucratic kingdom-building with little accountability to those who pay the bills.

      • OnePumpChump says:

        To some degree you are correct. Professor is a sweet enough gig as it is that I don’t really see why so many of them need to be making well into the mid 100s. And how about those California regents? 450 grand a year? And that’s just the still-relatively-inexpensive state schools.

        Not everyone at a university is absurdly well-compensated, of course. But there is fat to be cut. Too bad most of it is actually the people appointed to do the cutting.

  8. smartmuffin says:

    Not until people in large numbers start to realize that a traditional four-year university is not a REQUIREMENT for financial success.

    We can play semantics about “endowments” all we want, but most universities operate just like a for-profit business that has come to the realization that their marketing has been so successful, they can charge absolutely whatever they want and people will pay it. Not only will they pay it, they’ll wait in long lines and BEG you to allow them to put themselves in a debt that will take decades to pay off.

    • ShinGetterPoPo says:

      I agree with you. But unfortunately until the businesses that hire people believe the same thing it has become a de facto requirement to get a decent job.

  9. Eat The Rich -They are fat and succulent says:

    Ya know, it seems like every time we allow something which was formerly done by the government to become privatized, it simply ends up costing more, and more, and more with fewer and fewer benefits.

    Whenever something becomes deregulated, it turns into a fustercluck for the public.

    When are we going to learn that free enterprise is fine as long as there are controls in place to keep greedy SOB’s from gaming the system?

    Unfettered capitalism is destructive to society and stability. It requires some form of control.

    • nova3930 says:

      That’s really funny considering most traditional colleges are non-profit and a big chunk of those are gov’t operated….

    • Happy Tinfoil Cat says:

      Very true. Love the screen name and the word for today. I’ll have to work “fustercluck” into my lab notes.

    • pantheonoutcast says:

      “It requires some form of control.”

      You mean the free market? Wherein a student is able to freely choose to attend either NYU for $55K a year or SUNY Binghamton for $17K?

      • Verdant Pine Trees says:

        Well, it’s more complex than that, isn’t it? These schools can heavily discount my tuition if I’m a good student, or otherwise desirable. Colleges are one of the only areas in our economy where your income – rather than say, your behavior, or the services you request – significantly changes the amount you’re charged. The people who are most hurt by this are middle class people seeking admission to private non-profits, and poor people seeking admission to private for-profits.

    • huadpe says:

      Thing is, the reason these schools can get away with high prices is government policy. Federally guaranteed, non-bankruptcy loans mean that 18 year olds with no sense of what debt really means can sign up for massive student loans, that banks are happy to give out, since Uncle Sam backs them up.

      If there were only normal unsecured loans available for college, tuition would drop in a hurry.

  10. Loias supports harsher punishments against corporations says:

    So, when the bubble bursts, exactly what happens?

    Does the cost of education just go down? I have to imagine that the burst will cause hundreds of colleges to close, and more to scale down so much they become niche school (Ex: Duke University School for Fine Arts and Engineering).

    Some might see the burst as a good thing, but I do worry what lasting effect it will have.

    • colorisnteverything says:

      When it bursts, I could lose my job.

      I’m a PhD student and as long as we have record enrollment, I have a job because they need people to grade and teach them. However, when that goes away, I am SOL.

      • cowboyesfan says:

        LOL! Those tenure jobs of the past are long gone. Part time is the new reality.

      • colorisnteverything says:

        Tenure isn’t necessarily gone. But jobs for assistantships will be. That was what I was referring to. The goal if you are looking for a TT job is to go down a tier for safety or to find a niche. I do both public policy and comparative politics, so I am pretty marketable. However, if you do theory – which is seeing a lot of budget cuts many places, including at my own uni, you are SOL a lot of times. Professional schools need more teachers because of their “applied” focus. I am going to be that person.

    • Verdant Pine Trees says:

      It won’t just hurt people who work in higher education. It could hurt people outside. Higher ed is driven by credentialism, big time – and it’s one of the areas where you’re often given time to pursue your studies, get a second degree so you can move up, etc.

