Is Higher Education A Bubble?

Tuesday, May 31, 2011

What’s been the return of investment on your college experience? Anya Kamenetz, senior writer for Fast Company magazine and author of DIY U: Edupunks, Edupreneurs, and the Coming Transformation of Higher Education and Generation Debt: How Our Future Was Sold Out for Student Loans, Bad Jobs, No Benefits, and Tax Cuts for Rich Geezers--And How to Fight Backdiscusses the way in which the value of college is being reassessed.


Anya Kamenetz

Comments [43]

Harlan Barnhart from Queens

I don't see how higher education can avoid "bubbles" because it is subsidized by government backed, low interest loans. Once the government speaks money into existence and creates a distribution channel (student loans), an industry designed to relieve students of that money will develop around it. Bubbles can be funded by real, productively produced money as well, but not as quickly.

On another note, I find the comments below lauding the non-job related benefits of higher education enlightening (ie marriage partners, networks ect...) I guess this is the basis for the class (caste) system in America.

May. 31 2011 09:23 PM
Leslie from West Orange, NJ

Discussion drivers are all about the "economics" and "return on investment". What about the importance of a college degree that provides society the educated participants we need for a healthy democracy? We need our population educated. An educated population would, hopefully, drive better ideas and policy than uninformed, hysterical POV's that have nothing to do with the real issues facing our advancement as humans. Media splashes us with the news of rising costs, the competition, etc. Yes, all true. But kids and parents are victims of a propaganda machine that leads them to believe that pnly a "competitive" school can secure a pathway to becoming a strong earner. I rarely hear the media discuss the need for an educated poplution that provides the base for a functional democracy. We need citizens who seek education to not only drive the economy, but also to better understand their roles as taxpayers, voters, supporters of the arts, as parents; and importantly, to be informed about the world we live in. A truer picture of educational costs today may come from a discussion of the many options in higher education available to everyone. As well, we need to have an open discussion concerning the way we fund higher education, the manner of compensation for professors, and the perks schools receive from government.

May. 31 2011 12:02 PM
Anya Kamenetz from Brooklyn

Commenters are making important points about the distinction between overpriced private colleges and more-affordable public colleges, and "college" as a broad category vs. more-specialized licenses and certifications.
I think the best possible outcome of this bubble talk is an opening up of the niche of affordable quality in higher education. The challenge by TX governor Rick Perry to create a public, no-frills BA for $10,000--total, for four years--is a great example of this.

I also didn't get a chance to point out that I think there is a "subprime" sector of higher education that IS a bubble. For-profit colleges. They charge $14,000 on average per year, have very low graduation rates and high default rates.

May. 31 2011 12:00 PM
Disappointedlawgrad from New Jersey

This is just a typical discussion I would expect from someone like Anya Kamenetz. She denies there is a bubble in higher education because, wait, she never really answered that question. The few statements she did make arise from flawed reasoning. Just because the government is paying, doesn't preclude a bubble from manifesting. In fact, the vast majority of tuition increases can be attributed to federal loans and pell grants. Why keep prices low if you have an unlimited flow of cheap federal money to pay? Anya Kamenetz apparently didn't notice that big pink elephant in the room.

As for graduate school, anyone who makes that investment in a liberal arts MA/BA is going to be on the unemployment line. Graduate school simply overqualifies you for any kind of decent employment. They would rather take someone with no degree or a BA over you.

What amazes me the most is these people like Anya Kamenetz are still touting that education is a good investment (albeit "slightly diminished" in value). The clip Lenard played with that economist just shows how out of touch with reality these people are. Its easy to talk about great returns when you aren't unemployed or struggling to manage north of 100k+ debt.

May. 31 2011 11:54 AM
brian from brooklyn

I agree with CL. Can't we distinguish higher education from job training and professional development?

May. 31 2011 11:50 AM
robert jahnke from Oradell

I became an apprentice pipefitter straight out of high school; after my 5 year apprenticeship I went out into th field a very young journeyman making good bucks (late 70's), a good time in a young guy's life, but maturity was setting in and I took advantage of th new labor studies programs starting at most state colleges at th time. In short, I later received a BA from Rutgers Univ. ('88) with a major in labor studies and, being th pragmatic one, a minor in business administration. All this got me NOWHERE professionally, either in th construction field or in th upper ranks of my union. As a matter of fact I believe th college education hurt me because I was among so many who were without a degree that I often felt looked upon with suspicion, or held at a distance by those in charge. I realize this could just be sour grapes as one who slipped thru th cracks but I don't think so. So when I think of all th jobs and overtime I had to pass on so that I could get to class later that nite on top of th $50 to $60 per credit I was paying to take all th courses, was it WORTH IT? Monetarily no; personally yes, definitely yes.

