Ready to bust
High tuition, more students and few jobs leaves education bubble ready to pop
Published: Tuesday, July 26, 2011
Updated: Wednesday, July 25, 2012 20:07
Imagine a product where sky-rocketing prices outpace the growth of inflation and personal income. These prices are fueled by government subsidies, favorable taxation and cheap credit. The peddled product is highly priced and considered a signal and source of middle class prosperity. Those who have it are successful. Those who don't have it are left in the dust and both political parties in Washington, D.C. push relentlessly to expand the products availability to all Americans. No, this is not about the housing bubble. This is the higher education bubble.
According to the College Board, tuition and fees at public universities increased 130 percent from 1988 through 2008. Inflation adjusted median income over the same period actually declined slightly. This explosion in costs is disturbing in and of itself but more so when observed with other indicators.
When you look at high school graduates in 1988, 87.1 percent of Americans ages 16 to 24 received a high school diploma or some equivalent according to the National Center for Education Statistics. That number rose to 92 percent by 2008, which, at face, value would seem like a good thing.
In 1988 the National Assessment of Educational Progress showed 17-year-olds scored an average 290 in reading but by 2008 that score declined to 286. In 1990, average math scores were 305 (1988 scores not available) and 306 by 2008, virtually unchanged.
At the same time the National Assessment of Educational Progress shows that in 1988, 58.9 percent of high school graduates went on to college. By 2008, that number had climbed to 68.6 percent.
Over a period of 20 years of spending countless dollars and attempted reforms, academic achievement arguably declined while high school graduation rates increased five percent and college enrollment jumped almost ten percent.
What about the quality of college students over this time period? Developmental education expenses, mostly remedial education for students not ready for college, have dramatically increased.
The Texas Higher Education Board reports, "General revenue appropriations for developmental education increased from $38.6 million in the 1988-89 biennium to $172 million in the 1998-99 biennium." Their latest numbers estimated total developmental education expenditures for the 2010-11 biennium to reach $392 million (this includes state appropriations, student tuition, fees and additional university expenditures).
That's right, high school graduation rates are up, high school educational attainment is at best flat, college enrollment is sky high and we are spending more money than ever on students who are in college but not prepared for it.
Universities are digging deeper into a pool of less qualified high school students who would never have been admitted to college in the past, while the costs of a college degree are increasing at a considerable rate.
An abundance of college graduates combined with a stagnant recovery pushed the unemployment of Americans with a bachelor's degree or more to an all-time high of 5.1 percent last November.
The New York Times ran a piece this week titled, "The Master's as the New Bachelor's." So is the bachelor's degree the new high school diploma? Probably not yet, but it's looking like a serious possibility in the near future.
Many graduates are finding themselves peddling résumés from their parent's house while working as servers and baristas. Student loans, which don't even die in bankruptcy, are coming closer to being due. Without serious economic growth, the higher education bubble could be careening toward a devastating pop.
This is terrible news for current students and recent graduates who have paid astronomical prices for an education in a terrible job market. While some majors would be hit harder than the rest, the overall picture isn't pretty.
If the bubble bursts, many degrees may not pay for themselves. This isn't your mom and dad's America. College degrees aren't a golden ticket to a house in the suburbs, a white picket fence and two kids.
It's looking like the main difference between a high school diploma and a college degree could soon be mountains of debt.
Taylor Wolken is a junior economics major and editor-in-chief of The Battalion