      Here’s the problem. Let’s say 500 schools nationwide go “south”. All those faculty and staff members who can’t get hired by surviving institutions start pursuing other jobs. They have (on paper anyway) more degrees – more of them have EdDs, PhDs, MAs and MSes. Now, it’s possible that they could be turned away and told “You’re overqualified”. But it’s also possible that it will start a massive “arms race” in some fields, where employers can cherry-pick the overqualified, and where qualified people who don’t have the higher degrees will be turned away.

  11. Dallas_shopper says:

    Even state schools are charging outrageous tuition rates. When I started at UT-Austin in the early 1990s, my first tuition/fee bill was $800. The same course load would cost about $3,000-$4,000 today. It hasn’t even been 20 years. Heck even in the 4 years I was in college, tuition rose 50%.

    Thank god I don’t have any kids.

    • crazydavythe1st says:

      When I started UT Austin in 2006, my tuition was around $4100/semester in state. This semester, it is close to $5000. Doesn’t sound like much, but that’s over 20% in 4 years. I looked at an inflation calculator, and the inflation rate from 2006 to 2010 was around 6%. At the same time, student services have been cut in many areas.

      Basically, the UT system decided to cap tuition increases because state legislators were “that” close to having the state regulate it. If they had their way, we would easily be seeing the UC-like 50-60% increases in tuition.

  12. captadam says:

    Some private schools have found that slowing the rise in tuition actually harms enrollment. Kids see the cost of their schools as directly correlated with the quality of the education. If one elite school does not raise its tuition as much as another elite school, then the lower-tuition school must be doing something wrong.

    Remember that most private schools with high tuition have significant discounts on tuition in the form of school-sponsored financial aid. That is, benefactors have given millions of dollars that have been invested, and the interest on those investments is used to offset reductions in tuition given to needy students. Of course, the children of the wealthy pay full freight (and more; parents are asked to give large-sum gifts in addition to full tuition), which also has the effect of subsidizing the educations of those who are less wealthy.

    • smartmuffin says:

      Based on this chart, that must be SOME return they’re getting on those investments if it even comes close to offsetting tuition hikes this extreme… Whoevers doing that investing maybe needs to work for Citibank… or the federal government.

  13. SaltWater says:

    It ain’t called the Academic Industrial Complex for nuthin’.

  14. Rocket80 says:

    Woah woah we are going to blame PRIVATE investment on this price inflation? Sorry, but it is the federal government offerring student loan money at ridiculously cheap rates (subsidized by the tax-payers) that make taking out student loans so tempting and easy. Combine that with the fact that we have this bizarre idea in our country that “every one needs a college education” just like we used to have the “every one needs to own a house” nonsense. Homeownership is not for everyone, neither is college – and perpetuating this myth about how great college is is part of the problem.

    But yes this bubble will definitely have to burst soon, but who knows maybe Obama’s solution to that will be a Obama-education bill where everyone gets free college education. That’s probably a good idea, right?

    • rugman11 says:

      This. It’s amazing that people will see the availability of cheap credit in the housing market and immediately correlate it to rising home prices but they don’t see the same forces at work in the education market. Student loans are essentially four-year no-income, no-job, no-payment loans. Imagine where the prices of houses would have gone had there been not just no-interest loans, but no-payment loans. It would have been insane. Just like college tuition is now.

    • pantheonoutcast says:

      Brilliant. I have an unemployed friend that is going back to school to complete her undergrad degree in Political Science. $15,000 in loans later, she will have nothing more than a degree in Political Science. Before she lost her job, she worked in the insurance industry for a company who didn’t care one way or another if she had an undergrad degree, as they were willing for to pay her handsomely for the skills she honed during her ten year career in the industry. An otherwise intelligent woman, she fell for the myth that college degree = self worth.

    • craptastico says:

      i agree. i think in the current envirionment a teenager could do a lot better by learning a trade as opposed to going to college. we can’t outsource plumbers. and if you start your own business you can easily make as much applying your trade as you can working as a college educated bean counter. the value of a college education has been watered down to the point that it’s hardly worth it for most kids

    • eturowski says:

      I’m sorry, but 6.8% fixed interest in today’s economy is NOT cheap.

      • Billl says:

        Sorry, an unsecured loan given to an 18 to 21 year old at 6.8% is a great deal for the student. When you become an adult go to a credit union and try to get a $20k unsecured loan…you’ll pay over 10%….if you can even get that big a sum.

