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Two prominent higher-education experts are warning that the financial structure of colleges and universities may be the next “bubble” to burst in America.
The result could be mergers, closures and even bankruptcies of smaller colleges that have spent too much and taken on too much debt based on a shaky system of student loans paying for ever-rising tuitions, say Joseph Marr Cronin, former secretary of education in Massachusetts, and Howard E. Horton, president of Boston’s New England College of Business and Finance.
The duo raised a stir within academic circles last week when they penned a joint opinion piece in the Chronicle of Higher Education entitled “Will Higher Education Be the Next Bubble to Burst?”
Their answer to their own question: Yes.
The problem is colleges - funded by a seemingly unending stream of student-loan money, backed largely by the U.S. government - have kept raising tuitions at rates far ahead of inflation and then spent every nickel they got.