Sweet Briar College is gone.
The little-known woman’s liberal arts school in Virginia closed its doors this year without much fanfare, but a well-known businessman says that’s a big deal.
"This is just the beginning of the college implosion," Mark Cuban tweeted after hearing about the school’s demise.
Cuban, a very successful entrepreneur and owner of the NBA basketball team the Dallas Mavericks, has been saying for some time that there is a “college bubble” in the same way there was a tech bubble and real estate bubble, which caused the wrenching financial crisis in 2008.
He says that students have too much debt because we make it easy and cheap for them to accumulate it, and because colleges are more than willing to take their money – without providing them enough bang for their buck. So, he says, at some point young people will not be able to afford college or be able to pay back the debt or find value in going, and colleges will struggle. Other smaller private schools have been having financial difficulties, according to some reports.
Cuban says there will be a price revolt and when colleges are forced to decrease tuition they won’t be able to respond by cutting costs – similar to the newspaper industry, out-flanked by new trends (online education and cheaper community colleges and good state schools) and too slow to react.
“By the time they realize they need to change their business model it will be too late,” he says. “Higher Education’s legacy infrastructure, employee costs structures and debt costs will keep them from being able to re-calibrate to a new generation of competitors.”
Others however, dispute Cuban’s premise, including the Federal Reserve of Cleveland, which did this report. They say college is worth the expense when you compare how much more graduates make compared to people who don’t attend post-secondary school. They say, for instance, that while graduating students only saw their income go up $800 annually recently, young people who didn’t attend college saw their salary decrease by about $2500.
They also say most loan payments aren’t as bad as critics say, because figures are skewed by some students who have excessive debt which drives up averages.
And still other experts say the college experience has value beyond the salary students will make.
So what does this mean to you? The best advice might be two steps: Consider if you want to study for a career that requires college and think about other options. (Perhaps during a gap year when you can figure it all out). Think about what you can realistically afford, what your debt will be and what various schools and careers offer in terms of value.