    • jessjj347 says:

      I completely agree with your sentiment about there being a push towards everyone going to college, when it is not necessary for everyone. The one thing I want to add, however, is that I don’t think that the commenters bashing federal loans have a good sense of the dept situation of most students.

      While it may be true that students have federal loans, those who attend private universities have more debt from private loans than federal loans. The federal loans just changed a bit this year, and previously students were forced to have multiple private loans, typically. The problem with having multiple loans is that they may have variable interest rates which usually go up later, and also consolidating the loans can lead to more issues.

      Really I think that students in general have more dept from private loans. So, the issue is not really just federal loans.

  15. wkm001 says:

    Most of the people reading and commenting on this article are sitting in their office chair with their college diploma on the wall. So yea, most of us went to school, paid too much for it, and hate paying the monthly payment. Because honestly, most of the time it doesn’t seem worth it. A college degree is for your first job out of college. How many of us have even been asked to provide proof of our college degree since our first job?

    The true purpose of going to college is to increase your earning potential. Since college pricing has gotten so out of control, the amount of time it takes to see a ROI is too long. At some point it will be advantageous to skip college and learn a trade rather than pay off all those loans. I fear that tipping point is very close, maybe just one generation away. My possible kids for example. If college prices increase at the same rate, I will recommend that my hypothetical kids learn a trade.

    • BrianneG says:

      I was asked for not only a copy of my college degree but also my transcript when applying to take the professional engineering license exam. I suppose I could have done it without the degree but it would have taken many more years of experience to get the right to sit for the exam. Plus, I probably wouldn’t have been able to pass it without the four years of schooling.

      • Nigerian prince looking for business partner says:

        I had to do the same thing for professional certification — transcripts, class syllabuses, publications, etc. I’ve never had an employer ask for a copy of my diploma but they have wanted copy of my certification paperwork/packets, as well as my thesis.

    • Blueberry Scone says:

      “The true purpose of going to college is to increase your earning potential. “

      That, and to network.

      You can be an English major at a state school, a small private school, or an Ivy League – Faulkner is still the same, no matter where you go. But it’s the connections that you make, and the prestige of having a certain school’s name on your diploma, that can – but not always – make a difference between Getting A Job and Not Getting A Job.

    • INsano says:

      I called the “trade school” situation last year. I’m ~30 and would like to go back to grad school, but those ba$tard$ can eat my @$$ if they think I’m doubling my already significant debt from undergrad. The dearth of jobs that require or will reward you for a Masters+ education has obviously shrunk in this economy as well.
      Education has its own value in a society, but ours refuses to sufficiently support it. I guess if we get out of Iraq and Afghanistan and save a few billion a day, we could re-prioritize as a nation…either that or accept that the military industrial machine won’t have anything at home worth fighting for if the decline of our nation continues.

  16. ShruggingGalt says:

    The bubble will burst when the Federal Government stops increasing the student loan limit every year.

  17. Jevia says:

    Tuition also increased because the government will back student loans (allowing the private lender to take the risk on the student, no matter how poor their grades may be or how much at risk the student is to dropping out), and the student loans are not dischargeable in bankruptcy.

    That is the other kicker. The kids graduating with these huge debt burdens will have them for decades and they can’t be discharged. You know what a loss of $500 to $1,000 (or more) a month does to one’s ability to participate in the economy, i.e. buy/consume other products? It means they don’t. That reduces demand, which in turn reduces jobs, and vicious cycle continues. The economy will suffer from this loss of participation for decades to come.

    • Stiv says:

      The federal government does _not_ back private education loans. Only federal student loans. And while in the past banks and lending groups served as intermediary funding sources for those loans, the Health Care and Education Reconciliation Act of 2010 ended that practice. From this point forward, all federal education loans are funded directly through the Department of Education.

      Now, discharge of an education loan through bankruptcy is a much more complicated issue, but for some students, it may be possible: http://www.finaid.org/questions/bankruptcy.phtml

  18. aloria says:

    Prices won’t go down until getting your piece of paper isn’t practically a requirement for getting a job. For example, I know plenty of extremely bright and knowledgeable people in IT who never went to college, but often get passed over for someone less skilled with a degree.

    A HS graduate’s options today aren’t really “should I go to college?” but rather “which college should I go to?”

