Are we approaching a tipping point in the globalization of higher education?

The unsettling financial events of the past few weeks have undoubtedly pushed the cost/price model of American higher education much closer to the breaking point.  In an earlier post, I argued that any significant limitations on price increases could cause fundamental problems for our basic business model.  We now are in a much more complex situation than I discussed in the earlier posts. The state of the economy certainly will lead to greater pressure from parents and government to halt increases in the real price of higher education, so we can expect more intrusive legislative actions, and much stronger push-back from parents.  Loans to parents and students, which have provided the undergirding support of our large price increases, will not be so easy to get in the future for a multitude of reasons including large drops in home values.   In addition, we face a situation in which philanthropy will be quite uncertain for some period, and endowments and their returns have been greatly battered.   For public institutions, there is the reality that states are seeing greatly reduced tax returns, and furious budget cutting is evident everywhere.   And on the cost side, the cost of borrowing (when it can be obtained) will certainly go up significantly. This will impact higher education directly in many ways, as in  our facilities programs where we usually use considerable long term debt.  In addition, many  higher education institutions have significant short term debt that is used to pay bills in between the huge inflows of income that occur at the beginning of each semester (trimester or quarter).

In my view, all of this pushes American higher education much closer to a globalization tipping-point, similar to the one  that occurred in Great Britain and Australia a decade ago.  In both cases, governments told public higher ed institutions that state funding would not be sufficient in the future to maintain their growth and quality, and that other sources of funding would have to be found - without passing the burden to domestic students.  The solution was to bring international students in at high tuition, and to open campuses and programs around the world.