May. 31 2011 11:46 AM

Ivy league is not such a good brand given the evil characters it produces like Summers etc. - at least the MBA program at Harvard , Yale, Wharton etc is/are suspect. All MBA schools are suspect really. I view them as a vocational school absent the ethics one should be inculcated with more fully at a university.
I teach at University, and the University professors in the moneyed programs (Business., Petroleum Engineering , medicine, some applied math programs) are earning a lot of money with consulting.
PH.D's programs should be more selective.

My take on this is that there will be two tiers of higher education. The elite schools will produce the untouchable higher classes who will lead and guaranteed to be part of a special club for life. They are very few indeed.
All the rest will be intelligent hands to produce more workers for them. Where is the commitment to serve our country.

I think college should be free. I got my high school dipl in France ( licee'). It was a great education and the universities are great.

Dreams here are crushed by having to deal with corporate state.

My advice to the young.
Have fun learn alot about other cultures and your own. Don't cheapen the experience of learning by wasting time with market related money centered schemes. This things will shake out soon enough either by your own genius and experience or your employers. Fill your soul by helping others no matter where, when or how on a personal one to one basis. There is where real knowledge is gained.

Congrats to graduates.

May. 31 2011 11:40 AM
Mike from Manhattan

Anyone who has read the Journal of Higher Education over the last 10 years knows that people in Ph.D. programs and post docs in the physical and biological face unemployment when their programs are finished. The JHE has stories about alternate careers for science graduates on Wall Street as quants, and other equally non-productive but potentially more lucrative employment. All this is despite the outcry about our lack of science education in the USA. Kids hear about this from teachers and older sibs, and that is a big discouragement for high school students faced with the decisions about taking science and math courses or easy A humanities courses.

May. 31 2011 11:33 AM
Lisa from Forest Hills

I think the college model should be altered. What if out of high school, people who encouraged to find jobs in a field they felt compelled to or for a company they felt an interest in at the same time they enrolled in college. They could learn on the job while attaining their degree. Sort of like buying a house.

May. 31 2011 11:31 AM
Adam from NJ

Another point to ponder might involve looking into where college tuition money goes to, and how much a student benefits from the rising costs. I've taught as an adjunct professor in three different schools over the past ten years, and at the $30,000/year private university level saw my salary (with a terminal degree) not rise by a penny. At the community college level, pay has risen in the past five years, but was frozen for the previous five, only affected by unionization. As tuitions rise and reimbursement for faculty stagnates, lagging well behind inflation, are benefits to students during their time at a university also in question?

May. 31 2011 11:31 AM
Rebecca from Bloomfield, NJ

I graduated in 2001 with an architecture degree from NJIT. My father paid for undergraduate, but said if I wanted a graduate degree it was on me. Needless to say, I did not go. I have my architecture license and am currently working in my field ahead of classmates of mine who did go to graduate school. I have thought of going back for a more specialized degree and would need to if I want to teach, but the cost is too outrageous.

May. 31 2011 11:30 AM
James Hannah from Tottenville

'When all you have is a hammer, you see the world as a nail.'

Contemporary American thought has devolved down to two 'tools': economics and politics. When college is viewed with these, it becomes nothing more than a politically correct trade school. The original purpose -- that of educating a small elite so that they could serve as repositories of our culture's finer aspects, has now been all but lost.

May. 31 2011 11:30 AM
chris from califon, NJ

the value of education should not be viewed as the delta in earning potential in may or may not provide but in what is learned.

May. 31 2011 11:29 AM
Brian from Hoboken

Thank you for mentioning how education is tripling the inflation rate. How is this? It is not public vs private debate but instead we should be focusing on where this money is being spent at college campuses.

May. 31 2011 11:28 AM
Stephen Ward from White Plains

What is the cost to society of NOT having a college degree? Putting a purely economic frame on college education misses the point completely.

To be an educated person you NEED a college degree. A liberal arts education is a program for self-development.

May. 31 2011 11:28 AM
Peter from New Jersey

A second comment. It important to consider "sorting effect" versus actual "value-adding" from a degree, meaning to what extent is getting a degree actually making someone more productive in the economy. Or, is it merely a sorting effect where having a degree labels you as someone that would probably be more successful

May. 31 2011 11:28 AM
NANCY from nyc

Instead of the only options being a degree or not a degree, now about pressure being put on these colleges to stop with the outrageous tuitions. Maybe they don't need smart boards and state of the art gyms for all students. I think the speaker just started speaking to this. Just common sense.

