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The Higher Education Bubble (Encounter Broadside) Paperback – June 26, 2012
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Just as the housing bubble was fueled by loose lending practices, the higher education bubble is enabled by government subsidies and guaranteed student loans. "As with any subsidized product, prices rose to absorb the subsidy."
People talk about education being invaluable, but "when the investment runs well into the six figures, students would be crazy not to worry about the return." Reynolds points out that if there's no reasonable expectation of return on investment, then tuition is an expensive consumption item rather than an investment.
Students presumably go to college to enable a higher standard of living, but taking on excessive student loans can have the opposite effect. "It's hard to get a mortgage, for example, when you're already in effect paying one in the form of student loans... These people may wind up living in their parents' basements until they are old enough to collect Social Security, which may wind up being garnished--no joke--for unpaid student loans." The author also points out that a large number of people taking out student loans never graduate.
Many people may be better off not going to college. "Bureau of Labor Statistics predicts that 7 of the 10 fastest growing jobs in the next decade will be based on on-the-job training rather than higher education."
Colleges and universities will need to adapt by delivering better value. "The first step is to ensure that students are actually learning useful things." STEM majors (science, technology, engineering, and math) will be prepared for well-paying jobs, but many others are difficult to justify. Online education may offer some opportunity to reduce costs. "Sure, there's not a lot of one-on-one interaction that way--but how much is there in a 200-student lecture class, really?"
If there's a silver lining in this dark cloud, it is that disruption to the status quo may create new opportunities. Reynolds suggests "there's a need for an alternative credentialing system. Filling that need will make someone rich."
In conclusion, "the higher education bubble isn't bursting because of a shortage of money. It is bursting because of a shortage of value. The solution is to improve the product, not to increase the subsidy."
Of course, college education was never perfect. Many college graduates in the 1970's faced difficult job prospects. I remember working a summer job one year as a "swamper" unloading trucks. The truck driver I was helping out had an M.A. in English Lit. He told me the academic gravy train of the sixties had dried up in 1968. He chose driving truck over teaching high school. But the difference between then and now is the student debt. Reynolds emphatically makes the point: Don't go into student loan debt!
It was only a broadside, and so it was meant to start discussion and not to be a thorough study. The people that I would recommend it for would be: parents who are thinking about sending their child to college but who aren't quite sharp enough to do detailed research or who don't want to be bothered reading the newspaper every day (things like the Courtney Munna article that was cited in this were things that I had already encountered just by my habit of skimming the newspaper for interesting articles every day). You could give this to your friends who fall into that category who can read more than a newspaper/ magazine article, but less than a full book.
There were some great references for further reading/ viewing at the back of the book.
Overall, just because of the low price and time cost, this was worth the read.