Right. A Wharton professor has stated that the market has already baked in a recession; and Goldman cited two or three things that tell them a recession is unlikely and the market will recover what it’s lost by 12/31.
I may be missing something, but they both are not likely right.
In actual market behavior terms, the “known” part of your statement is not a prerequisite to the market doing or not doing anything.
That’s why serious economic study today is interdisciplinary. If I had it to do over again, behavioral economics - the marriage of economic theory and psychology - would be an attractive area of focus.
The 1% were unaffected and proceeded as though nothing were wrong. 300K (2022 dollars) was really not something of concern even if their net worth dropped from 10MM to 6MM.
The bottom quartile were unaffected. They never had anything to begin with in terms of funds for college, and you can’t lose what you don’t have. The best of this group find their way to T20’s at an increasing rate to this day.
The “in between” was where the action was:
middle to upper middle class kids- started to question the value of elites, and the financial sacrifice they would need to make to afford them with savings that were now devalued, parents that were unemployed, and/or the negative wealth affect these events have on the middle class. Many rediscovered their cheaper, public options and this trend has persisted to today. I would surmise fewer higher stat, middle and upper middle class kids attend T20’s today, than they did in 2005. The rise of Honor’s Colleges is part of this.
Schools outside of the top 100 started struggling back then, and continue to. The cost of keeping the lights on continues to rise at the same time many kids see their value (relative to state options) decline.
In short- vulnerable schools will continue to pay a price and disappear and/or consolidate. Middle class kids will attend publics in even greater numbers.
Elite schools will be unaffected.
Some did have something to lose, which was jobs and associated income. In addition, student part time work to help pay for college was less available. Going from lower middle to poor, or poor to dirt poor, can still be a meaningful household financial difference.
Yes, it can still be a meaningful houseful difference financially. With respect to paying for college, not so much, as these families would qualify for the same types of financial aid (or more) and virtually none of them would have had the financial wherewithal to be writing big checks for tuition, as even in-state public school tuition would be a hefty percentage of their income prior to the recession, much less for out-of-state or private colleges.
One situation in which low income students could be affected - if they are needed at home to supplement household income. This could be a big effect in some immigrant households where the 18 year old is the most fluent in English, is legal, etc.
I read about this FGLI Amherst professor who used some of his FA money to help his family pay utilities, rent. I could see more of this in a recession.
Foreign students (full pay) could increase in number at some schools.
Enrollment goes up during recessions, which makes my higher-ed job really secure. Most of those enrollments are generally state schools because costs are cheaper and more predictable than private schools.
State schools usually have stable tuition levels during non-recessions. But when state revenues fall while other state services increase in costs during recessions, state school funding gets cut, resulting in tuition increases during recessions.