is higher education a bubble?

[RGacky3]

I'm heavily leaning toward higher education being a bubble (not enough to bet on it, not yet at least).

HOWEVER.

http://graphics8.nytimes.com/images/2008/12/03/education/03newcollegesub_large.jpg

Keep in mind this is up until 2007, According to The College Board, the average 2010-2011 tuition increase was 4.5 percent at private colleges, and 7.9 percent at public universities.

Take that with state help dropping

http://upload.wikimedia.org/wikipedia/commons/thumb/1/18/College_Tuition_State_Funding.svg/557px-College_Tuition_State_Funding.svg.png (http://upload.wikimedia.org/wikipedia/commons/1/18/College_Tuition_State_Funding.svg)

Again, this is ONLY in 2008, we know in California for example the cuts have been much much more extreme.

Heres another problem, these loans grow the longer you don't pay them off, unemployment is going up, meaning the job market is going up.

http://www.mybudget360.com/wp-content/uploads/2009/09/college-unemployment.png

Its the skilled, unskilled AND the professional being hit.

And its not only unemployment, Many have taken jobs that do not make use of their skills; about only half of recent college graduates said that their first job required a college degree. (http://www.nytimes.com/2011/05/19/business/economy/19grads.html?_r=1)

An analysis by The New York Times of Labor Department data about college graduates aged 25 to 34 found that the number of these workers employed in food service, restaurants and bars had risen 17 percent in 2009 from 2008, though the sample size was small. There were similar or bigger employment increases at gas stations and fuel dealers, food and alcohol stores, and taxi and limousine services.

Some might say "sure, but its those getting degrees in humanities that are the unemployed, not the engineers and scientists." Ok, however, tons of college graduates are getting the engineering degrees, infact more than china and india (proportionately of coarse)

http://www.mybudget360.com/wp-content/uploads/2009/09/engineering.gif (http://www.mybudget360.com/wp-content/uploads/2009/09/engineering.gif)

Of coarse the data show that that humanities degrees find it harder to get a job in the field than engineering degrees, but that does'nt explain the growing difficulties at all.

Now how is this a bubble? You have plenty of private "colleges" poping up basically robbing people blind, leaving them in debt with no job prospects, school costs can not be gotten rid of by bankrupcy (which makes sense since education is not a physical thing you can take like a house or a car), you keep them, it does'nt go away, so the only option, is to default, if enough students default on their loans, you have a major problem, this bubble won't deflate and demand for higher education has gone up, cost will not go down and its very unlikely that the public sector will control cost, demand is going up even as returns are dropping (because the alternative is even worse).

Some arguments against the bubble are that education is not like a commodity that can be flipped and speculated on, i.e. you can't "re-sell" education like you can a house, or that cost has'nt gone up THAT much, rather its just been shifted on the student, another argument is that its the state, which backs some of the loans, that distorts the market (although the empirical evidence does'nt back this, since state support has dropped, while cost has gone up).

As for this debt being securitized and circulated on the market? We just don't know, I'm not sure, but what I am guessing is that as time goes on more and more students will defualt, leaving millions of debts being unpaid.

What do you guys think?

[Black_Rose]

Do you think the unemployment among college graduates is underestimated, since they are more likely to be from high-earning families and live with their parents, without searching for a job.

[RGacky3]

Do you think the unemployment among college graduates is underestimated, since they are more likely to be from high-earning families and live with their parents, without searching for a job.


That could be the case, but there is no way of knowing the exact numbers, also very important is to keep in mind that those who ARE employed but are not making enough to survive AND pay off debt.

Students from very high income households would very likely not have a problem paying off the debt.

[Kombouto]

I wouldn't label anything related to education as a "bubble". Education allows the sons of the working class to improve significantly their lives and access to social mobility. While it is true that more educated people are unemployed, it is not exclusive of them: unemployment is rising for everybody.

Even if this "bubble" were true, the most logic thing to do would be raising the level of the grades needed to enter University. Neoliberal governmentes have chosen to raise fees, revealing their secret agenda: to prevent the working class from getting any education.

In any case, unemployment is not unavoidable. It's another tool of the system to submit the workers.

[eyedrop]

Neoliberal governmentes have chosen to raise fees, revealing their secret agenda: to prevent the working class from getting any education.


Is it actually in the interests of capital though? Capital wants more educated workers, I can see how they gain by shifting more of the burden over on the individual workers, but getting fewer educated workers is gonna bite most factions of capital in the ass long term, is it just another example of the shortsightedness of capitalism.

Or is it a symptom of the factions of capital, that can't easily relocate and needs educated workers, like industrialists loosing out?