  19. nova3930 says:

    I say it won’t pop until the gov’t quits funneling money into student aid programs stimulating demand for the limited number of student slots.

    • TehLlama says:

      And you would be correct, if politically incorrect in stating it so succinctly. It certainly hasn’t reflected the quality of education having gone up, and this is the only remaining logical answer for most of that difference.

  20. damageddude says:

    I went to law school over 15 years ago. WIth inflation, tuition should be about $18,000 per year to be equal to what I paid. Instead it is over $35,000 (I went part-time at night). That comes to over $140,000 for the 4 years a PT student goes to law school. Unless they get a job in big law it will take a long time for those graduates to pay off their loans and for their salaries to rise, if they ever do, to come out ahead.

    • womynist says:

      I have been considering Law School, and the only law school in my state (NH-Franklin Pierce Law) costs about $200,000 for a 3 year curriculum. That’s outrageous, especially because I currently work in non-profit, so I know I couldn’t contribute anything towards the tuition.

      So now, I have to decide whether the investment is worth it, or if I should stay in the job market and hope that in the next few years I’ll find a job that can pay me a decent salary, as I’d like to purchase a home soon. I know I won’t be able to take on a mortgage if I have $200,000 in debt from Law School. And that’s on top of the $18,000 I still owe from undergrad. The whole concept of higher education has been tainted by greed, it seems.

      • zifnab0 says:

        If you are competitive enough to graduate at the top of your class, AND a good enough writer to get on Law Review, AND kiss enough ass to be editor-in-chief of law review, AND can BS your way through a clerkship interview, AND you’re tolerant enough to be a judge’s gopher for a year…

        THEN 4 years down the road you can easily land a job paying $150k+ per year. That is, if you can handle billing 2200 hours a year (which translates to being in the office roughly 14+ hours per day).

        It’s an investment, but only if you REALLY like the law.

        Otherwise, you graduate in the top half of your class, nothing special, get a decent job paying $60k/year, bill 1800 hours a year (9-10 hours a day), and have some time for a life. But you’ll probably never pay back that loan until either:
        a) you make partner (6-7 years later) and bring in a million-dollar-a-year client; or
        b) you win the lottery.

  21. superfluousK says:

    The problem is that the colleges in their desire to increase revenue will take ANYONE. And by taking anyone it forces them to teach to the lowest common denominator so that people that really shouldn’t be there can stay. They’ve diluted the quality of a bachelors degree to the point that you need it to get any kind of job anywhere even if it only pays $10 an hour, with crap or no benefits. And have fun paying back your student loans on that.

    On top of that you’ve got these damned for-profit “schools” giving people these unrealistic expectations of what a college degree can do for them. When the reality is a BS or BA is a minimum requirement, and when the hiring manager sees Devry or Phoenix on your resume it goes into a special pile in her trash can.

    A whole lot of people would be better served just going to community college. It’s cheaper, and the credits transfer. There’s no need to drop 7 grand to find out college isn’t really for you or to take the damn math and English you should have learned in high school.

    /incoherent rant

    • Happy Tinfoil Cat says:

      Not that way in California. The UC and the SC systems in CA have high standards. There no “No Child Left Behind” mentality only “Survival of the fittest”. Kids that can’t make the grade end up in community colleges or private colleges. The CA university systems want to ram as many kids through as possible; if you falter, you’re out. No changing of majors midstream either. You’re in and you’re out, no loitering.

  22. The hand that feeds, now with more bacon says:

    Some advice to get a degree without going broke:

    Take everything that can transfer at a community college first. I had 60 community college credits when I went to the state university. Only 40 or so applied to my engineering major though. (I took a bunch of computer science stuff at the community college because I didn’t know what to do.) *I took all of these courses while still in high school.* My state and many others have programs to cover THE ENTIRE COST of certain academic programs provided by the community colleges (dual-enrollment and Huskins) for high schools that don’t offer advanced-level coursework. These are only available while you are in high school, but you can take classes in Spring, Fall, and both Summer sessions up to 12 credit-hours each. Even if you didn’t use these programs in high school, take as much as you can at a community college and transfer the credit to a state university. You can usually transfer enough to cover a full year, it costs about 20% as much at the community college, and the class sizes are smaller!

