HUFFINGTON POST: TedX and College Finance: A Danger in Your Community
Career College Central Summary:
I told you so. In a Ted Talk almost two years ago I told you so. I said that while too much student debt is bad for students, it may be worse for colleges. Events in 2015 are starting to prove me right. Ordinarily I wouldn't be a scold but there still remains a huge misunderstanding of what is happening.
Remember that almost all the money from student loans ends up in the pockets of colleges. To wit, my theory is colleges have grown far too dependent on these loans which have become one of their biggest sources of income. The solvency of colleges depends on their being able to raise tuition each year confident that student's have access to student loans to pay for the increases. The government makes these loans and it has become the company store to which colleges owe their financial life. While worried about their finances, colleges are very certain that the government will always be there for them. But is this confidence warranted? What if student defaults continue to grow to a point where they loan defaults jeopardize the whole program? Or what if the feds start to cut back on financial aid in order to control the deficit?
For proof of colleges' over-dependence on student loans let's look at Sweet Briar and the stock performance of for profit Schools. Sweet Briar was just rescued from the brink and for profit stocks crashed. Why?
Click through to read the full article.