Saturday, August 8, 2009
Extinction Level Event for Private Colleges
My older son is going into his junior year in high school. Accordingly, we have been mapping out the colleges he will be applying to. Being the Obsessive/Compulsive that I am, I began to look at their budgets, endowments, tuition income streams, etc... (I know... but I can't help it...)
I won't bore you with the details (but I will in a later post), so here is what I think:
Over 50% of the Private Colleges in the United States will not be functioning in 2020.
"I'd like to repeat that, because I think it sounds vaguely important!" - the late, great George Carlin
That's right. Over 50% of the Private Colleges in the U.S. will not be hosting any alumni weekend get togethers after 2020 or so.
"Peak Credit" has hit the college education market, and in its unwinding it is going to LEVEL it. The creation of a mountain of Student Debt has created a "college bubble", complete with jagoff - but tenured - professors, politically correct administrations drawing SILLY salaries and benefits, bulging budgets, and no hope of future revenue growth (actually, it is going to decline rather precipitously).
It then follows that paying $200k for an also ran private college education is rather silly, when for $40k the state schools are more than sufficient. Not that I won't send my son to a private school - that will be his decision. He can go to a state school on a full "Dad" scholarship, and maybe a nice graduation bonus... or he can go to a private college, no bonus, and maybe just a little debt to help him understand value.
I will let you know what he decides.
In the mean time, if you have kids nearing college age, ask yourself: It is now June 1, 2015 (or '16, '17, '18...). Your kid just graduated. What is he going to do for a living? Will it pay enough to warrant being in debt or you not having money to help them buy a home (or whatever)? All of this is a no brainer if you are rich. But let us say you are in between... say you have a couple of million $ net worth, 2 or 3 kids to educate, a wedding or 2 to pay for... this sums up a good percentage of the folks that send their kids to the "Also Ran" private colleges (you know, the consolation prize for spending $250k on private schools K-12 and your kid didn't make the cut at Harvard-Stamford-Yale-Princeton... this is going to sum up 99% of the parents of kids at our nations "top" private high schools, but hey, at least they taught our kids things like "honor above all", i.e. stuff that CANNOT be measured. My B*ll Sh*t Meter heads straight for the red zone whenever I am near these people.. and I know I irk them, too... nobody in that cabal likes a guy with eyes and ears and an ability for abstract thought). Please keep in mind that I believe that unemployment will be very high in the middle of the next decade.
If you doubt this... keep in mind, the "College Bubble" was funded by loans that will NEVER be repaid and furnished by Sallie Mae, and in much the same way that Fannie Mae and Freddie Mac ABSOLUTELY, POSITIVELY were the largest contributor to the HOUSING BUBBLE. Just as when the financing dried up for housing, the housing bubble popped... so, too will be the fate of the "College Bubble".
Not to worry, though. These people will work extra hard to B*ll Sh*t you, manipulate you, and out right lie to you in order to keep those latte's and co-ed's coming.
But the wheels are coming off this system, and there ain't much to be done about it.
Posted by The Short Story Man at 10:42 AM