Will education demand decrease?
It seems that finding buyers of student loans that have been in default is getting more difficult, according to Inside HigherEd:
Here’s the rub: The country’s current economic mess has obliterated the
market in which banks or other investors buy existing student loans,
and while the U.S. Education and Treasury Departments have taken
several steps to buttress that market, what they’ve done so far has not
included rehabilitated loans. And as of Friday, Suntrust — the lone
lender that has been buying up nearly rehabilitated loans from the
guarantee agencies (and the government) that hold them — will no longer
do so, which would leave borrowers who qualify for rehabilitation
starting in December without a means of getting back into good graces.
Other sources of savings for education, such as Canada's Registered Education Savings Plan, have been affected by the market crash with many people losing 20 to 50% of their savings.
What does this mean for the demand side of higher education? Will we be seeing a dip in enrolment in the next few years, as costs continue to increase? For universities and colleges, now is the time to examine operating models and assumptions, before the full impact of the recession hits them. This goes against conventional wisdom which says that demand for education goes up in a recession, but I for one do not believe that this is an ordinary recession as it is coupled with the shift away from the industrial era into the Inernet age, which changes many of the economic rules.