May. 31 2011 11:26 AM
Phil from Riverhead

Looking for a good paying job that requires little education? You can become a cop on Long Island with little more that a GED and make 110K after five years.

May. 31 2011 11:26 AM
Stephan from Queens NYC

Yes your guest is correct we are fed up. I was lay off and I wanted to follow my passion a go to a culinary school. After seeing the tuition around $25K-32K for about 9 to 12 months of study I could not believe it. Back in the 70,80 & 90s companies paid or help you pay for higher education. I got 2 masters in Information Tech. through my previous companies. Today most companies don’t want to help with tuitions and the cost is just too high to go into alone.

May. 31 2011 11:25 AM
Cameron from Brooklyn

I have an under employed post grad living at home now. She realizes that due to current economy it will take longer for her to get a full time job in her field.

She has a 45 - 50 year career ahead of her. Getting that degree is likely to pay off over that time.

May. 31 2011 11:24 AM
Frank from Oyster Bay

This is not solely an economic decision. A college education should be more than just vocational training. Exposure to ideas in social sciences and the humanities is necessary to becoming a well-rounded individual. I shudder to think of an electorate with only a high schooler's perspective.

May. 31 2011 11:24 AM
jgarbuz from Queens

Higher education is a commodity for most people. If you don't have the high I.Q. to really absorb and do something worthwhile with your higher education, you are just a parrot with a Ph.D. At best, you can be a critic of everything and everyone who has succeeded without a formal higher education. You become a malcontent only qualified to critique everything about the status quo.

May. 31 2011 11:24 AM
Ivey from Brooklyn

I value tremendously what I gained from my liberal arts education, but I also think that college is not for everyone. We need to recognize those fields where a degree is not necessary and where practical experience is useful. AND encourage students who may excel in these areas.

May. 31 2011 11:23 AM
phil from Brooklyn

Borrowers such as myself who should never have been granted $80,000 in loans, were coached by my colleges economic advisers and lenders to take on a lifetime of dept without understand real world consequences. 18 year old kids are not prepared to make a financial decision that will impact their entire economic future and pressure by schools and banks to easily acquire this type of dept is a type of predatory lending.

May. 31 2011 11:23 AM
Violet from NYC

I really value education, but colleges are far too focused on maintaining a reputation. Nearly every class I paid good money to attend was graded on a curve. If your students aren't LEARNING then the education and its grades are all devalued by lower expectations.
I also think its not a worthwhile investment if you don't have a goal in mind. We need an educated public for certain, but not if education comes at the cost of our freedom to explore and invent, and try new endeavors. We all shuffle into a routine because we are worried about the $300 + we need every month for our debt. Its a disservice to our future as a country.

May. 31 2011 11:22 AM
Hamish from Woodside

I think it can depend in the past on area of study and particular area of the downturn.

I graduated from university in New Zealand in 2001 - it was a lot cheaper than here in the US because there is a lot more govt support (at that point my fees were $3000 a year which was about average). I graduated with a computer science degree just at the tail end of the dot com crash - a terrible time. I was competing against people with 10yrs experience. I only got a job after 6 months of looking because their first preference was someone with 10yrs experience who turned down $40 000 a year. They were desperate to get someone to start immediately and I was the first to answer my phone so I got the job. Because of that, I haven't falled behind at all in career/salary progression (that job got me through the recession of the early 2000's).

If I hadn't got that job, I hate to think how far I would be behind in my career if I had been unemployed for a year or two.

May. 31 2011 11:22 AM
Frank from Hillsborough NJ

Of course a college education doesn't guarantee a good income anymore, and that's a terrible problem. I don't mean to minimize it. But, what about another of college's traditional purposes? Isn't there any value left in simply not being ignorant?

May. 31 2011 11:21 AM

I like to remind the students I teach at university that this country was built and run until comparatively recently by people with high school educations (and by some who went off to get a year or two of college). All sorts of jobs that were done and could still be done competently by high school grads now require higher degrees—this is the true locus of the inflation: our collective worship of credentials.

May. 31 2011 11:20 AM
CS from New York

I graduated from college in 1999. After a year of work (at $25,000 a year), I went to graduate school, got a Ph.D. (where I did not pay for school), got a job, and just got tenure-- guaranteed lifetime employment. I might not make as much as folks in the private sector, but I put a huge premium on flexibility, meaningful work, and job security. Hopefully, my long-term economic expected outcomes will work out. College did not necessarily make a huge difference on its own, but it was my essential stepping stone to everything else I have now.

