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A Student Debt "Bubble" and Higher Education Costs

The Huffington Post reports that Moody's recently issued a report in which it indicated that the next consumer debt crisis may arise from college graduates with high student loan burdens who are unable to find jobs (or at least jobs that generate sufficient income for them to afford their loan payments). The article also notes that the debt ceiling deal eliminates the interest subsidy for graduate and professional students while they are still in school, which could lead to a 16% increase in their overall debt burden by the time they complete their graduate studies. In addition, it is possible (if not likely) that federal student financial aid could come under further pressure in the second round of deficit reduction negotiations slated for this fall.

As concerns about student loan debt continue to mount, the pressure on colleges and universities to contain costs as a way of limiting tuition increases will similarly continue to rise. Institutional responses to such pressures clearly may include further limitations on IT budgets. But growing worries about the cost of attending college and related student debt may present an opportunity for higher education IT. As institutions decide that more fundamental restructuring may be required to address their cost and funding issues, higher education IT leaders and professionals may have the chance to highlight where and how redesigning operations and processes around technology could be key to the solution.


I have been exploring the college funding maze (personally), for my children and can't agree more. This bubble is the result of unrealistic expectations of students, bad planning, and poor financial literacy.



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