    I took the shotgun approach to scholarships and applied for anything I qualified for, maybe 5-10 applications per semester. I’d usually get 1 or 2 scholarships that covered $500-1500 per semester in tuition. I used public transportation or walked exclusively as the school had a deal with the city for reduced fares for students.

    Once in the university, I worked in the engineering department making about $500-$700/month to supplement what I had in my savings. During the summer I worked internships at electric utilities and made $19.80/hr my first summer and $25.20 the second, while staying with my parents. From each summer I was able enough to cover the entirety of the rest of the year’s expenses. I got a grant for graduate school that covered all of my tuition and paid me $600/month. I was too busy with research and classes to get a separate job, but $600/month is enough to live off of.

    I finished my undergraduate in 3 years and the master’s in 1.5. I graduated, not only debt-free, but with more savings than when I started. My 3 siblings graduated in 2.5, 3, and 3 years each, all debt free. Anyone can do it, it just takes a LOT of hard work and dedication and living within a very tight budget.

    Now that I’ve graduated and have a well-paying job, I find it incredibly easy to save money. I’ve managed to save about 50% of my after tax income.

    • BrianneG says:

      Where did you live that $600 was enough for living expenses? Even my cheapest apartment in Champaign, Illinois was $300/month in rent plus utilities and that was 10 years ago.

      • The hand that feeds, now with more bacon says:

        Raleigh, NC. Rent is about $600-800 for a small apartment. Split 3 ways (who doesn’t share an apartment in college) it comes out to like $300/month with utils. No other major expenses because I didn’t have a car (or even a license, so no insurance needed).

    • Nigerian prince looking for business partner says:

      “During the summer I worked internships at electric utilities and made $19.80/hr my first summer and $25.20 the second, while staying with my parents. From each summer I was able enough to cover the entirety of the rest of the year’s expenses. “

      I think that’s the hard part for a lot of people. I managed to finish my undergrad in three years but never made anywhere near $20 or $25/hr (in yesteryear’s dollars) when working at the same time. Part time jobs for students, even when fairly complex, technical positions paid garbage wages. Living rent free really isn’t an option for most of us, even if just for the summer.

      • The hand that feeds, now with more bacon says:

        Working for a utility is a better idea than some realize. Utilities’ incomes are stable and not very sensitive to market fluctuations. The utility I work for pays all interns a minimum of $16/hour up to a max of $25.20, not just in highly technical positions.

        Also, wherever you go you should talk to whoever in the company coordinates with the interns and see if you can arrange to split the cost of an apartment with other interns for the duration of the internship.

        If you can’t find a solution that doesn’t leave you in debt, then you would have to consider how much debt would accrue and whether amassing and living with that debt is a financially sound.

    • JiminyChristmas says:

      Anyone can do it, it just takes a LOT of hard work and dedication and living within a very tight budget.

      I don’t think you really intended to make this whole comment sound as smug as it does, but it is so packed with rosy scenarios and unqualified assumptions that it’s infuriating. To pick apart one piece of it:

      You said you lived with your parents and took public transport or walked to school. Ergo, you had no housing or auto expenses. Obviously, your family lived in an urban area of sufficient scale to have both a university and buses or trains.

      What if my parents lived in the suburbs, where there was no public transportation? I could live at home, but I would need a car to get to school. Likewise, what if they lived in a small town or rural area and there was no college or university within commuting distance? I would have to move somewhere closer to a school. How would any amount of hard work or dedication, or lack thereof, change those circumstances?

      Also, $25.20/hr for a student internship? I hope you realize this is exceedingly rare. So is $19.80/hr for that matter. There are plenty of people who would be overjoyed to earn that much after they actually graduate. If I were currently an 18 to 21-year-old I would be thrilled to earn in the $12-$15/hr range at a summer job.

      • Ragman says:

        That’s actually a fairly common amount for engineering interns. If you aren’t making at least $12/hour as an engineering co-op/intern, you’re getting jacked. The average co-op pay at my school (according to the industrial practices group that managed our co-ops) for engineering and comp sci was in the upper teens.

        Major technical companies, once you make it into a co-op position and they see that you can do your job, are more than happy to keep you working every semester for 20 hrs a week while going to school for at least 6 credit hours. And you will very likely get an offer at graduation.

