3. Lower admissions standards to admit a larger fraction of applicants (including community college transfers) in order to kick the can down the road for another year or two, then feign shock when retention rates fall off a cliff. (My university went from about 81% to 59%, freshman class.)
.. One of our top departmental applicants, a guy who should have been in line for multiple scholarships in a good year, said he didn’t think he’d be able to attend without financial assistance. For whatever reason, millennials are incredibly reluctant to go deeply in debt in order to finance education. It’s almost as if the formative years of their youth witnessed some kind of similar cycle.
.. Keep your eyes on asset-backed security issuance rates for repackaged student loans. The loan market is technical, but it sends off all kinds of advanced warning signals in the form of flagging demand. As of now, I’d say the trend is turning over. And yes, with a 1.2 trillion loan market suddenly facing rising delinquencies and having more trouble marketing fresh debt to a new generation of dupes, this will snowball. As banks can’t find ways to sell debt, they’ll issue less of it, which means fewer applicants, which means that universities will be forced to swallow the depreciation cost of all the improvements they’ve been making under the early rush of new money from the education bubble, for years to come.
Student debt assets were, at last count, making up something like 50% of the US government debt portfolio.