Higher Ed Bubble Driving Luxury Development Around College Campuses

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The higher ed bubble – the explosive growth in tuition and student loan debt driven by government policies promoting college – has resulted in a lot of hiring and compensation growth in the higher ed industry.

And, in turn, that’s driving big-money development around college campuses to serve this growing class of rich university elite.

Real-estate investors and developers, hungry for new areas for growth, are finding a lucrative and previously untapped market in these areas surrounding college campuses, one marked by low inventory, booming enrollment and an increasing appetite for luxury living.

We see this national trend here in North Dakota, where salary for the state’s 11 university presidents has grown rapidly over the last decade (more than doubling for the heads of NDSU and UND). North Dakota’s new chancellor, Hamid Shirvani, got a $120,000 per year raise over his predecessor (he promptly bought a Porsche upon taking his new job).

At North Dakota’s largest university, the average full professor makes over $100,000/year, an amount that has grown $42,000 over the last decade.

How many of you are making $42,000/year more than you were a decade ago? Not many of you. But then, most of us don’t work in an industry in the middle of a bubble.

“When the borrowed money dries up, this’ll change,” writes Glenn Reynolds, author of The Higher Education Bubble.

Indeed it will. But in the mean team, let’s remember that this opulence is built on the back of unsustainable amounts of student loan debt, even as the value of a college degree declines.

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Rob Port is the editor of SayAnythingBlog.com. In 2011 he was a finalist for the Watch Dog of the Year from the Sam Adams Alliance and winner of the Americans For Prosperity Award for Online Excellence. In 2013 the Washington Post named SAB one of the nation's top state-based political blogs, and named Rob one of the state's best political reporters. He writes a weekly column for several North Dakota newspapers, and also serves as a policy fellow for the North Dakota Policy Council.

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