Blogs:

A look at the University of Chicago and you will be impressed with its Gothic buildings and leafy avenues. This solid and sober place is now submerged in piling debt just like other not-for-profit universities in our country.

For years, crisis has been brewing in the field of higher education. Spending by universities has been on the rise which is evident at the University of Chicago which has recently constructed a state-of-art library where robots retrieve books. They have also constructed a ten-storey hospital and a new arts center.

This university and many others in our country spend a fortune with a hope of attracting the best staff and students. They also enhance the infrastructure to boost their league table ranking, draw in research donations and grants and attract more money and talent.

More numbers of students are being recruited by universities and tuition fee is constantly being hiked up to pay for all this. Since 1983, college cost per student has gone up at least three times the rate of inflation. It is obvious that this kind of increase cannot continue.

Today, the student debt in our country stands at $1 trillion. Even before the financial crisis reached massive proportions, private lenders started asking for security for student loans. As compared to this year’s $6 billion, private lenders disbursed at least $20 billion in 2008.

Though states have cut back, higher education is receiving high federal support. Universities today are realizing that most of their students require need-based aid, there is practically no philanthropy now and endowments have shrunk.

There is no dearth of reasons for colleges to be concerned about their debts. Debts cannot be inflated like grades. Though colleges such as Cornell, Yale, Harvard and Georgetown are cushioned and supported by huge endowments, they have still been on the unsustainable path for quite a number of years.

According to “The Higher Education Bubble” author Glenn Reynolds’ prediction, when the bubble bursts, it will certainly be a major mess. For a very long time, people strongly believe that no matter what the cost, they must get college education for future prosperity. While colleges are constantly raising tuition, people continue to pay more especially as credit is easily available.

Reynolds says that there is no way this trend can continue forever. People have now started questioning whether it is worth taking on a $100,000 debt for religious and women’s studies. Experts stay that value for extra money charged has not been delivered by higher education. As compared to the past, students are learning lesser in fewer hours. They feel that it is only a matter of time when the bubble will burst.

Universities have now started addressing their finance issues on a war footing. There is a welcome recovery of endowments. Finances have improved for some institutions such as the University of Chicago since 2010.

Experts feel that brand name institutions must curb their impulse to continue with need-blind admissions and hiring star professors to ensure that they do not go bust. Deeper cuts are required at the other colleges that are lesser known. They must shutter or merge campuses and shed courses and departments.