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Study Finds College Tuition Bubble Might be Bursting

An increasing amount of studies are emerging that show college not to be the ticket to career success that it once was and that’s bad news for the up to 50 percent of college graduates that are either unemployed or under-employed. A study conducted by consulting firm McKinsey & Co. found that 53 percent of surveyed graduates from the classes of 2009 to 2012 would “do things differently if they had to do it all over again.”

Further, the study found that more than one third of participants didn’t feel that college prepared them for the job market.

As more studies find that college doesn’t necessarily lead to higher paying jobs, experts are advising perspective college students to evaluate the decision like any other purchase. Amy Laitinen, deputy director for higher education at the New America Foundation, a Washington think tank, said, “You wouldn’t go to buy a car without doing basic research,” she said. “But here we are spending tens of thousands of dollars on a school, and we know almost nothing about it-other than maybe the mascot.”

Other signs show that students are, in fact, thinking twice about college. Business Insider reports that some schools are seeing only 20 percent of accepted students enrolling. That’s down for the average rate of 33 percent. They’re also increasing the “tuition discount rate” to an all-time high of 45 percent. This is the price after all grants and scholarships are applied.

Finally, the rate of college tuition inflation slowed from more than 7 percent on average to 3.9 percent for the Fall 2012 school year. Public colleges and universities climbed by only 4.8 percent. Both of these rates represent a 12-year low.

Courtesy of the CARPE DIEM blog, author Mark Perry shares this graphic showing how college tuition inflation has largely outpaced general inflation as well as medical care and home prices.



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