Thursday, November 3, 2011

When Will the Education Bubble Explode?

 The author, Peter Reilly, in Forbes identifies the following warning signs that would indicate that the burst of the education bubble is coming: "These warning signs would be favorable laws toward discharging student loans in bankruptcy (making it more challenging for students to receive money for education); a societal zeitgeist toward education changing (for instance, businesses preferring certification or a degree from something similar to the Khan Academy over traditional colleges); a major recession coming back to the United States, taking away more employment (making it more difficult for student with loans to pay back their loans); students becoming discouraged by negative news toward education (causing many to drop out or to avoid college)."

 Well, all that said, students majoring in subjects like math and accounting still seem to routinely entertain multiple job offers. And let's not forget too that the frequently quoted 9+% current national unemployment rate is about half that (or just over 4%) for those with college degrees. Even having some college seems to help. So I think the issue is not throwing the proverbial baby out with the bathwater and concluding that University is a waste of time. To the contrary. Going to University is a good thing; it is just a question of adopting much needed reforms so as to provide higher quality services and lower cost. This is something only greater competition can provide. And what better environment for this to take place than the disruption and creative destruction wrought by crisis in the marketplace? For  if allowed to properly function, this crisis in the market will inevitably result in opportunity.


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