May. 31 2011 11:19 AM
Edward from NJ

The fellowships Peter Thiel is offering have gone to people who are indisputable geniuses. Yes, these individuals probably don't need to go to or -- in some cases -- finish college. This doesn't have any meaning for the vast majority of people.

May. 31 2011 11:19 AM
erik from mount vernon, ny

i graduated high school in 2002.

i went to a private institution and studied fine arts. i was offered a scholarship and would not have enrolled in this particular private university were it not for the discount. however, this is not to say i was financially responsible nor was i mature, as i lost this scholarship.

shortly thereafter i had to drop to a part time student and eventually dropped out because i could not take the annual 40k slap in the face. since then i have managed quite well without the degree, but this may be in part because i studied visual art and my job credentials are illustrated in the form of a portfolio.

regardless, i will probably be paying for my college education for the next 20 years.

May. 31 2011 11:19 AM
donna from brooklyn

employers discriminate unnecessarily against those without college degrees. there are thousands of entry level jobs that list a bachelor's degree as a requirement when, in fact, the day to day work does not require a degree and could be done equally well by a bright, energetic person with no degree.

May. 31 2011 11:18 AM
Aaron from NYC

seems like a bubble to me -

i remember in undergrad (i have a MFA in fine art and 60K in debt) a prof. from Europe remarked that in Europe only the top 10% or student artists get accepted to state sponsored masters programs while in the US only 10% or grads continue to make art.
Meaning in Europe society bankrolls the best artists, here- private education profits from idealistic young "also-ran's".

May. 31 2011 11:18 AM
Jack from Brooklyn

How about this ... Is there a 'bubble' with regards to very expensive private colleges vs. more modestly priced public colleges? People complain about schools that cost 30–50K, as if good public schools running below 10K don't exist.

(BTW, I happen to teach at one of the more expensive, private schools and I'm not convinced at all that it provides a better educational experience than my public school education.)

May. 31 2011 11:18 AM
bob from huntington

Please address the interest rates charged on government sponsored student loans--higher than current mortgage rates and much higher than the .25 federal funds rate.

May. 31 2011 11:17 AM
Rick from NYC

We could argue the costs vs benefit associated with a college education till we're green in the face (pun intended) but the bottom line is upward mobility is still pinned to having earned a degree. Job opening requirements often lead with Bachelor's degree required.

May. 31 2011 11:16 AM
sheldon from Brooklyn

I disagree Hugh. People simply spend too much money (Ivy League aside) on private colleges, when they may be better off going to a good, yes, good city or state college.

The main problem is that we place too much weight on "college" as opposed to good post secondary vocational education that produces "skilled labor" - something America is short of. More "Plumbing" and less Liberal Arts"

May. 31 2011 11:16 AM
CL from NYC

This discussion is depressing. A college education is not-- or should not be-- primarily a "job preparation" activity. To the extent that it has become that at some (or many) schools, we are all the poorer for it (vide the popularity of "business" degrees). It is shameful that BL can't or won't get someone on this show to discuss higher education as something more than a commodity.

May. 31 2011 11:16 AM
Ed from Long Island

Dont forget the side benefits! You will meet and marry your future wife in college; gain many friends and contacts, and a lifelong connection with the learning institution.

May. 31 2011 11:15 AM
Peter from New Jersey

I want to comment on Medical Schools. While Medicine is still an excellent career, currently there is high demand to enter medical school. Many of my classmates graduate with hundreds of thousands of dollars of debt, only to make real money only years later despite working I-banker hours. Last year the New Jersey Medical School tuition increased in one year 18%. A few years ago, a program to delay payment of medical school debt payment was axed. We worry about the effect of future medical systems reforms that may deflate our ROI through radical income change. Many students are driven from primary care towards specialties that offer lifestyle or payback for economic reasons.

May. 31 2011 11:15 AM
Henry from Brooklyn, NY

Might the cost of a college education come down due to the increasing use of on-line courses and degrees?

May. 31 2011 11:13 AM
Liz from NYC

I know someone who got a masters in a high demand field. He has high quantitative skills and letters of reference from previous work experience. Private school did not place him and he ended up on public assistance. His loans are deferred.

May. 31 2011 11:12 AM
Jack Hughs from nyc

College is kind of like a brand. So a good brand like Harvard is worth the money.

A crappy brand is not worth the money.

Yet all private colleges cost about the same to buy.

May. 31 2011 11:03 AM

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