Education means debt

Wade Lafever

From breast implants to pipelines. From the housing market bubbles to America’s higher education. Why are so many things bursting these days?

The envy of most other nations and the fuel for the economy here, the American system of colleges and universities, is in danger. The current model of America’s higher education is financially unsustainable and needs to be observed from both sides: student and institution.

For students, costs are soaring; debt is rising. As Universities fight for the competitive advantages, students are left picking up the slack. Building lavish residence halls with heated pools (they do exist) is ridiculous when the focus should be on education. As costs rise, so do student demands for amenities, which drives up the costs. The arms’ race is an endless Catch-22.

In already tough times, the amount of federal assistance is decreasing while tuition increases. A decade ago, a recent graduate had a manageable amount of debt, maybe $8,000. Nowadays, that same graduate is looking at paying off $17,000 in loans — some more and some less.

And that number figures to increase to what? With all things considered, experts say that a four-year education at a top tier university will cost $330,000 by 2020. The amount of student debt would be unimaginable. In June, the level of student debt surpassed credit card debt. In the period from 1983 to 2007, tuition costs have risen 400 percent.

Mark Taylor, author of “Crisis on Campus: A Bold Plan for Reforming Our Colleges and Universities,” asserts that college and university assets are down because of the financial bubble. Liabilities are up because many institutions have borrowed excessively; costs are fixed or rising, leaving little room for cutting back sufficiently; income is inadequate and cannot go up sufficiently and most institutions sell their product at two-thirds of what it takes to produce it. That is not a sustainable business model.

Taylor predicts things will get worse and in the near future wealthy universities will survive and, in some cases, merge with each other. Other weaker colleges and universities, he says, will close.

The issues facing America’s higher education extend far beyond its financial woes. In order to remain a vital part of this country’s research development, changes must be made in other sectors of higher education. Making changes in tenure and curriculum are other areas to focus on as well.

The truth is, if the problem is brought to the forefront now, more money will be saved in the long run as a result. Both the students and institutions will benefit.

As recent history reveals, financial trends are important to follow. Is our higher education system a bubble waiting to burst? History suggests yes. Others might downplay the situation.

There are two options: we can begin the critical reshuffling now, or continue on the fateful path until it’s too late. It is better to be active than reactive.

Wade Lafever is a columnist for the BG News at Bowling Green State University and guest columnist for the Daily Kent Stater.