The non-dischargeability of student loan debt is the linchpin of the higher education bubble.
Let's play out a causal chain:
1. If it becomes possible to get out of student debt through bankruptcy, then there must be additional collateral posted by the debtors.
2. This will cause fewer loans to be made, which will reduce the available pool of money sloshing into higher ed.
3. Enrollment and revenues will fall, forcing universities to:
a. Fight for some other form of government-ensured revenue stream (beyond the funds that state schools already receive). Get the popcorn out for this political rhetoric.
b. Reduce scope and conserve the more limited funds coming in the door. This probably starts with eliminating the endless program offices and initiatives that serve to swell the ranks of non-teaching staff.
c. Compete on price and return on investment by improving quality and employment rates of graduates.
Let's play out a causal chain:
1. If it becomes possible to get out of student debt through bankruptcy, then there must be additional collateral posted by the debtors.
2. This will cause fewer loans to be made, which will reduce the available pool of money sloshing into higher ed.
3. Enrollment and revenues will fall, forcing universities to:
a. Fight for some other form of government-ensured revenue stream (beyond the funds that state schools already receive). Get the popcorn out for this political rhetoric.
b. Reduce scope and conserve the more limited funds coming in the door. This probably starts with eliminating the endless program offices and initiatives that serve to swell the ranks of non-teaching staff.
c. Compete on price and return on investment by improving quality and employment rates of graduates.