Thursday, March 5, 2009

The College Bubble

By: Bovemsa Cheung

Colleges could be the next bubble industry to pop. In June, 157-year-old Antioch College shutdown their college—they only has 60 students enrolled and their $40,000 per year tuition was being heavily subsidized by Antioch’s five newer campuses. However the decrease in students led to a fewer professors and the newer campuses did not want to subsidize their mother school. This is only one example of colleges that are facing economic problems. 504 institutions were surveyed and one-third said the credit crunch had hurt enrollment and about one-fifth of respondents said they had fewer returning students than expected. Demand for student aid is increasing and charitable donations from foundations and individuals will increase during hard times. Also decreasing tax revenue may also decrease federal aid. The crunch will be hard on institutions known for being a “country club college.” These colleges have luxury dormitories, spas and top of the line sports complexes to get better students. College tuition has increased by more than three times the rate of inflation for the last 20 years. This college bubble is similar to the housing bubble blow. Private colleges may be the next fragmented industry to consolidate as a result of over-expanded colleges. This merge is recently seen with New York University and Polytechnic Institute.


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