Analysis: In debt row, hints of emerging-economy crises — from Reuters by Pedro Nicolaci da Costa
WASHINGTON | Sun Jul 24, 2011 5:59pm EDT
Debt default. A ratings downgrade. Political deadlock. Such terms, once associated primarily with the developing world, now abound in the mighty United States.
Also see:
The sky has not fallen — but pieces of it could soon be hitting a campus near you.
That is one way of summing up the findings of Inside Higher Ed’s first-ever Survey of College and University Business Officers, released today in advance of the annual meeting of the National Association of College and University Business Officers. (A copy of the survey report can be found here.)
Excerpt (emphasis DSC):
Surveys of the American public and of more than 1,000 college and university presidents, conducted this past spring by the Pew Research Center in association with the Chronicle of Higher Education, revealed significant concerns not only about the costs of such education, but also about its direction and goals.
More fundamentally, the business model that has characterized American higher education is at—or even past—its breaking point. Many institutions are increasingly beset by financial difficulties, and the meltdown since 2008 is but a shadow of what is to come. Undergraduate tuition has risen dramatically: at a 6.3 percent annual clip for nearly the last three decades—even faster than the much-decried 4.9 percent annual cost increases plaguing the healthcare industry. The full increase in the price of higher education has actually been hidden from many students and families over the years because gifts from alumni, earnings from private university endowments, subsidies from state tax revenues for public universities, and federal subsidies for students have been used to mitigate some costs. But universities are exhausting these mechanisms.
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A Thriving, Disruptive Innovation
Just at the moment when these challenges to established higher education have arisen and compounded, another group of universities has arisen whose financial health is strong and enrollments have been booming. And yet the brands of these schools are weak and their campuses far from glamorous; sometimes the campuses are even nonexistent from the perspective of students, as online learning has largely driven their growth. How could this upstart group be so successful when the rest of higher education is treading water at best?
DIY U: The Future Of Learning [Video] — from FastCompany.com by Anya Kamenetz
From Khan Academy and TED Talks to instructional YouTube videos, the future of learning is open and free.
A related comment from DSC:
I have it that higher ed is a bubble and if an increasingly larger group of people can’t afford it — yet still want it — then, in my book, that’s a major problem.
I’ll use myself as an example. My wife and I could not begin to afford to send our kids to many of the colleges and universities out there right now — today, in 2011! (Let alone in 2017+ when our kids start hitting the college scene.) I should note that our kids are doing well in school and are very talented, hard workers. I should also point out that my wife and I place a very high value on being educated and we are both trying to pass that value along to the next generation.
But if you tell me that higher ed is not a bubble, the first question I will ask you (besides what planet are you living on) is what’s the gross income for your household? If you are making close to 6 figures, I highly doubt that your perspective will be the same as that of folks from households who are making $20,000-$50,000 a year. In fact, my hunch is that those who say higher ed is not a bubble are:
My take on this is that all of us in higher education need to figure out how we can greatly reduce the price of higher education. It shouldn’t be how well you understand the system or how many hours of work you have done to figure out the grants, loans, etc. that exist out there.
NEVER again should we be pleased with ANY sort of increase in tuition. Never again should we say, “Well, our tuition only went up by ___% which is the smallest increase in our history (or the smallest increase relative to our competition…or the smallest in our state/country/nation).”
Such a situation is causing a backlash against the current higher education environment/setup.
As such, we need to constantly be looking to reinvent ourselves — and to staying relevant.
Addendum on 6/17/11:
Excerpt:
NEW YORK (CNNMoney) — What do you get when college costs skyrocket but incomes barely budge? Yet another blow to the middle class.
“As the out-of-pocket costs of a college education go up faster than incomes, it’s pricing low and medium income families out of a college education,” said Mark Kantrowitz, publisher of financial aid sites FinAid.org and FastWeb.com.
The numbers confirm what most middle class families already know — college is becoming so expensive, it’s starting to hold them back.
$3 billion slated for Michigan start-ups through Pure Michigan Business Connect — from metromodemedia.com
Excerpt:
The recently announced Pure Michigan Business Connect initiative promises to leverage about $3 billion in seed capital and new revenue streams for Michigan-based start-ups, thanks to some local heavy hitters stepping up to the plate.
College choice & prudent consumers (infographic) — from the Higher Education Management Group by Keith Hampson
From ‘gainful employment’ to lower college costs — from The WashingtonPost.com by Matt Miller
Excerpt (extra emphasis by DSC):
But whatever happens as these new rules are implemented in next few years, for-profit colleges will never get out from under a cloud, nor make good on their potential social contribution, until they pass on to students the benefit of the lower educational cost structures they are creating. To date, they’ve been reluctant to do so, because, for public companies especially, it seems tantamount to ignoring the shareholder interest in maximizing profits.
But this is shortsighted. For one thing, it ensures a perennial political backlash, which can’t serve shareholders over time. And beyond this, as a business matter, it means there’s a huge opening for any number of “Wal-Marts of higher ed” to win a vast market of underserved or overindebted young Americans (or mid-career workers who seek training) who desperately need affordable, high-quality educational services. The strategy should be to lower costs, lower prices and “make it up on the volume.” The firms that do this and earn a reputation for quality will force the traditional college world to reexamine its own inefficient practices, to the lasting benefit of students and the governments that fund them.
From DSC:
Also see:
Is Higher Education Ready for “The Education Bubble”? — from CampusTechnology.com by Trent Batson
Excerpts:
American higher education–the jewel in the global crown of universal education, with nearly a quarter of the total number of higher education institutions in the world, and including graduate programs that are the envy of the world–is facing the prospect of being the next bubble to burst. Technology is both a culprit and a promising ally.
The spread of information technology, and its infusion into our culture, has opened the world to learning opportunities–raising expectations for college graduates and changing the terms of success.
Is American higher education ready to either prevent the bubble from bursting or to weather the storm when it does burst? And what is the bubble?
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The bubble, as we can see by all the dimensions just described, is, in fact, a potential “perfect storm.”
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But this effort must also result from a presidential-level decree: “The learning theory that fit so well in our culture and with the dominant technology pre-1995 (print-based and paper-based technologies), now is not working very well for any of us, so we have to change. Each of you on campus has sincerely and devotedly committed yourselves fully to learning, but now we know that our learning epistemology is less and less appropriate. This is not your fault; it is simply a time of incredible human growth; it is a time of rapid evolution in our culture; a time of re-shaping our economy. We must transform or become irrelevant.”
From DSC:
Good to see I have some company in these perspectives; thanks for the article Trent. Also see:
From 5/21/09
Cost of buying and operating 2443 F35s is estimated to be $1.3 trillion — from Next Big Future
Lawmakers Want Backup Plan After Carter Calls JSF Costs ‘Unaffordable’
The Pentagon’s top arms buyer this week called current cost projections for the Joint Strike Fighter “unaffordable,” triggering a bipartisan group of senators to demand a Defense Department contingency plan for how tactical air forces would be modernized should the F-35 program collapse under the weight of its forecasted $1.3 trillion price tag.
From DSC:
Can you image what several teams worth of specialists could do with $1.3 trillion dollars!? Man, you could meet President Obama’s higher-ed related goals in a heartbeat!
