"Education bubble"?

[ja_va]

There is a popular conservative motto which is repeated over and over again recently: "education is the next bubble, people have already said. Financing college is the new real estate, and we know how that works out."It has been repeated so frequently that there seem to be a need to address it

Comments

[harry_beast]

If educated people are in high demand by the market, then graduates should have no problem earning wages high enough to pay for their schooling.

[ja_va]

Not necessarily. It depends on the proportion of debt to income. It may also depend on family circumstances, number of children, general health etc.

[sandwichwarrior]

If people are accruing more debt paying for college than they'll be able to pay off given employment, I'd say that this is solid evidence that education (at least in the monetary sense) is over valued and likely to collapse.

[a_new_machine]

Education in general, perhaps. There are apparently thousands of machinist jobs going unfilled because they can't find people with the requisite programming experience to run modern machining tools. Specific types of education are still in high demand.

[notmrgarrison]

getting a degree requires years of hard work and dedication

lol. Something tells me you're not all that familiar with college.

[ja_va]

Did you read the post? I am going to do Masters degree this fall, how can I possibly be "not familiar with college"? Do you always respond to posts you have not read?

[notmrgarrison]

Do you always answer your own questions?

how can I possibly be "not familiar with college"?

By not realizing that getting a degree does not require years of hard work and dedication. You're spending your college years in a bubble at best. There are plenty of people with college degrees who did far much drinking and little studying while in school. There are majors designed for these people.

[ja_va]

Quality of college education is a different issue entirely. It is an issue of licensure and accreditation, which should be properly enforced. Colleges and universities that do not provide quality education should be refused funding and licenses should be revoked. For the most part, this is already the case.

However, I have given years of hard work and dedication to my degree, and I do not know anybody who did not. Maybe you did not? In that case, sorry to hear that.

[meus_ovatio]

Dude you can't even decide if I'm a communist or a conservative. Which is it? Which pejorative tone of argument do you wish to take, and could you stick with it?

[meus_ovatio]

However, if you wish to hand wave about Germany, you might do well to acknowledge that their system is almost exactly what I was talking about for secondary education.

But nevermind.

[ja_va]

It is not at all what you proposed. Children and their parents decide, which type of education child will get, not government.

[meus_ovatio]

So let me get this straight: You're ok with the government forcing every child to get a certain education, as it stands, until the age of 18, but you're not ok with the governemnt forcing every child to get a certain education until the age of 18? So putting people into 2 years of vo-tech, is materially worse and even communistic, even though we're already putting them through 4 years of shitty college prep that doesn't even prepare them for college in the first place?

[chron_job]

"education is the next bubble, people have already said. Financing college is the new real estate, and we know how that works out

[mikeyxw]

Pretty much. Real estate and tulips were asset bubbles. Assets work differently than other goods, when peanut butter goes up in price, people buy less. When an asset goes up in value, people tend to buy more, not with the idea that they would consume them but that they could resell them in the future. This is what powers asset bubbles. Higher education costs will cause fewer people to go to college, acting more like peanut butter than stocks, this prevents an asset bubble from forming. It's the wrong model.

[meus_ovatio]

You're missing the point. Debt is the product. That product is then speculated, transferred, bought and sold, etc. etc. Debt associated with a service is not reliant upon volume to grow.

[mikeyxw]

Debt is a byproduct of a bubble, the speculative behavior is what drives it. I'm not seeing more and more people going to college to produce debt.

Don't get me wrong, college debt certainly is a problem, especially for people in their 20s, it's just not a bubble. I'm also not aware of much speculation going on around education debt. It's usually pretty crappy debt with low returns, not something like .com stocks in 2000 or real estate in 2007 that are the subject of irrational exhuberance. If you can point to a huge amount of speculation around college debt, I'd certainly like to see it.

Education might be a bit overpriced in some instances, but the return on most degrees at most colleges is higher than the cost.

[ja_va]

I agree that the causes of high costs are important. And I tentatively agree that having people to pay for their education may be seen as more responsible solution, making them think twice before they borrow.
But, first of all, its not! While Pell grants and federal aid became a joke, even in public schools they hardly cover part of the tuition, the loans are still seen as free money, giving the school administration free hand to increase fees further and further. It is looping into an infinity. Mind you that wealthy families have no problem with debt or no dilemma about sending kids to college, while for poor kids debt for the most part is the only solution. Years later it will come to roost. Government is still paying for education, but the responsibility is shifted, so it does not care how much the colleges charge, it assumes that students and their parents should. Problem is - I am not sure they do, either. Credit is not the same as real money out of your pocket, and level of responsibility at 18 or 19 is hardly the highest. But

[ja_va]

Government is, indeed, often the problem. But I can hardly see what other choice is there. If government stops giving loans without any other recourse, the result will be - mostly rich people's children in college, regardless of their ability. I suppose "loans by merit" could be an option, with certain GPA as a minimum requirement. Don't have good grades? No loan for you!