Demographics Of The Higher Education Bubble

Yesterday, I covered the healthcare jobs bubble. Today, I'll look at eds instead of meds. The college student crisis in Japan:

The number of 18-year-olds in Japan peaked in 1992 at 2.05 million, dwindling to about 1.2 million by 2012. During that time, the number of four-year universities grew to 783 from 523.

Even greater energy has been poured into thinking up new departments and majors. According to the Ministry of Education, there were 207 new departments, majors and graduate programs in 2011, and an additional 236 in 2012. In 2006, a whopping 482 new departments and majors were introduced.

The boom has been happening for quite some time. Since the late 1990s, more than 2,000 new academic departments and faculties have been created in Japan, despite an aging population. Although dozens of departments are scrapped each year, that still leaves hundreds added to the pile annually.

Meanwhile, existing schools and departments are suffering. According to the Promotion and Mutual Aid Corporation of Private Schools in Japan, a Ministry of Education affiliate agency, 46 percent of private universities have empty spaces. The group said that nearly 40 percent of private universities were operating in the red.

Japan has been making an effort to attract more overseas students, but the relatively small number of foreigners is not enough to offset the growing number of university spaces.

Emphasis added. Japan's demographic crisis is staggering. Yet the higher education industry there spent two decades in denial. Good luck bailing out that sinking ship.

By way of contrast, Pennsylvanian post-secondary institutions owned up to shrinkage long before demographics became an untenable problem. Today, PA attracts the most out-of-state freshman. Higher education is a major export industry.

Globally, the United States is tops in "exporting" the college experience. Its graduate programs are a particularly powerful draw. Japan is late (too late) to the "Great Brain Race".

With mounting student loan debt and lower national birth rates, anxiety about the higher education bubble is acute. The concern is warranted, if you ignore the entire population outside of the United States. The alarm over the eds and meds economy is myopic in scope. Ask first if a "dying" city or country is importing students and thus exporting education. People develop, not places.