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These Are The Colleges That Will Be Screwed When The Student Loan Bubble Pops

Dave_BerryDave_Berry 492 replies2607 threadsCC Admissions Expert Senior Member
edited June 2012 in Parents Forum
" 'We know the model is not sustainable,' said Lawrence T. Lesick, vice president for enrollment management at Ohio Northern University. 'Schools are going to have to show the value proposition. Those that don’t aren’t going to be around.'

(The New York Times; May 14, 2012)

Very few topics have received as much attention here at Sense on Cents as the student loan/debt bubble.

In my opinion, the size, scope, and impact of this problem is an enormous anchor weighing down our next generation and our nation’s economy.

Make no mistake, this anchor is not only impacting thousands of students and families but is also having an equally burdensome impact on colleges and universities nationwide.

I choose my words carefully here. The other day I entitled my commentary, Student Debt Bubble: Impending Doom for Colleges." ...

These Are The Colleges That Will Be Screwed When The Student Loan Bubble Pops - Business Insider
edited June 2012
176 replies
Post edited by Dave_Berry on
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Replies to: These Are The Colleges That Will Be Screwed When The Student Loan Bubble Pops

  • placido240placido240 614 replies22 threads- Member
    So, no actual names of colleges?
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  • xiggixiggi 24571 replies872 threads Senior Member
    " 'We know the model is not sustainable,' said Lawrence T. Lesick, vice president for enrollment management at Ohio Northern University. 'Schools are going to have to show the value proposition. Those that don’t aren’t going to be around.'

    Perhaps time has come for the White House boss to organize another beergarten party. Let's Lesick explain the value proposition to Kelsey:

    Kelsey Griffith graduates on Sunday from Ohio Northern University. To start paying off her $120,000 in student debt, she is already working two restaurant jobs and will soon give up her apartment here to live with her parents. Her mother, who co-signed on the loans, is taking out a life insurance policy on her daughter.
    http://www.nytimes.com/2012/05/13/business/student-loans-weighing-down-a-generation-with-heavy-debt.html
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  • parentOfJuniorparentOfJunior 67 replies17 threads Junior Member
    <So, no actual names of colleges? >

    I think we all know them, don't we? In my opinion, any college that charges over 50K a year will be on this list.
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  • barronsbarrons 23053 replies1955 threads Senior Member
    I'd change that to any college not in the Top 25 or so.
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  • BayBay 12456 replies43 threads Senior Member
    Here is a list of colleges with endowments exceeding $1 billion. Could they possibly be at risk?

    List of colleges and universities in the United States by endowment - Wikipedia, the free encyclopedia
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  • parentOfJuniorparentOfJunior 67 replies17 threads Junior Member
    <I'd change that to any college not in the Top 25 or so. > Agree :-).

    Any college that is not in Top 25 or so, YET charges over 50K a year. As for the endowment, it seems, incidentally, the list largely coincides with the Top 25
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  • barronsbarrons 23053 replies1955 threads Senior Member
    Yes, and over $50K.
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  • ucbalumnusucbalumnus 78630 replies697 threads Senior Member
    placido240 wrote:
    So, no actual names of colleges?

    There is a link to the actual report, but the link is broken.
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  • ucbalumnusucbalumnus 78630 replies697 threads Senior Member
    Here is a link to the paper that works (the one in the page linked to in post #1 is broken):
    http://www.naicu.edu/doclib/20090209_kneedler-paper.pdf

    However, the paper does not include any specific college names.

    Note that the same content of the page linked to in post #1 appears to be the same as that found here:

    Student Loan Crisis: Why So Many Colleges May Fail? | Sense on Cents
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  • hudsonvalley51hudsonvalley51 2386 replies96 threads Senior Member
    If #26 on the US News Top 40 charts is at risk so is #25 and #24 and so on. If the Apolcalypse is bearing down on us the odds are few, if any colleges survive. But I don't believe that is about to happen and neither do most intelligent people. I would agree that the profile of the most "at risk" colleges offered by the author of the study cited in the article is probably a bit on the optimistic site but some of you guys sound like the perma-bears commenting on the market back in 2001.
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  • PolarBearVsSharkPolarBearVsShark 588 replies11 threads Member
    Meh. Some of these smaller top LACs have endowments hovering around the 1 billion dollar range. And they also have strong alumni support, alumni with deep pockets, and extremely high alumni morale. It will be a game of favorites.
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  • cortana431cortana431 4846 replies169 threads- Senior Member
    I understand what the real estate housing bubble is, but what is exactly is the student loan bubble and why will/would it be disastrous if it pops and for whom? Aren't the colleges receiving the money from students and it's the STUDENTS and their families who are in trouble because they have already or already are paying their tuition, room and board through loans and now they must pay off the debts and not the colleges?

