Will Higher Education Be the Next Bubble to Burst?


In the last twenty-five years, average college tuition in the United States has increased 440%, more than four times the rate of inflation and twice the rate of medical care, states the article below from today’s Chronicle of Higher Education. With the stock market decline of more the 30%, many parents and students are asking if Higher Education might be the next bubble to burst as they scramble to seek lower priced options for learning. Many
students will live at home and go to community colleges this fall, the applications of which are up nationally by 40%.

Colleges are also looking at innovative ways they could avoid a bubble burst. Some are recommending year-long programs and many are already offering more nighttime and weekend classes. Colleges are also looking at increasing on-line course offering to up to 20% or more to compete with
non-traditional establishments like the University of Phoenix. But more institutions need to see this situation as urgent and morph to new, more workable models.

What we can learn from the dot com burst and the current housing crisis, which has sent markets world-wide roiling, is that no established institution is immune from reinventing itself–including education. The earlier we can take charge to establish new, more efficient learning options with higher quality of delivery at more affordable prices, the more we will
be able to educate the masses. Those who need this most to improve their lives and fuel our economic future–low income students who can least afford these sticker prices–will stand to gain the most over the course of their lives if we can turn this around now. As a nation, we stand to have few people in prison, fewer people in low earning jobs and more people contributing to the betterment of their own lives, their community and the world as a whole.


The public has become all too aware of the term “bubble” to describe an asset that is irrationally and artificially overvalued and cannot be sustained. The dot-com bubble burst by 2000. More recently the overextended housing market collapsed, helping to trigger a credit meltdown. The stock market has declined more than 30 percent in the past year, as companies once considered flagship investments have withered in value.

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