Is higher education the next financial bubble ready to burst?
Tuition and fees at community colleges in Minnesota and Wisconsin are among the highest of any state in the nation. And tuition hikes at Minnesota public colleges are running a lot faster than income growth in this decade.
There are lots of different explanations for this. But let's not go there right now. The reality is that despite attempts by some schools to ease the cost burden in tough times, schools are boosting tuition at a clip faster than family incomes are rising.
At some point something's gotta give.
My MPR News colleague Bob Collins today posted a link to a compelling opinion piece that noted: "Consumers who have questioned whether it is worth spending $1,000 a square foot for a home are now asking whether it is worth spending $1,000 a week to send their kids to college."
Minnesota's supply of high school graduates, growing since the early 1990s, is expected to peak this month and then decline through 2015. So at the same time the region's colleges face a shrinking supply of freshmen, they will be adding to a tuition burden that's among the highest in the country, during the deepest recession in more than 25 years.
That doesn't sound sustainable.
There's no doubt the financial payoff of a college degree remains strong. But at what point to Americans start seriously looking for alternatives to the traditional U.S. college education?
How about Canada, where the exchange rate is favorable and the government is making it easy these days to explore college options?
So is college worth the money? Do you see the time coming when the traditional Minnesota college education won't be worth its cost? What alternatives are out there? I'd love to hear from folks.
If you know someone who's trying to plan for college or stay in college in this economy, drop a line and share a story.
Save or spend? It's one of our favorite issues here at MinnEcon. I believe this recession is shifting American saving and spending patterns permanently away from consumption and toward savings.
The latest evidence? Numbers released today from the Commerce Department.
Personal saving as a percentage of disposable personal income was 5.7 percent in April, compared with 4.5 percent in March.
Disposable income rose 1.1 percent in April over March, thanks largely to the federal bailout, which lowered current taxes and increased government social benefit payments, the department said.
Personal consumption spending slipped 0.1 percent.
The excellent economic blog Calculated Risk today notes personal saving as a percentage of disposable personal income was the highest in 14 years (see graph below).
So after two-plus decades of hearing about how U.S. citizens spend too much and save too little compared to other nations, is the worst recession in more than 25 years compelling Americans to change their savings and spending habits? I think so.
We've seen evidence in surveys earlier this year. And citizens from our Public Insight Network have been telling us through the winter and spring they were pulling back on purchases, are saving what they can and otherwise wary about extending themselves with any kind of spending.
I understand that consumer spending is crucial to the economy, but I think it's a good thing for us as Americans. Our rising debt drove our consumption and, as we're witnessing, that's unsustainable.
Yeah, it's possible this is a short term change and that we'll be back to our spending/consumption/debt days when the economy recovers completely. I also know experts keep telling us that we'll mess up the economy even more if we don't start spending our dough.
What's the right thing to do? I don't expect people to stop buying stuff. But who can argue that's it would be a bad thing for the pendulum to swing back toward lower debt-to-income ratios and greater personal thrift?
You can add your voice and help MPR News get a better perspective on what's what happening by taking your own economic pulse.
Below are some recent responses from our audience on money issues. Send us a story and we'll add it to the map.