Saturday, March 7, 2015

The College Bubble

Just last week, Sweet Briar College near Lynchburg, VA announced it would be closing after this semester. Sweet Briar emerged as a finishing school for girls, and although it evolved into a humble liberal arts college, it remained steeped in the tradition of many of Virginia's all girls school.

But traditions are changing and history is no longer as relevant as it once was. Colleges like Sweet Briar hinge on legacy students and horseback riding, not exactly the sort of skill headhunters are seeking. They're also relatively expensive. And in an increasingly globalized economy, degrees from small liberal arts colleges are far less valuable than larger, often more affordable universities, like Penn State or Virginia Tech.

Billionaire Mark Cuban reacted to Sweet Briar's closure by Tweeting, "This is just the beginning of the college implosion." Citing a national college loan debt of more than $1.3 trillion (with a T), Cuban warns that easy access to excessive debt is beginning to weigh on the universities themselves. It's easy to look at universities like Penn and Drexel that are redefining our skyline and see no end in sight. But these are exceptional examples. A degree from the Wharton School of Business is as powerful in London as it is here at home. 

But there are other colleges in and around Philadelphia that cost nearly as much and carry little to no weight on the west coast. Could Bryn Mawr or Swarthmore be the next Sweet Briar?

Easy access to housing loans nearly caused a global depression in 2008. Overnight, houses no one could truly afford became houses nobody wanted. Did colleges pay attention? Can Drexel truly afford to build its Innovation Neighborhood, or is it banking on the hope that its students will someday pay back their $200,000 loans?

The $1.3 trillion in backed up tuition isn't just outstanding, it runs the risk of not being returned. Colleges can't foreclose on a degree, and with more and more people declaring bankruptcy, average credit scores falling, lenders for simple things like credit cards and cars will have to begin reconsidering the norm. 

But an impending college bubble doesn't just rest on lending ease, it also faces changing trends and waning traditions. Let's be honest, most corporate job candidates are far more than their degree in English Lit, and companies are more concerned with your certifications and experience than they are with what you did with your four years following high school.

People are landing lucrative jobs with certifications through non-profit organizations, for-profit colleges like Strayer University, and technical schools that train you for the workforce in lieu of traditional academia. These skills are more valuable to a company's bottom line than core coursework. 

In many cases, a college degree proves little more than the discipline to complete a goal. Unless you're studying to become a surgeon or an architect, your college degree may simply be a costly piece of paper. And with students - and parents - wising up to the reality of debts that may never be repaid, they're reconsidering the traditions that send them to small, regionally known private colleges like Sweet Briar, or even a traditional education.

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