[Ocean Seal]

No this is more or less a lolbertarian theory without any material basis. Its only so much a bubble as not going to college as there is going to be less employment as time goes on.

[Skooma Addict]

There is most definitely a higher education bubble.

[NewLeft]

No this is more or less a lolbertarian theory without any material basis. Its only so much a bubble as not going to college as there is going to be less employment as time goes on.

I know this was mentioned in the college conspiracy, but it's not necessarily wrong..

[Winkers Fons]

I would say that this is the worst time in American history to graduate from college. Unemployment among degree holders is still pretty low but that chart doesn't show that many graduates are underemployed and/or working outside of their field of study. This is especially true for people with liberal arts degrees who only went to college because they were pressured to do so by their families and high school teachers. People like this often end up working in retail or food service just like they would if they didn't have a degree.

Just think, kids that grew up in the past couple decades were told that they absolutely needed a degree if they didn't want to live in poverty for the rest of their lives. Fast forward to 2011 and you have millions of people with college degrees who were raised with the expectation that a degree (any degree) would be their golden ticket when in reality many degrees are not not worth the paper they are printed on. Combine this with the massive rise in costs over the same time period and you have an entire generation of graduates loaded with debt with no prospects of making enough to pay it back.

The definition of a bubble is "trade in high volumes at prices that are considerably at variance with intrinsic values". To me that sounds exactly like what is happening with higher education.

[NGNM85]

I've been thinking the same thing. Interestingly, I heard Umass was doing very well, but that this was because they were accepting an ever-increasing number of international students. I think it's clear that the rapidly expanding gulf between ever higher tuition and lower wages/high unemployment is, ultimately unsustainable. This is a bubble, and it's going to burst. It's just a question of when.

As an aside, I was recently studying my billng statement at my school. On the website they advertize that because it's a state school tuition is low. Indeed; 'tuition' is less than $300. However, this is compensated for by the nebulously-titled 'Student Fees', totaling around $800, per course. It's total bullshit. I actually may have to take a semester off because I just can't afford it right now.

[Kombouto]

Is it actually in the interests of capital though? Capital wants more educated workers, I can see how they gain by shifting more of the burden over on the individual workers, but getting fewer educated workers is gonna bite most factions of capital in the ass long term, is it just another example of the shortsightedness of capitalism.

Or is it a symptom of the factions of capital, that can't easily relocate and needs educated workers, like industrialists loosing out?

Yes, I think that two things at the same time, haha. I guess all this is related to workers' struggles: they achieved education fighting, and now that we are losing class strugle, they take it off us.

I was the first person in my family to have a university degree. I guess I'm the last one too.

[RGacky3]

I wouldn't label anything related to education as a "bubble". Education allows the sons of the working class to improve significantly their lives and access to social mobility. While it is true that more educated people are unemployed, it is not exclusive of them: unemployment is rising for everybody.

Even if this "bubble" were true, the most logic thing to do would be raising the level of the grades needed to enter University. Neoliberal governmentes have chosen to raise fees, revealing their secret agenda: to prevent the working class from getting any education.

In any case, unemployment is not unavoidable. It's another tool of the system to submit the workers.

Its not the education that is the bubble, its the turning of it into a commodity and the debt that is the bubble, really its education debt.

Just like with housing, it was the mortgages.


Is it actually in the interests of capital though? Capital wants more educated workers, I can see how they gain by shifting more of the burden over on the individual workers, but getting fewer educated workers is gonna bite most factions of capital in the ass long term, is it just another example of the shortsightedness of capitalism.

Or is it a symptom of the factions of capital, that can't easily relocate and needs educated workers, like industrialists loosing out?

Its really an example of the shortsightedness of Capitalism.

For the education industry, and the financial industry, the societal effect of having less educated workers is an externality, which is smoething they literally CANNOT take into account, because they need to maximise profits.

Its also a little bit of the latter, the industrialists benefit from education, but the financial industry profits from restricting it, and the financial industry is always gonna win that fight.


No this is more or less a lolbertarian theory without any material basis. Its only so much a bubble as not going to college as there is going to be less employment as time goes on.

It has nothing to do with libertarian theory, its economics.

people ARE going to college, and not being able to pay down their debt, thats gonna have an effect.


The definition of a bubble is "trade in high volumes at prices that are considerably at variance with intrinsic values". To me that sounds exactly like what is happening with higher education.

Thats one reason lots of neo-classical economists missed the 2007 crash, many of them literally thought that a major bubble was impossible, because market values always match intrinsic values.

I think you'll start seeing more and more students default, and when that happens we'll see how much of a bubble it was.