Half Sigma on the Higher Ed Bubble

A college degree may cost a lot more than it used to, but it’s also worth a lot more than it used to be worth because there are so few decent career tracks open to non-college graduates.

The only way to break the education bubble is to fundamentally change the job market in a manner that opens up more career tracks to people without college degrees, but I don’t forsee that happening. HBD-denialism is at work here. Changing the social structure of who gets into which career tracks opens up uncomfortable doors to the truth about HBD. Liberals don’t like to believe in hereditary intelligence, even within races. Liberals prefer to believe that education makes you smart, and the better the quality of education, the smarter it makes you. If only we could give every young person a Harvard-quality education, everyone would be just as smart as the average Harvard graduate. This is the liberal dream. Liberals want to equalize society. Liberals believe that it’s not fair that such a small number of people graduate from Harvard each year. At the very least, they think everyone should graduate from college. Liberals would like the government to pay for free college education for everyone. The student loan program is a compromise with evil cheapskate Republicans.

People who complain about the education bubble like to imagine a glorious popping of the bubble which causes all those overpaid liberal college professors to be laid off. They forget that we have two liberal parties. The Democratic party is hardcore liberal and the Republican party is moderate liberal. The more likely “solution” to the education bubble is that government will spend more money to fund education so that students don’t have to borrow so much money. The Republicans will probably agree to this in exchange for more tax cuts. (Even though I wrote the previous sentence, I'm not sure if it's sarcasm or a reasonable prediction of the future.)

Education: not a bubble and not going to pop

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This is a contrary viewpoint to my own, but Half Sig gets it wrong. I know this because he undercuts his own arguments. So, I will set the record straight.

Tuition has risen at three times the rate of inflation. College grads are leaving school with more debt and fewer job prospects than ever before. Those degrees are not worth more because they don't result in better job prospects in much the same way that houses were not worth more simply because people were willing to pay more for them. It seems to me that HS is at pains to justify the present system. But from what I read, he is essentially a centrist, and centrists are extremely inconsistent in their viewpoints. He says both that degrees are good, that they are worth it, but there are too many people going to college. Which is it?

I will set the record straight on the issues:

-There are too many college graduates.

We produce more grads than the economy needs. We know this because they can't get jobs while they live at home with their folks competing for jobs at Starbucks to pay their $700 a month student loan payments. Even for those who do get jobs, the debt burden makes their lives worse off than their blue collar counterparts who may make less but have no debt burdens except on their new Camaros and Harleys.

-The major is meaningless.

If I told you that English was a great major because Stephen King is a millionaire, you would laugh. But this is the same logic people employ when they say that computer science is a good major because Sergey Brin is a billionaire, or that business is a good major because Warren Buffett is a billionaire. The fact is that I have met and worked with both computer science majors and business majors, and they don't make much more than I do. On average, those majors might make more than others if you factor in the outliers in much the same way that I can say that English and drama majors make more if I factor in bestselling novelists and movie stars. This is why we use median income instead of mean income. If you account for student loan debt, your average comp sci major doesn't make more than your average electrician. And as Half Sigma points out in What college students major in, 2/3rds of majors are "practical." This bubble has not been created by basket weaving majors. In this economy, majoring in engineering is not going to cut it for you. Majoring in nursing or pharmacy might, but that is because of that anomaly called "Aging Baby Boomers." It goes back to the first point--too many college grads.

-Federally backed student loans are to blame.

Sallie Mae is simply doing what Fannie Mae and Freddie Mac did for housing. It is destroying the economics of the marketplace with abundant credit. Prior to this, the only people that went to college were smart kids and rich dumb kids who wasted their parents money on Women's Studies or some other soft degree. The government wanted everyone to own their own home, so they tossed out the rulebook and lent to people with bad credit on terms that were certain to fuck the very people they were trying to help. Similarly, the Feds want everyone to have a college degree which is now fucking those who will never be able to repay the debt or discharge the debt in bankruptcy.

What are the options?

I talk to a lot of young people, and I give them the same basic advice:

1. If you can go to college without having to pay for it, this is good. These would be scholarship recipients and military vets coming back from Iraq and Afghanistan. If you can graduate with zero debt, you are going to be much better off than those who chose to borrow.

2. Pursue a healthcare major. It is practical, and the demand is there and growing. Over the last 20 years, I haven't met an RN, a pharmacist, a doctor, a dentist, or even a dental hygienist that was not doing well for themselves. I have worked alongside engineers, comp sci people, business majors, and what have you along with dozens of liberal arts majors. I have yet to work alongside a healthcare worker that couldn't find employment.

3. Pursue a trade. Not everyone was meant to go to college. No one wants to settle for average which is why people eschew trades. The result is that diesel mechanics, electricians, plumbers, and the like are now doing better than their college educated counterparts. And that isn't factoring in debt levels. The reason for this is that the moderately bright but not genius people opted to go to college instead of trade school and apprenticeships. This is why the fastest growing enrollment at tech and vocational schools are from people like me who already have a four year degree but recognize they got punked by their guidance counselors, the government, and the wider culture. This is how you get a book like Shop Class as Soulcraft.

4. Don't do what you love. Love what you do. There is a difference there. I love surfing the internet and watching TV, but no one is going to pay me for that. But I have found that I have loved every job I have ever had except for one--the one that required a degree. I love what I do now, and I can love just about any blue collar job there is. If you doubt this, remember my resume includes many years cleaning out septic tanks and portable toilets. If you can love that, you can love anything. I'd rather do that than play the Machiavellian game that is corporate politics.

5. For those who are under the student debt load now, my best advice is to live at home and pursue a trade. I recently ran into a 24 year old with a master's degree in music. The guy plays the tuba and unloads planes at the airport for UPS. He is carrying $70K in debt which I suspect is just the principal. I told him to become an electrician. He dreams of joining the symphony. I told him I knew a viola player who was also a fabulous singer. He made his living as a hairdresser. If you find yourself on the wrong road, you have to turn around, go back, and get on the right road. Continuing on the wrong road is not going to make it better. It only makes it worse.

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