Is the College Debt Bubble About to Pop?

The New York Times has been running a series about the college debt crisis.  Both public and private institutions continue to hike tuition and fees, resulting in graduates coming into the job market with greater debt loads and relatively poor prospects of finding employment that pays well enough to retire that debt in a timely manner.  Sounds like a debt bubble doesn’t it?

Moody’s Investors Service, in a report earlier this year, said it had a favorable outlook for the nation’s most elite private colleges and large state institutions, those with the “strongest market positions” that had multiple ways to generate revenue. Ohio State, for instance, received a stable outlook from Moody’s last fall, though the report cautioned about the school’s debt and reliance on its medical center for revenue.

But Moody’s issued a negative outlook for a majority of colleges and universities heavily dependent on tuition and state revenue.

“Tuition levels are at a tipping point,” Moody’s wrote, adding later, “We anticipate an ongoing bifurcation of student demand favoring the highest quality and most affordable higher education options.”

Not only is this potentially devastating to students and their families, the institutions in the middle of that bifurcation could face ruin unless they find a new business model.   We’ve discussed this before (here and  here, for example).  The Times piece is here.  Don’t miss their interactive graphic on college costs and debt levels.

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