  23. V-effekt says:

    Another issue is what I like to call the Macy’s effect for private colleges. Nobody likes to pay retail, so that is why there is always a sale. The prices are artificially inflated, especially at private schools. At private schools, institutional aid, or a hefty discount rate is what drives down the tuition. In some cases, private schools are less expensive that public schools due to this heavy discounting. Scholarships are given out for a variety of reasons, but the pricing in this chart reflects the ‘sticker price.’ I do believe there is a bubble, but the numbers here are a bit skewed.
    Student debt is a big factor in the Forbes ranking, as opposed to the US News Ranking that largely relies on peer perception.
    http://www.forbes.com/2010/08/11/best-colleges-universities-rating-ranking-opinions-best-colleges-10_land.html?boxes=Homepagemostpopular

  24. packcamera says:

    I graduated in 1998 and this article prompted me to look at my alma-mater’s website. Looks like tuition has more than doubled since I attended. I’ve been wanting to obtain my Master’s, but as others have pointed out, the ROI is not worth it. On the other hand, if I had some flexibility, I could study in Europe (London, Paris, etc) and my international student tuition costs are not much more than a decent local state school.

  25. Happy Tinfoil Cat says:

    Lets hope it bursts. I’ve got two 16 year olds soon to be heading to college and another kid 3 years behind them. I keep telling them they better get some scholarships. ;^) One has a 16 year old girlfriend already in college on a full scholarship so he has some motivation.

  26. chocobo says:

    This bubble will burst when students start defaulting on their student loans, filing for bankruptcy, and giving up on attempting to pay the loan.

    Oh wait – that’s impossible, because student loans can never be wiped out. So colleges can keep increasing tuition forever, and it will never stop because banks are more than happy to keep giving out huge student loans. “Subprime” students don’t matter this time, because it HAS to be paid back.

  27. Coelacanth says:

    Just like with Health Care, this bubble must burst. Its growth is completely unsustainable and in my opinion, the only reason it’s occuring is because people are getting with billing customers far more than their actual costs (and *some party’s actually willing to pay up.)

    Fortunately, I was pretty lucky having gone to a very reputable state school. It’s nice to know one can compete with Ivy League students while shelling out pennies on the dollar.

  28. Dutchess says:

    I will cry misleading data here…

    I’m doubting the true cost per student has gone up that much over the time period. I would guess the amount that each student has been asked to contribute towards his/her own education has escalated for various reasons.

    As schools see their funding cut back they’re having to raise tuition to offset the reduced funding. So while out of pocket tuition costs for students have increased the overall cost per student has probably not outpaced inflation.

  29. milkcake says:

    Am I the only one who looked at this graph and thought that the housing price is still higher than it should be? I know the starting point matters, but still.

  30. slychocodile says:

    When I applied to colleges I chose both private and state schools and it worked out that my top choice, which was private, was actually my cheapest option because they offered me a $15k a year grant (on $32k a year tuition, this was in ’95) so I actually had to borrow less in federal and private loans than if I’d gone to either of the state universities I’d applied for. Even if they’d been comprable in terms of what I’d owe, the scales still favoured the Private college as the alumni network nepotism of the school I chose has a much higher value than that of the state schools for my particular program.

    They should apply to multiple schools and see what offers they get, and weigh the cost versus the benefit of attending each school.

    • Nigerian prince looking for business partner says:

      Pretty much everyone I know who went to private schools say the same thing regarding tuition — they all got $15k – $30k in grants to go. Does anyone pay full price at these schools?

      • Skankingmike says:

        what most people fail to understand is that this Private schools are not for profit, minus those for profit private schools that should be outlawed, and thus any extra they make they throw right back in. And they often have large donations from alumni that want to keep their school prestigious, thus increasing their diploma value. All this adds to the amount of scholarships for students. The biggest issue most people have is not filling out paper work for scholarships.

        The same is not true for a state school

        The donation level there is much lower thus all funds are government aka taxes.

  31. evnmorlo says:

    Private colleges are priced based on what the wealthy can pay. There are plenty of parents who could easily afford to pay a lot more.

  32. rav3 says:

    yeah i was gonna apply to NYU and then i saw the tuitions compared to unis in england, no way im going to NYU, the tuition for a year equaled two in england.

