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Blowing the Last Bubble:
The Frailty of Financing Higher Education and the Risks it Poses to
Our Students, Communities, and Institutions
Scott H. Baker
Robert Skiff, Jr.
University of Vermont
Ed.D. Cohort 2009
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The American economy runs on credit; as of 2001, we had 1.5 billion credit cards (five for
every American) and $560 billion in outstanding credit card debt (MacGuiness, 2001). As of May
2009, just the top five credit card companies had $554 billion outstanding debt (CreditCards.com,
2009). The amount of mortgage debt in America stands at nearly $14 trillion and counting. Lastly,
the total debt within the U.S. economy calculated by the Federal Reserve amounts to $50 trillion,
which amounts to more than 350% of GDP (Board of Governors of the Federal Reserve System,
2009). In other words, America owes 3.5 times what it makes.
This staggering amount of debt, and debt servicing, while allowing America’s economy to
function, is becoming a burden that limits our commitments to social justice and meritocracy.
Financial institutions are now becoming the most important gatekeepers in higher education,
determining student access based on credit scores and functioning their skill in accessing capital
markets rather than academic ability and merit. The debt ratios currently being imposed by global
financial markets, and the current credit crisis, have the potential to dramatically transform the
mission, operations, and structural functions of higher education.
Higher education in America is potentially emancipatory. It is supposed to create more
choices and opportunity for individuals to create social, cultural, political, and economic capital in
support of the achievement ideology. However, the current of level of debt that students are
burdened with is having the opposite effect; it alters or limits the choices they can make after
graduation. Instead of experiencing a truly liberal (from the Latin “to free”)