An article published back in July by The Atlantic suggested that the College “bubble” is actually beginning to leak air. As many financial professionals have drawn similarities to the mortgage crisis and the student debt crisis, there was a common theme that this would not last and it would end with a burst. However, citing several different reasons, one can believe that the situation may be correcting itself in a way.
The Main Reasons Supporting This Theory
The Atlantic article cites four key factors that have led to the postulation of this theory. One of the big reasons is the current declining birthrate in the United States. There are just simply fewer teenagers in High School. Although the rate at which people are attending college after high school has not dropped, the number of college-age teens has, which means fewer college students.
The second reason is a decrease in annual student debt rate, which could possibly be related to the decrease in volume of college age eligible teenagers. Thirdly, which one could assume is related to the declining birth rate, is the decline of college enrollees. And lastly, the amount of extra income that one can expect after getting a college degree has plateaued. an increase in college closures. The article offers a few possible explanations for this phenomenon, with it being a mixture of weak demand, over-supply, a crackdown on for-profit colleges, and a change in culture.
The colleges that are taking the biggest hit are the for-profit colleges. Many of these institutions are struggling to make profits, and as a result, are closing their doors. Between certain social pressures, a better job market, as well as the government crackdown on certain for-profit institutions with poor practices, it has led to a near dried up pool of possible candidates for enrollment.
Although these are all quantifiable reasons, the Atlantic has suggested that there could be other things beneath the surface at work that are hard to pinpoint. These things can include better higher education shopping by families as well as the growing social outcry against the cost of education, forcing institutions to take a look at what they are charging.
In a study conducted by the Brooking Institution, who shared their findings this last January, took a look at what this increase in for-profit college regulation would mean for the thousands of students at these institutions. They wanted to see if these regulations against for-profit institutions would damage opportunities for certain individuals to gain access to higher education. They found that these regulations did not damage their opportunities since they usually end up finding an alternative program at a public institution, which at the same time improves their situation as far as public loan programs. Although they cited that overcapacity at public schools appeared not to be an issue, many states have “disinvested” in community colleges over time. Now they feel the best step would be an increase in “public support for community colleges and other high-performing education options.”
Though this may be signs of a turn-around in the current higher education crisis, many are still struggling to deal with the massive amounts of debt they have accumulated. For them, this does not change their situation. With this new shift, one can only hope that we are on a path to tackling the problem of student loan debt.