  33. Warren - aka The Piddler on the Roof says:

    I have a BS degree and no student loans to repay. This is what I did:

    After graduating close to the bottom of my class in high school I enrolled in a trade school (which is now a community college). I earned a 2-year degree in electricity. I paid my way by working 30 hours a week as a sous chef. When I couldn’t find a job in my area of study I (gulp) enlisted in the Marines. Hey, desperate times call for desperate measures. This was at the end of the Desert Storm and there was still a remote chance I might be sent over there.

    While enlisted I enrolled in night classes. The Corps paid 75% of my tuition and I paid the other 25% out of my pocket. By the end of my 4-year enlistment I had completed all but 2 classes. I later completed them and now have a 4-year degree from an accredited university. I have no student loans to pay back.

    For the financially challenged (as I was), enlisting in the service (the Air Force has the best education benefits from what I’ve been told) might be worth a look. Yes, we’ve still got the Iraq and Afghanistan messes to deal with, and God willing our troops will be home safe before long, but if I had to do it again I’d make the same choice.

  34. mdovell says:

    The reason for this is largely due to student aid. Public rather than private. If student loans from the government are guaranteed (they also don’t perform credit checks on students) then this means the demand is being subsidized.

    But yet the number of schools, number of professors, number of staff, number of buildings etc is limited. Union contracts (rightfully I might add) usually put a cap as to the number of students that would be in a class. Private schools might say they have smaller classroom sizes but in all honesty I haven’t seen a public one any larger than 30 at most (I know large ones exist I’m talking about my own person accounts)

    If the government or any group gave unlimited funding to do anything and there is a limited supply then naturally the price will go up and up. Remember when the toyota hybrid was hard to find in 2008? Well combine high gas prices (at the time) with government tax breaks and naturally it was harder to find.

    It should also be noted that not all majors are the same. Where I go aviation cost 2x as much as everyone else. Flying a plane commands more money (we have a fleet at a airport for training). If someone is a doctor or in law I assume they are probably in six figures of debt (I’ve met one). Some of the payoff can happen naturally but sometimes it can take awhile.

    It should also be understood that tuition is NOT removable in a bankruptcy! I used to do collections and some still owed on bills that were decades old.

    Another factor is that until recent textbooks were often purchased after the first few classes. Now some states mandate ISBN’s to be released which helps on pricing. In addition some are doing textbook rentals and amazon actually has a buyback…

    Eventually some of the terms might be loosened in the future. At what point is “instate tuition” a real term if someone can take online classes in other states? What would happen if smaller two year school started popping up that were 100% online? Broadband is common..so are webcams..much of academia uses blackboard.com’s materials anyway…do school realistically need to make more dorms when this is an option? Business travel declined dramatically after 9/11 not because of a fear of a terrorist attack but largely because it was simpler, cheaper and easier to do it online.

    Lastly is that it’s probably better to simply save up money prior to going into college. Obviously students haven’t worked much given labor restrictions of someone that is under 18. Sometimes it is better to be debt free and be older.

  35. mugwump says:

    I take three grand worth of college every year, because that is what my employeer will reimburse. I’ve never had the financial backing to get a degree, so I do what I can with what I have. I am almost 42 years old and I still see the benefit of having a degree, and I will take on the burden of paying for my kids to go to college so that when they graduate they will have the opportunity to become successful without the weight of debt on their shoulders.

  36. JiminyChristmas says:

    Public funding has a lot more to do with tuition costs than the private student loan market. With the university system in the state where I live, from the time the system was founded in the 1880s until about three years ago at least 50% (much more in the distant past) of university funding came from the state, paid for by taxes. The balance came from tuition and fees.

    Now, it’s the reverse. It’s the individual students who pay the majority of their own educational costs. The long-term policy trend has been to treat higher education less as a public good and more as a private commodity.

  37. Stiv says:

    “You know that if those guys were caught, there were many more out there doing the same.”

    That’s some mighty fine speculative reporting there, Lou….

  38. aleck says:

    This is what government guaranteed loans do, just like it did for the housing. There is no free market check on the price because anyone can get a government guaranteed loan and to school regardless of the financial situation. Schools had no reasons to keep the tuition costs in check.

