Has the College Expense Bubble Burst?

Has the College Expense Bubble Burst?


Discounting has long been practiced at higher education institutions across the United States with the biggest savings for families in need.

Experts Weigh In

Since our story ran, others have jumped in to analyze college costs with not a few experts stating that the college expense bubble has finally burst. Michael Barone, the senior political analyst for the Washington Examiner and a Fox News contributor, explained that bigger discounts and smaller tuition increases demonstrate that “markets work.” Even if those market forces take time.

The Brookings Institution, one of our nation’s oldest think tanks, has also weighed in through its Center on Children and Families policy brief. While Brookings acknowledged that possessing a college degree has certain advantages, not all college degrees or college graduates are equal.

Declining Financial Benefit?

Brookings also found that as college costs more, the benefit of attending falls. Non-monetary benefits aside, those benefits are typically measured in financial returns, specifically how much more a college graduate earns than a noncollege graduate. The average benefit for completing college is clearly higher, but Brookings noted that for some students, especially those that come from an economically deprived background and who take on student loans, the benefit is much smaller or not apparent at all.

Drilling down further, Brookings also found sharp differences between competitive and noncompetitive colleges. Students that earn a degree from competitive colleges and universities such as Harvard or Stanford are likely to earn far more than students graduating from Fayetteville State University in North Carolina or the University of Maine at Presque Isle. The second group of colleges were among the schools where graduates would likely receive a negative return on their education even with financial aid considered. That list was compiled by Payscale as part of its College Education ROI Rankings list.

Public Versus Private

The Brookings report also noted differences between private and public institutions, with the latter offering an improved ROI over the former. But, one caveat should be considered: the competitiveness of the public college or university. Still, Payscale data reveals that a number of private and public institutions have clearly missed the mark or provide a financial return of little consequence.

Ultimately, statistical averages may not go far enough to explain the return on investment for today’s college students. Indeed, one of the report authors, Isabel Sawhill, offered her positive personal assessment for attending college. Said Sawhill, “On average, getting a college degree is a good decision, but it isn’t good for everyone. It’s whether you finish, where you go, what you major in it, and what you do.” And then there is the non-monetary contribution that institutions of higher learning provide as college graduates are more likely to positively contribute to society with stronger marriages and community involvement.

College Debt Considerations

With data demonstrating that college may not offer the value many students expect, today’s high school students and their families may want to consider the ROI and just how much debt to take on in pursuit of a degree. Student loan debt has now topped $1 trillion, an amount that should cause everyone to consider what they’re spending. Colleges and universities may finally reign in costs to provide a more competitive market for students that can best benefit from a college degree.


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