Saturday, August 1, 2009

The Higher Education Bubble: Not Bursting Yet

In previous posts (e.g., this one, this one, etc.) I've questioned the benefits of higher education and speculated that it might be the next debt-fueled sector to see its bubble burst. Not just yet, apparently, according to this front page article in today's Financial Times. Excerpt:

Americans are going back to school, choosing to sit out the worst employment market for 25 years in colleges, universities and business schools in the hope of better job prospects when times improve.

A spike in higher education enrollments has shown up this week in earnings announcements from companies in the otherwise hard-hit media sector, whose education divisions have far outperformed their better-known news brands.

On Friday, the Washington Post disclosed a further $89m in quarterly losses from its flagship newspaper and a $5m loss from Newsweek, its news magazine. By contrast, its Kaplan higher education division saw profits up 74 per cent to more than $70m.

The article goes on to give other examples of media companies' education divisions cleaning up, including the example of Pearson (the parent company of The Financial Times) which runs the NY Institute of Finance, among other educational ventures.

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