I wonder if the student loan/debt bubble will hit these towns hard (if it turns out to be a bubble). Spending on higher education seems like its gains are unsustainable.
Students and their parents need to have some difficult conversations: 1) How well prepared is the student for a given major? Remedial classes add cost but not credits toward the degree. 2) Does the student have a track record of finishing what they start? 3) Will the starting salary for graduates with that degree permit the student to pay their living expenses and their loan debt? 4) Are the time-to-finish estimates realistic? IIRC, the majority of students in 4 year programs actually take 5-6 years.
First, the market clearly does not reward cheap education. A lot of prospective students and their parents are enamored with pricey colleges either for the status or for the perceived value. This is probably a result of cultural expectations lagging behind actual reality by a few decades.
Second, all the intermediary parties have no incentives to control cost. Student debt cannot be discharged under bankruptcy, so why would the lenders ever say no to any debt? They don’t care that the college is overpriced by a factor of 10 and the student will never pay off their debt fully, they’ll still pay 6-11% interest for the rest of their lives, which is highly lucrative for the lender.