Just as the fall of Lehman Brothers in 2008 heralded a much larger economic crash, the September shuttering of the ITT Technical Institute chain of for-profit colleges signals a broad crisis in higher education.
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Highlights:
- Since 2000, overall educational outcomes have fallen while debt and student defaults have risen. And for-profits have become ground zero for the student-debt crisis, representing roughly 75% of the increase in student defaults.
- The $1.2 trillion student-debt bubble represents a much smaller part of the consumer-credit market than housing did on the eve of the 2008 financial crisis.
- only a quarter of first-year college students can predict their own debt loads within 10% accuracy.
- While it’s true that a degree ensures something more than a $15-an-hour future for most graduates, it’s no longer a ticket to higher social mobility for the poorest Americans. Many end up in second-or third-tier colleges, going into debt for dubious degrees.
- In ITT’s case, the government may write off loans for current students. Though aimed this time at the right people, this new bailout could end up costing taxpayers $500 million, according to private student lender Sallie Mae.
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