We've had the housing bubble, the commodities bubble, the stock market bubble, the dot com bubble and they have all busted over the last few years. But what about the college bubble?
The housing bubble was created by low interest rates and programs designed to allow people to own homes who in the past simply would not have qualified to get a home loan. This pumped up the prices and inventories of homes until finally the market could no longer be sustained. In other words, the bubble popped and we are now seeing the results of what happens when bubbles pop.
Colleges have been building a similar bubble over the last few years. It has been fed by low interest government loans that were given to most anyone. And most anyone has been able to attend some type of college regardless of their academic history.
But I'm afraid the college bubble may now be getting ready to pop as well. Harvard has just frozen salaries and suspended faculty searches. This looks like a pin that could just prick the college bubble to me.
Could it be that if the loans get more difficult to obtain that more and more students will opt for an alternative such as online college courses or skip college all together? It is doubtful that any major colleges are going away, but if the trend of student populations is turns down it will have a major effect on colleges and some of the weaker ones may have to close their doors.
So, keep an eye out to see if the Harvard move is the first sign of a change in trend for student populations and college costs that have spiraled out of control over the last several years.
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