Is Higher Education the Next Bubble to Burst?

[...] The Chronicle of Higher Education raises a question worth examining, as the credit stays tighter than usual and the economy remains sluggish: Is higher education the next bubble to burst? With tuitions, fees, and room and board at dozens of colleges … Read Full Post: Is Higher Education the Next Bubble to Burst? – The Washington Independent.com [...]

While I agree that it is a problem for higher education, it is good for me. I teach at a community college, and I advise students to go that route first. In fact, most of the teachers who teach at the 4-years teach at the community colleges. I then advise going to cheaper 4-year schools. The graduate schools are where the money should be spent.

I think much of this is good. Many students go to school because they feel they have to. They have no interest in the subject matter or doing well. Many go because they want to keep insurance or family obligations, or they are not responsible enough to leave the school system (they want to continue high school essentially). If it were me, I would have students take vocation tests. If they were academically inclined, the state would help the student in college. If they were vocational, the state would help move them in that direction. Both sides would agree that if the student chose to do something different, it would be on their own money completely. There would be less choice in the matter of course if you get help from the government, but this would ensure we have college for what is needed. The students would have responsability, and the state could make sure that job gaps are being filled.

Higher Education is often approached in a completely backward manner. It's an investment which should be expected to pay itself off in a reasonable period of time. Both the government and the market should be able to solve the problem of extending credit to those that wish to attend, even with the current economic situation.

The bubble doesn't exist in college in general, but in those disciplines that don't provide the needed return on the investment. Engineers have no problem paying off a $200K education, relative to what they could earn without a college degree, but there are far more social science and humanities degrees coming out for the market to support. Instead most of these graduates are going into general purpose careers that don't discriminate on the type of degree earned (and it's debatable if one is even necessary for the job in many cases).

Many students are going into college without the investment in mind but are caught in the mindset that a degree (no matter what it is) is required for most jobs. There's a lot of truth in that and most students and parents see the college degree as little more than a tax to enter the job market. But does a $200K investment make sense for someone to take a $25K per year job, that might take 20+ years to pay off? We really need employers to be more honest with their educational needs, universities to be more honest with the supply of slots in programs with few job prospects, and expand slots in programs where employers have to go overseas simply to fill their positions, such as engineering, and students need to be more considerate of whether the education makes financial sense in the long run.

Treating this like a money supply issue is only going to put more young adults back at home with mom and dad because that first job out of college barely covers the student loan payments, let alone room and board.

[...] that luxury, but it will be interesting to see how that looks in three to five years time. A lot of very smart education-watchers are openly asking the question if, by the time other markets are finally starting to rebound, [...]

We should look into why the heck college is costing so much. Where is the money going?
Sounds like big time fleecing to me, perhaps with some collusion thrown in.

Has anyone looked into the relationship between the demand for college (number of college age individuals) and supply of college (number of classrooms) over time? My hypothesis is that the former has grown more rapidly than the latter, and this in turn has allowed colleges to increase costs without decreasing demand and revenue.

Martin

Your post chilled me to the bone, as that is the situation I find myself in; a debt that will last thirty years, and I’m 54 now. I’ll be eighty – four, if I live, when the debt is paid in full. Many Americans are trapped in what I call ‘perpetual debt’, a financial concept unthinkable thirty years ago, now it is the norm. I’ve seen blogs of degreed indebted thirty – somethings, who are carrying debt that will easily see them into their sixties. They’re either seeing the salaries of their chosen fields hardly keeping up with the cost of living, let alone providing extra money to pay on the debt comfortably (and if credit card debt is added to this, the financial situation becomes purgatory), or they can’t find work in their field and must take less just to survive. They, my self included, feel that the so – called American Dream has vanished, replaced with a treadmill.

The irony for me is that I work at a University as a librarian and I’m paid a pittance. I personally know students who are concerned about future college debt after graduation. One girl, graduating with a BA in Education after seven years, is staring down the barrel of $75,000.00. If she decides to stay in Louisiana she’ll carry that financial burden for years.

There was a time when college was the ticket to a higher standard of living, though there was never any guarantee of this, a number of generations prospered with their degrees, without the indebtedness of today. Now a college education is a mere roll of the dice, promising nothing, or worse. I agree, vocational school is the better and more effective route to take. The cost is reduced and if you choose a trade in great demand, you could make a decent living without a financial millstone around your income.

Calling this a “bubble” is a disservice to higher education. The original post focuses only one one type of institution (private elites) and ignores the fact that the national tuition discount rate averages nearly 35% according to NACUBO. A lifetime-earnings ratio of 1/75/1 for baccalaureate-degree holders compared to folks whose formal education stopped at high school is another fact the bubble argument ignores. There remain a great many strategies (including community college, regional public universities, etc) through which people can get an affordable and effective college education. A bubble is based on false premises; a college degree is still the best economic bet a family can make. For a broader post and links, see http://www.lipmanhearnecommons.com.

I wrote an entire book, _Beating the College Bubble_, about this topic in the hope of helping others work through the problem.

Check it out. I'm giving away an electronic copy for free.

http://www.edububble.com

I wrote an entire book, _Beating the College Bubble_, about this topic in the hope of helping others work through the problem.

Check it out. I'm giving away an electronic copy for free.

http://www.edububble.com

Tuition fees do need some reassessing, at least for certain courses and if their output is relevant enough etc. A lot of people opt to get a temporary fake college degree even if they are talented because fees are so high though.

[...] Naked Law site (which is law for non-lawyers, not law by naked lawyers, sorry to disappoint) to the Washington Independent has made these same connections. Perhaps this proves that you don’t need to be a statistician [...]

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