The "Education Bubble"; Student Loan Debt Passes Credit Card Debt

[bobbyw24]

Peter Thiel, co-founder of PayPal says We’re in a Bubble and It’s Not the Internet. It’s Higher Education.

“A true bubble is when something is overvalued and intensely believed,” he says. “Education may be the only thing people still believe in in the United States. To question education is really dangerous. It is the absolute taboo. It’s like telling the world there’s no Santa Claus.”

Like the housing bubble, the education bubble is about security and insurance against the future. Both whisper a seductive promise into the ears of worried Americans: Do this and you will be safe. The excesses of both were always excused by a core national belief that no matter what happens in the world, these were the best investments you could make. Housing prices would always go up, and you will always make more money if you are college educated.

http://globaleconomicanalysis.blogsp...loan-debt.html

[madengr]

Yes, exactly. Take a look at the first chapter of this book (a few posts back):

http://www.ronpaulforums.com/showthr...bs-and-Incomes

[Krugerrand]

Bubble - yes. (and I'm amazed how many people around me don't see it.)

I don't go along with the solution:

The biggest need is more competition. The free market would work and work well if there was not a monopoly on accreditation.

Except for lab work, most classes could easily be taught online, for a song. Let's accredit a wide variety of classes taught from India over the internet. Fraud would not be an issue if the mid-term and final exams are in person. Lab courses have to stay here, but I am quite sure there are numerous ways to drastically lower costs of those courses.

Student loans should not be guaranteed. That would settle the hash of places like the University of Phoenix right away.

If some kids or their parents want to pay outrageous sums of money for "prestige schools", let them. The vast majority of students would opt for something far less expensive if given the chance. I say give them a chance.

I don't think the biggest need is competition. Coursework online is not the solution. We are over educated. There is no socio-economic justification for the phenomenon that the Master's degree is the new Bachelor's degree. We need fewer students in universities. We need high school to do a better job preparing kids for life. Most post-high school education should be career training/certification programs. (which I guess in some ways could be considered competition.) We need to stop giving our young adults a virtual sabbatical from life's responsibilities so they can study Humanities.

[VBRonPaulFan]

i had a big argument about this at lunch the other day with a co-worker. he's from Canada and pretty heavily liberal leaning. i mentioned Ron Paul cutting the dept. of education and he said that would be the biggest mistake the US could make. i tried to explain how the government backing student loans and dumping money or guaranteed money was eliminating the downward forces on education costs that keep them down and quality up, but he didn't care. he also didn't care that people are going to school for basically worthless degrees that they don't even use. people that could've saved 4 years of their life and a huge wad of cash by going out and learning a trade instead.

a lot of people nowadays think education is the end-all be all of what you need to do to get ahead. people are unwilling to believe that a lot of people would be better off going out and learning a trade and making a living right away, rather than going to school and getting an 'art history', 'philosophy', or 'classical music' degree. college is an investment. like any investment, you have to make sure it is going to be worth it. also, people are going to have to realize that it should be the individual and the family making the investment, not the government.

edit: i also think this is the next bubble to pop. the fairy tale is going to go away, not sure how. maybe the us credit line getting downgraded and interest rates going up?

[stuntman stoll]

There's no way to help the collapse along and make money off of it, like there was with the housing bubble, is there? There's very few education companies that are traded and they will be probably suffer the least because they generally have lower overhead and actually provide useful education. Also, here's no opportunity to profit from loan defaults because the gubment either makes the loans or guarantees them, and student loans are not liquidated in bankruptcies.