Monday, September 20, 2010

Bubbly College Debt

by Andrew Gillen

Minding the Campus has published my essay on The Amazing College Debt Bubble. My favorite parts include:
by far the largest share of blame for the tsunami of debt falls on the colleges themselves. As Robert Martin argues, "higher education finance is a black hole that cannot be filled." Colleges have nonetheless attempted to fill the hole with student borrowing. Such greed, when filtered through a well-functioning market, need not be a cause for concern as the market channels it into useful and productive activities. Unfortunately, the higher education sector cannot be characterized as a well functioning market...
the best way to put these figures into perspective is to realize that the $1,456 per student that colleges actually spend on instruction implies that the $126 billion that Americans borrow would cover the instructional costs for 86.3 million students. Using the higher figure of $2,366 for instructional costs, Americans' borrowing would still cover the instructional costs for 53.3 million students. And yet we only send 18.7 million students to college (and many of these are part time students)...

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