There is a lot of talk recently about a bubble in higher education, and I believe in it. Here are the facts:
-The cost of college has risen four times faster than inflation over the last 25 years.
-College graduates earn less and less.
-The degree itself is often worthless with students getting less education for the dollar.
Going to college is a money loser. An equivalent amount invested in low cost index funds or treasuries will yield a great return on investment. How did this happen?
The creation of the higher ed bubble is the same as the housing bubble, the dot-com bubble, etc. Bubbles come from easy access to credit. In the case of college, students take out loans which increases demand for education which increases tuition which increase more demand for credit such that what one pays for the education cannot be justified by the earnings they can expect to receive upon graduation. Eventually, unemployed college grads and underemployed grads will default on these loans. They manage to defer this collapse by going to grad school. The result is that colleges turn out more graduates than the economy needs.
I was talking about this with my brother who is a structural engineer. Engineers with a freshly minted four year degree are making a bit more than a draftsperson who requires no degree or certification whatsoever. On a return on investment basis, the high school grad who knows AutoCAD beats the structural engineer hands down. Why is this? Plus, there is greater demand for the draftsperson than there is for the engineer because supply exceeds demand for engineers. In other words, there are a lot of unemployed engineers out there. If you factor in student loan debt, the engineer is in the hole. Things shouldn't be like this.
Once upon a time, having a college degree meant a guaranteed job and a higher than average income. This is no longer the case. Today, a college degree means a debt burden and hoping to find a job but probably not in the field you majored in. Some fields like healthcare and IT seem to do much better than others, but you don't need a four year degree to become an RN or program computers. Most programmers I know learned their skills on their own out of necessity as their field grows and innovates so quickly that any four year degree you could earn becomes obsolete. RNs can get certified after completing a two-year program at a technical school. These folks can pursue a four year degree, but the return on investment hardly justifies the additional cost.
The best deal today in education is vocational schools and technical colleges offering job training. These schools have greater job placement, greater job prospects, lower tuition, and less time in school. Why don't more people take advantage of this? That is because the jobs you get when you leave these schools will be blue collar. We live in a culture that has degraded the working people, but the laugh is on us as these dirty jobs people end up making more money (and having more fun) than the college educated white collar people with their substandard salaries, heavy student loan debt, and maxed out credit cards.
The higher ed bubble will pop. It is unsustainable. College is a waste of time and money, and people are waking up to this realization. When I was in high school, they told us to go to college, and I did. But I'm going to tell the young people what the guidance counselors won't tell them. The world needs plumbers, carpenters, welders, diesel mechanics, and the like. There is honor in these jobs because they are honest and produce something of value. As for people changing careers, you could do worse than enrolling in a tech school and learning how to be a machinist or an automotive tech or a truck driver. As for you recent college grads with debt and no job, I'm sorry, but you are fucked. You were sold a line of shit. Society does not need you or your skills. Good luck finding a real job.
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NOTES
3. http://www.youtube.com/watch?v=IRVdiHu1VCc (Excellent vid from Mike Rowe.)
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