Education bubble?
April 11th, 2011 by Graham Attwell
I suspect that if I ever met him I wouldn’t like Paypal founder and venture capitalist, Peter Thiel. We would probably disagree about most things.
But I do agree with his assertion that we are now in a education bubble. Education has come to be portrayed as the answer to all of society’s ills. Young people are told they must get an education to get on in life. Older people are told they are responsible for their own lifelong learning to ensure they remain ’employable’. We threaten to cut social benefits to those that refuse to undertake retraining courses. And of course it is a lie. Many people are unemployed becuase there are simply not enough jobs. In Europe thousands of graduates, who in countries like the UK have run up substantial debts to get their degree, cannot find work. Thiel is right – education is not working. At least not the kind of education system we have now. It requires a complete rethink. What is the purpose of education?
But I do agree with his assertion that we are now in a education bubble. Education has come to be portrayed as the answer to all of society’s ills. Young people are told they must get an education to get on in life. Older people are told they are responsible for their own lifelong learning to ensure they remain ’employable’. We threaten to cut social benefits to those that refuse to undertake retraining courses. And of course it is a lie. Many people are unemployed becuase there are simply not enough jobs. In Europe thousands of graduates, who in countries like the UK have run up substantial debts to get their degree, cannot find work. Thiel is right – education is not working. At least not the kind of education system we have now. It requires a complete rethink. What is the purpose of education?
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Education is a huge bubble which is going to explode. College treasurers have been concerned for a few years now about the ‘tuition wall’, which is the point when tuition becomes so high that parents cannot or will not pay it. Federal financial aid policies have created a tuition bubble by giving more financial aid to students who attend more expensive colleges. If federal higher education spending is cut back this year (very likely), the collapse may begin.
I graduated from a private liberal arts college in 1999, at which time the billed costs (tuition, fees, room and board) were $29,000, and 75% of students received financial aid. Now, the school costs $52k, and 97% of students there receive financial aid. If federal financial aid is reduced, students will drop out of these overpriced colleges, and many private and proprietary schools, including my alma mater, will likely go under.
Much like the housing collapse, many people will say that it can’t happen. Oh, but it will! I think for the average American, the education collapse will be a good thing, as college prices will finally drop just as housing prices have dropped. Furthermore, I think it lead to more government funding of public colleges, and more government oversight of what goes on at colleges. Both reforms are very necessary.