The Higher Education Bubble (Encounter Broadside) [Paperback]

Glenn Harlan Reynolds (Author)

Book Description

Publication Date: June 26, 2012 | Series: Encounter Broadside (Book 29)

America is facing a higher education bubble. Like the housing bubble, it is the product of cheap credit coupled with popular expectations of ever-increasing returns on investment, and as with housing prices, the cheap credit has caused college tuitions to vastly outpace inflation and family incomes. Now this bubble is bursting.

In this Broadside, Glenn Harlan Reynolds explains the causes and effects of this bubble and the steps colleges and universities must take to ensure their survival. Many graduates are unable to secure employment sufficient to pay off their loans, which are usually not dischargeable in bankruptcy. As students become less willing to incur debt for education, colleges and universities will have to adapt to a new world of cost pressures and declining public support.

Editorial Reviews

About the Author

Glenn Harlan Reynolds is the Beauchamp Brogan Distinguished Professor of Law at the University of Tennessee. He writes for such publications as The Atlantic Monthly, Forbes, Popular Mechanics, The Wall Street Journal, and the Washington Examiner. He blogs at InstaPundit.com.

Product Details

• Paperback: 56 pages
• Publisher: Encounter Books (June 26, 2012)
• Language: English
• ISBN-10: 1594036659
• ISBN-13: 978-1594036651
• Product Dimensions: 4.7 x 0.2 x 6.8 inches
• Shipping Weight: 4 ounces (View shipping rates and policies)
• Average Customer Review: 4.6 out of 5 stars  See all reviews (34 customer reviews)
• Amazon Best Sellers Rank: #68,268 in Books (See Top 100 in Books)
  • #40 in Books > Education & Reference > Schools & Teaching > Funding

Most Helpful Customer Reviews

56 of 59 people found the following review helpful

5.0 out of 5 stars Timely and Eye-Opening - June 23, 2012

By Loyd E. Eskildson HALL OF FAME

Format:Paperback

The 'Higher Education Bubble' hypothesizes that there is now a speculative boom in higher education fueled by cheap credit (federal student loan programs), with a bust coming or already present. College tuition payments have rapidly risen far faster (tuition and fees up 440+% from 1982 - 2007, vs. cost of living increases of 106% and family income growth of 147% during the same period, while the rate of return for a college degree is decreasing.

For example, more and more newspaper reporters have learned their work was subsidized by classifieds and now can't survive Craigslist et al, computer programmers in the U.S. have been replaced by others in India, and both the proportion of adults graduating from college and non-elite schools are rising.

Already we have about $1 trillion in outstanding student loans, many in default (payments are being made on just 38% of the balances, down from 46% five years ago), and they can't be discharged through bankruptcy. Roughly 11% attended for-profit colleges and they receive about 25% of federal student loans and grants. Meanwhile, learning has presumably decreased - students are studying 50% less than a couple of decades ago.

Author Glenn Reynolds is a law professor at the University of Tennessee. He contends that college education is merely a way to meet spouses of similar status and a marker (self-discipline, ability to defer gratification), not an ingredient needed to enter the middle class. Reynolds points out as illustration that professional basketball players have expensive sneakers, but it's not the shoes that make them good.

Once a student graduates from college he/she may be unable to find a job enabling paying off student loans. Recent surveys have found that 25% of recent graduates were living with parents, starting salaries in 2008 averaged 10% less than 2006 and 2007, and about half were either unemployed or underemployed. A 6/25/2012 WSJ article reported the law school class of 2011 had little better than a 50-50 chance of landing a ful-time permanent job as a lawyer within nine months of receiving their degree. Per the Dept. of Labor, about one in three graduates is employed in a position not requiring a college degree.

Reynolds advises those considering higher education to avoid debt and consider non-degree vocations. He believes that bursting the bubble of higher education will be beneficial by encouraging entrepreneurship. He'd also like to make defaults expensive to colleges so they become more careful about how much they lend, who they lend it to, and what kinds of programs they offer. The 'good news,' per Reynolds, is that 19th century teaching methods are being challenged by 21st century alternatives.

Harvard/MIT have announced they're putting $60 million into open-source online education, Minerva University (Larry Summers and Bob Kerrey) has raised $25 million in start-up capital, Stanford professor Sebastian Thrun is starting Udacity after teaching 160,000 robotic driving in an on-line course.

Bottom-Line: Reynolds' thesis makes economic sense, yet remains controversial because numerous reports also tell us that college graduates earn considerably more than non-graduates over a lifetime. Given the growth of inequality in incomes, I suspect this differential would considerably shrink if median incomes were instead compared. Dr. Richard Vedder, Director of the Center for College Affordability and Productivity believes the difference is due to differences in talent and motivation between the population that completes college vs. those that do not.

32 of 36 people found the following review helpful

5.0 out of 5 stars Everyone Should Read This Book! June 22, 2012

By Lao T. Sue

Format:Paperback|Amazon Verified Purchase

I have taught college for 40 years -- mostly part-time. I have worked at a decent private institution for the last 27 years and have been horrified at the lack of preparation of a significant number of students -- not all, but way too many. In my terms, half of our graduates are functionally illiterate. Combine this with escalating tuition, and you get a national crisis -- a bubble, if you will.

Mr. Reynolds' work in this area, which I have accessed most often as a daily visitor to his excellent "Instapundit" website, has defined and elevated this issue so that it is now entering the mainstream.

Every teacher and administrator, at every level of education, should read this book. Every parent of a school age child, and every high school or college student, should also read it. Something that can't go on won't. Change is coming. If you want to understand the problems of contemporary higher education and be part of the national discussion and solution, you've got to read this clear and concise work.

14 of 15 people found the following review helpful

5.0 out of 5 stars Pointed, Lucid and Persuasive June 27, 2012

By Richard B. Schwartz TOP 1000 REVIEWERVINE™ VOICE

Format:Paperback|Amazon Verified Purchase

This is not a book, but rather a broadside--a longish essay (48 small pages) which focuses intently on the subject in a lively and pointed way. Institutions of higher education are charging too much for too little. This cannot last; the bubble will burst. The ivies, significant privates and flagship publics will all survive, but many (fourth tier law schools, e.g.) will not. The education bubble is comparable to the .com bubble: operations will be closed; the industry will be shaken, but the internet and world wide web will continue.

Meanwhile, Professor Reynolds offers some cogent advice. First and foremost, do not incur significant student loan debt. And to the universities? Offer coursework of rigor and substance; cut the fluff. Offer value for dollar.

While there will be significant readjustment, as runaway tuition, fees and loan costs approach the stone wall, that readjustment can take many forms. The further cheapening of the product is always likely. Indeed, it has been underway for decades.

If there is one element of the readjustment that Professor Reynolds overlooks, it is the chameleon-like nature of institutions to change their appearance and, indeed, their very nature. The pleasant little liberal arts college on the edge of town is suddenly surviving on the basis of weekend/evening cash-cow master's degree programs or setting up offices in strip malls in a neighboring city. This process has also been underway for decades.

Reynolds writes with passion; his rhetoric is lucid and lively; he is aware of key works in the contemporary higher ed literature (and quotes them, but does not provide footnoted references).

This broadside will stimulate discussion and open eyes not yet familiar with the subject.