    And about how long will it be until this bubble pops?
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  • placido240placido240 614 replies22 threads- Member
    I thin k the bubble analogy is based on a drop in demand, just as the housing bubble in 2007 - 2008 came about because ever-increasing prices of homes combined with banks' increasing inability to lend at those prices and to get the loans off their books reduces lending - the musical chairs stopped.

    In the college context, as prices for tuition keep increasing, and as government lending for student loans hits a ceiling, students will not be able to afford the tuition and simply will go to cheaper schools, thus leaving high-priced schools (like high priced homes) high and dry. The endowment may cushion this effect for some, but the point is that the high costs will serve as such a deterrent that departments will get shut down and facilities will shrink. Pretty soon colleges will figure out that their admin costs have gotten way out of line and will start to cut the "diversity officers" and other such blather.
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  • cortana431cortana431 4846 replies169 threads- Senior Member
    Will they also cut tuition, room and board and the overall cost of attendance so that more families will be able to soundly afford such schools?
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  • GladGradDadGladGradDad 2804 replies14 threads Senior Member
    There seems to be a 'victim' tint to many of these articles - how the student and the student's family are somehow victims in all of this. We even have an executive at one of the highest cost schools (with little in the way of 'name' to go along with it) acting as if the people in charge of determining the cost of the college are somehow disconnected.

    This is a simple supply and demand equation - as long as people will pay the high costs, the colleges will charge what the market will bear - it's a simple as that. I don't see why anyone's complaining about the cost of these private colleges (public is a different story). If you don't like the cost - choose another college. If enough people did that then there's no way many of these colleges can keep charging what they do. Colleges like HYPSM... will likely be able to keep charging what they do and could probably charge even more due to the high demand but a college like 'Ohio Northern University' (no offense intended)?

    These students generally aren't racking up these costs on their own, someone needs to cosign on the higher loans, so this isn't simply the 18 y/o making ignorant decisions.

    Hmmm - are there any cc'ers who are paying these high fees for their kids to attend a particular college where the parent doesn't think it's worth the cost? If so, why's your kid going there?
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  • lmkh70lmkh70 803 replies173 threads Member
    So, Baylor University has such a big endowment, yet, gives very little financial aid and loads kids up on loans. That is a little sad I think.
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  • pugmadkatepugmadkate 5824 replies64 threads Senior Member
    So now I"m supposed to worry about what will happen when my son graduates and worry about his college being "screwed"?

    Too much bad news these days.
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  • charlieschmcharlieschm 4096 replies186 threads Senior Member
    The endowment numbers can be very deceiving because they don't take into account debt. There are many universities that have debt that is higher than their endowment, but few people pay attention to those numbers other than the bond rating agencies.

    Yes, the colleges that are most vulnerable are the ones that charge too much money, are not highly ranked/prestigious, don't have a strong market niche in certain popular academic fields, are very tuition dependent and have high debt. These colleges are already greatly discounting their tuition for most students - some colleges already offer "merit" scholarships to almost every student they enroll.

    Colleges located in areas with high cost of living also are more vulnerable. In addition to increasing the college's costs, the students also have much higher costs if they move off campus. Some of the worst debt horror stories were students who insisted on going to college in Manhattan.

    The cost of housing greatly varies from college to college. Part of those costs are influenced by the newness of the college's housing and how elaborate it is.
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  • mom2collegekidsmom2collegekids 84175 replies1035 threadsForum Champion Financial Aid, Forum Champion Alabama Forum Champion
    Kelsey Griffith graduates on Sunday from Ohio Northern University. To start paying off her $120,000 in student debt, she is already working two restaurant jobs and will soon give up her apartment here to live with her parents. Her mother, who co-signed on the loans, is taking out a life insurance policy on her daughter.


    OMG...what idiots.

    And, she's a Marketing major. She could have gotten that degree anywhere.

    "I'm going to owe like $900 a month. No one told me that." Oh my. How come her co-signing mother didn't look into that...where are the adults???? And, the monthly payments will likely be larger than $900 a month.

    If it's true that her private univ (an unknown school outside of the region), told her to focus on her "dreams" rather than cost (debt), that school should be ashamed of itself. I hope the school is embarrassed by this article.

    I can't imagine the feedback this girl and her parents have gotten since this article came out. Instead of sympathy, they're probably getting Idiots of the Year nominations.


    WORKING 3 JOBS* Chelsea Grove dropped out of Bowling Green State University and owes $70,000. “I’ll be paying this forever,” she said.


    Here's another one. Who the heck borrows $70k to go to BGSU??? and she didn't even graduate. Crazy. The co-signers would deserve it if these kids default.
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  • eastcoascrazyeastcoascrazy 2542 replies22 threads Senior Member
    I'll take a stab at it:

    Some of the colleges that will be screwed are on the "Colleges That Change Lives" list.

    On a currently running thread, Ursinus is listed as still having openings in this fall's freshman class. Very small LAC, in Pennsylvania, $52,000/year.
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