This Economic Bubble Is Going to Wreak Havoc When It Bursts

An imminent economic crisis the likes of which this generation has never experienced is coming.

However, the conditions under which the next bubble will burst will surprise even the most astute observers of economy, culture, and politics. The higher education bubble (one-sixth of the U.S. economy) will likely burst with the force of all previous catastrophes combined—a shock wave so sudden, so large, that it gathers the full force of the savings and loan, insurance, energy, tech, and mortgage crashes, creating a blockbuster-level perfect storm.

Disturbing patterns of unsustainable economic activity have emerged over the last decade. College and university budgets rely on inflated real estate investment, deny the short- and long-term effects of student loan defaults, accept the rise in tuition above the rate of inflation as normal, and expect a downsized part-time faculty to help subsidize inflated tenure track and endowed tenure budgetary lines. The insatiable upper administrative appetite for high salaries, job description absurdity, and low accountability adds endless layers of compulsive, prideful incompetence to an already unstable education business model that believes it simply cannot crash.

While higher education is not a business in the same way for-profit corporations are, a business plan rooted in reality remains essential to its success. Reality, however, seems an ongoing elusive concept to college administrators.

Dormitories and sports facilities are funded regardless of flat enrollment rates. The mission of imparting knowledge to students (the service for which parents and students pay dearly) is shunted off to ill-paid adjunct faculty with no skin in the game. Students poorly equipped for real-world opportunities are unable to repay student loans, let alone become alumni willing and able to support their alma mater. How long until higher education’s customer base realizes the expense is no longer worth it?

Without dramatic and immediate changes in the higher education sector, broader economies that support third-tier learning will fail along with it: People in the community employed by the college will lose their jobs; commercial activity geared toward the student population will fail; and investment in real estate for student housing will no longer have its expected return.