Subprime Higher Education: Notes on a crisis

The signs were already there. Anyone following social media knows the stories of disillusioned international students writing from Canada, Australia or the UK. However, it was difficult to distinguish these from the usual international student experience - the heroics of odd jobs - and that's what most people did. The stories of cost-of-living crises, student suicides and massive fraud were filed away as exceptions until they could not be ignored any longer!

The stories are real, and this crisis is unlike any before. The students are not complaining about having to work at Seven-Eleven. They are complaining about not being able to live on what they are being paid. They are complaining about shabby rooms that were supposed to be the campus, the disengaged individuals who are supposed to be their professors, the classrooms packed with people from their own country and the constant demand for fees from the 'college' they have come to.

This is higher education's subprime. Built on unscrupulous and often fraudulent salesmen who sell unrealisable dreams to the credulous and the vulnerable, the sector thrives on another middle-class fiction: a higher education degree is the gateway to a better life. The degree-issuing universities, beleaguered by the public funding cuts and led by people who are either too arrogant or too lazy to figure out any other way to find a path forward, turn a blind eye to these players and their practices, just the mainstream banks did once. The regulators conveniently keep these players - for-profit institutions and their agents - at arm's length, just as credit rating agencies did not want to know. It is no one's interest to upset the apple cart.

But like every good thing, this party is coming to an end. The reason is that inflation and high interest rates have driven up the cost of housing, and the international student cities - London, Toronto, and Melbourne - have become unaffordable. Suddenly, the visas are scarce, colleges are unsustainable, and the story is reaching home. The countries where the students came from - India, China, Bangladesh, and Nepal - are sensing the crisis and bracing for large-scale return events. The universities are finding themselves in the spotlight - the poor outcomes of their degrees and their complete lack of oversight of the for-profit partners are about to be exposed - and the gates are being shut.

The fall-out - there will surely be one - will reconfigure the sector completely. Unlike the subprime housing crisis, there will be no winners because no one in this case is too big to fail. The broken lives of the victims wouldn't be counted: They would be counted as co-conspirators. The university officials would shuffle from one institution to another and perhaps move between countries, hoping that no one would remember this little saga of overselling and underdelivering. But there will be no more returning to the glory days of visa selling and diploma mills.