Posted by: crudbasher | June 7, 2010

Glenn Reynolds: Higher education’s bubble is about to burst | Washington Examiner

This article was written by a Law Professor who I think makes a lot of good points.  The only reason people go into massive debt to go to college is because they believe it will pay for itself in a reasonable period of time.  My question is, what if that changes?

The housing bubble was driven by two things, cheap money and a belief that housing prices would be going up quickly, therefore generating a return on investment.

Similar conditions exist in the Higher Education market I believe.  Especially if unemployment continues like it has for a protracted time.  If there are no jobs available for new grads, they are less likely to view a college degree as a good investment right now.

Anyway, it’s not that long of an article but I think it raises some good points.

  • DIY-U in this story

    tags: education, bubble

    • The buyers think what they’re buying will appreciate in value, making them rich in the future. The product grows more and more elaborate, and more and more expensive, but the expense is offset by cheap credit provided by sellers eager to encourage buyers to buy.
    • Buyers see that everyone else is taking on mounds of debt, and so are more comfortable when they do so themselves; besides, for a generation, the value of what they’re buying has gone up steadily. What could go wrong? Everything continues smoothly until, at some point, it doesn’t.
    • College has gotten a lot more expensive.
    • Bubbles burst when there are no longer enough excessively optimistic and ignorant folks to fuel them. And there are signs that this is beginning to happen already.
    • A college education can help people make more money in three different ways.
    • First, it may actually make them more economically productive by teaching them skills valued in the workplace
    • Second, it may provide a credential that employers want, not because it represents actual skills, but because it’s a weeding tool that doesn’t produce civil-rights suits as, say, IQ tests might.
    • third, a college degree — at least an elite one — may hook its holder up with a useful social network that can provide jobs and opportunities in the future.
    • My question is whether traditional academic institutions will be able to keep up with the times, or whether — as Anya Kamenetz suggests in her new book, “DIY U” — the real pioneering will be in online education and the work of “edupunks” who are more interested in finding new ways of teaching and learning than in protecting existing interests.
    • I’m betting on the latter. Industries seldom reform themselves, and real competition usually comes from the outside.

Posted from Diigo. The rest of my favorite links are here.

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