Banks and homebuilders aren't the only ones facing hard times due to the economy. America's undercapitalized independent colleges are staring at a spiral of major threats as penny-pinching students and parents consider cheaper options, and funding sources dry up. As a result, they could be the next bubble industry to pop.
But while head counts slide, needs rise. Demand for student aid is up, but charitable donations from foundations and individuals will fall during a downturn. And the same goes for investment returns. Federal aid may take a hit, too. Taken together, many independent institutions start to look vulnerable.
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