    • Stiv says:

      “This is what government guaranteed loans do, just like it did for the housing. There is no free market check on the price because anyone can get a government guaranteed loan and to school regardless of the financial situation.”

      The government limits the amounts of “guaranteed” loans that undergraduates and graduate students can borrow annually:

      Dependent Freshman: $5,500 Federal Direct Student Loan
      Dependent Sophomore: $6,500 Federal Direct Student Loan
      Dependent Junior/Senior: $7,500 Federal Direct Student Loan

      Graduate Students: $20,500 Federal Direct Student Loan

      Depending on the school’s Cost of Attendance and the student’s other aid, these amounts are sometimes less.

      Parents and Graduate students can borrow up to the school’s Cost of Attendance through the Federal PLUS Program, but the loan is credit based, so not all applicants qualify.

      Anyway, the point here is that federal loans aren’t open-ended programs with no funding caps.

  39. sopmodm14 says:

    its utterly horrifying

    financial aid *DECREASES* while tuition/fees *INCREASES*

    state schools are no better it seems

    the following generations will be paying off loans just before they collect social security (if thats still around)

    colleges are run like any financial institution, and that means holding students financially hostage along with their families.

  40. Rena says:

    Tuition costs will come back down as soon as I graduate. Just you watch.

  41. thinkalive says:

    I’m gonna go out on a limb and say that if we didn’t pay our state University leaders in California 7 FIGURES, we might be in slightly better shape. Our top 5 highest paid public employees in California are in the University system. Most of the Universities have well over 100 people making 6 figures. People keep saying this has something to do with unions, but gosh, I just don’t know.

  42. VashTS says:

    The stories here are sad. Education should not cost so much. Clearly school’s are just as bad as wall-street. Every sector of education seems very dishonest. I wish I never went to college. Seven years, no career. Just part time work.

  43. zifnab0 says:

    The problem is not one of private lenders, but of government subsidies to these universities.

    No matter how many universities you open, they are always going to be a limited resource. As (hopefully), everyone knows, when you make a product less expensive, then the demand for the product grows, because more people are able to afford it. If there is a limited supply of a product and high demand, simple economics says that the producer should raise the price.

    However, because of state subsidies to many schools, the actual price of education is very low, so schools raise prices (to pay for those oh-so-expensive professors and grad programs to raise their ratings and compete). Government-subsidized loans make college affordability even easier, with interest rates anywhere from 0-3%.

    TL;DR version: when you make something cheaper, more people want it. So the schools raise rates. So the government makes it more affordable, and more people want it.

    Eventually we’ll reach a cap where people aren’t willing to spend 2-3 thousand dollars a month to support their education ten years down the road, and the bubble will end.

  44. u1itn0w2day says:

    The college industry has sold themselves better than any other industry out there by striking fear and loathing into the hearts and minds worrisome parents and students.

    Most importantly the college industry has played the system masterfully using students loans, grants, scholarships or the pretense that someone else is paying for it. Where would they be without somebody else’s money.

  45. legolex says:

    My mom doesn’t believe me but I decided to skip college and stay in the work force because I refused to put myself into that kind of debt and I graduated in 2001. She’s convinced it was because I didn’t care. While sometimes I think I should’ve gotten a degree in something, I’m currently the boss at my branch by working my way up.

    Only when I have a bad day and look around at other jobs and they all say “Degree Required” do I regret not going, but then again, I’m not $30k in debt.

  46. Moosenogger says:

    I was hit with this reality this semester when I had to pay a small fortune to take one class.

    One course worth 12 credit hours = $1,700 down the toilet.

  47. GrayMatter says:

    When the bubble bursts, we will have a lot more Milton Colleges (http://en.wikipedia.org/wiki/Milton_College)

  48. Kconafly says:

    Part of the rise in tuition can be explained by the significant cuts in state funding for public higher education. Ten years ago the student paid 40% of the cost of the education while the state paid 60%. Now the numbers are reversed with students covering 60% of the costs and states picking up about 40%. I wonder what they’ve done with those tax dollars?

  49. OnePumpChump says:

    Here is the truth about college financing:

    http://www.youtube.com/watch?v=1x-QCmsx2WI

    Here is the truth about the value of a college education:

    http://www.youtube.com/watch?v=5LofaJ66bWM

  50. phil says: