Mark C. Taylor

 

On his book Crisis on Campus: A Bold Plan for Reforming Our Colleges and Universities

Cover Interview of October 11, 2010

The wide angle

The book’s chapter 5 is titled “Education Bubble.”

When considering the financial problems of higher education, it is important to look at the issue from the side of both students and institutions.

The cost of college has been rising much faster than both income and the Consumer Price Index for decades—and it is approaching the breaking point.  During the past 25 years, tuition and fees have gone up 440%—four times the rate of inflation.  This June, the national student debt surpassed credit card debt for the first time.  This fact is astonishing but its significance has not been noted.

If current trends continue, four years at a top-tier school will cost $330,000 by 2020, $580,000 by 2028 and $788,000 by 2035.  Obviously, this has to change.

The problems are equally challenging for colleges and universities.

Assets are down.  With the recent financial meltdown, the continuing recession, and declining government support, endowments are down, and not about to go up again in the near future.

Liabilities are increasing.  Over the past two decades, many colleges and universities borrowed heavily to expand—and they are now are carrying significant debt.  Costs are either fixed or rising and income cannot increase enough to maintain current operations.

The Chronicle for Higher Education recently reported on a study of 700 colleges, which concluded that 2/3 were facing a severe financial crisis—and many seemed destined to close.