A lot of people have asked me what the bear case for the student loan crisis is. It’s not pretty, and it’s not guaranteed, but every day it looks more and more likely (1/n)
First, universities are leveraged to the hilt.
In a world of unlimited money schools are spending like crazy to attract more students. Buildings, administration, additional services - schools are spending *way* more than they used to bain.com/Images/BAIN_BR…
In a world of unlimited money schools are spending like crazy to attract more students. Buildings, administration, additional services - schools are spending *way* more than they used to bain.com/Images/BAIN_BR…
Non-top-tier universities are finding it incredibly difficult to cut costs; faculty have tenure and pensions, buildings can’t be unbuilt, and students would notice a reduction in services.
So what do they do? Loosen admissions standards. wsj.com/articles/after…
So what do they do? Loosen admissions standards. wsj.com/articles/after…
At many universities every revenue stream is down, every expense category is up. They’re taking on more and more debt.
And the debt is being downgraded, making it more expensive.
medium.com/@MLMorley/high…
And the debt is being downgraded, making it more expensive.
medium.com/@MLMorley/high…
All of the sudden Clay Christensen’s prediction that 50% of colleges go bankrupt in the next 10 years doesn’t seem quite so crazy cnbc.com/2018/08/30/hbs…
Again, this is the bear case, but entirely feasible
