Higher Ed bubble: Their costs went up because they MADE them go up
The Kansas City Star
The New York Times just completed a six-part series on the ballooning costs of college, and it seems clear that the nation’s higher ed sector has been building something so bloated that a collapse of some sort seems inevitable. As the late Herb Stein used to say, a trend that can’t go on, won’t.
Some points from the story: Overall debt levels more than doubled from 2000 to 2011 at 500 institutions rated by Moody’s. At the same time, cash, pledged gifts and investments maintained by those institutions declined by more than 40 percent relative to debt owed — which came to more than $200 billion at the end of last year.
The spending really is incredible. In the chase for students who might help pay the bill for this binge, colleges have been tarting up their campuses with amenities like student unions with movie theaters and wine bars, palatial rec centers and dorms with single rooms and private baths.
Last weekend, The Wall Street Journal’s Review section led with a similar piece: “Who Can Still Afford State U?” Schools have not only gone wild on fancy dorms and gyms, administrative costs have soared: the number of managers and administrators over the last decade grew 50 percent faster than the ranks of instructors.
Walter Russell Mead (at whose blog I found the NYT link) couldn’t resist a gibe that in this case seems apt:
“All the brilliant financial geniuses managing these colleges are among the most liberal group in the country, the educated experts who are sure they know better how to run everything else in the country — the ignorant masses should just get out of their way and trust in their wisdom. But suppose they don’t even know how to run their own colleges? Suppose that, after 200 years of progress, the Busted Boomer generation has actually run the American higher ed system into the ground?”