Presidential elections are looming and focus on the federal budget has never been more intense. Worry about the upcoming “fiscal cliff” and the end of the Bush tax cuts is causing economists to fear what may be the disaster ancient Mayans were predicting for 2013. The future of higher education is looking no less disastrous; however is it fear mongering brought on by an election year, or should we be concerned?
First off is what might happen to higher education if congress cannot decide on a budget by January 1, 2013. The Budget Control Act, a collection of extensive cuts across the board to Federal spending, was created as a stipulation of raising the debt ceiling back in 2011. It will take effect if a currently deadlocked Congress cannot produce a budget that contains almost an equal amount in cuts by the allotted deadline.
Last month, the White House released a comprehensive report on where exactly these cuts are mandated to occur, and several higher education based departments are fated to see drastic cuts of 7.6 to 8.2 percent. While these numbers might not seem substantial, percentage wise they mean millions of dollars in financial aid. Most affected will be the Office of Post Secondary Education and the Office of Student Federal Aid, both of whom provide grants and advocate for higher education.
It seems worrisome, but Katie Baird, UWT professor of economics and researcher of education policy, isn’t overly concerned about this.
“The question you have to ask,” she explained, “is ‘what’s the likelihood that this is actually going to happen?’”
Her prediction is that Congress will either raise the debt ceiling again or produce some sort of budget, but it will act before things come to such drastic measures.
Secondly and perhaps more likely is what some are calling the “higher education bubble”. Over the past few months Higher Education Chronicle, National Review, and even The Economist have been predicting a housing market-like crash that will cause massive breakdown throughout our higher education systems. Economists predict this in part because, like during the housing situation, loans are being given to people who can’t necessarily pay them off and who are going deeper into debt every year as costs go up. This is an even direr straight for students than for home owners because they can’t sell their education to pay off some of the giant bill. They predict that once people realize higher education is not worth such monumental costs, it will become virtually valueless as did houses, and people will be indebted for something they cannot use or afford.
Baird also disputes this prediction, mostly because the housing market was a problem of scarcity that drove up prices; everyone wanting to buy a house isn’t sustainable; however, there is really no scarcity factor in knowledge and education. The real problem here, she explained, is the job market, which will hopefully be temporary, and the state budget crises that are driving up the cost of public higher education. This will mean high prices and temporary low rewards, but not necessarily a bubble.
All in all, we may not have as much to worry about as the election year media makes it seem.