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Wednesday, July 11, 2012

Is Education the next bubble to pop in America?

Over the past 30 years most have touted the value of a college education. How it leads to increased job opportunities. An opportunity to increase one’s income over that of a High School graduate or a skilled trade worker.

However with millions of college graduates currently unemployed or underemployed in low-wage jobs and these former students drowning in debt I have to wonder if education is the next bubble to pop in America.

There are thousands of colleges across the country. And many more opening on top of the existing universities and colleges that already exists. Some are nationally accredited colleges; others have regional accreditation. Some have no accreditation at all. All are producing millions of college graduates on top of the millions already in a marketplace flooded with people looking for work.

Similar to the housing market in the mid 2000s, there are just too many college graduates chasing too few jobs. Worse, many of the degree programs being produced by American colleges today do not meet the needs of today’s employers. The market is saturated with students who have completed degrees in majors that have absolutely no value to the U.S. economy anymore like anthropology, political science, psychology, art history, and sociology. Even some business, science, and law degrees hold no value to employers anymore.

With so many graduates out of work I have to ask: Is college a necessary tool for building wealth?

Or has it become another high-priced consumer product?

It’s clear the prestige of a college education has worn off over the last fifteen years. I have to wonder if the value of a college education has declined as well.

Looking at the facts, a college education costs anywhere from $60,000 for a two-year public college to $200,000 for a four-year private college these days. Graduate school can cost another $50,000 to $125,000 on top of this depending on the area of study.

However, the return on the investment of a college education seems to be minimal these days. Most entry-level salaried jobs are hard to get. Worse, they only pay anywhere from $25,000-$35,000 a year these days. With the average employee remaining on a job for about two to three years before a position turns over (usually due to layoff, resignation or termination, not promotion) there’s little room for advancement or financial growth for today’s college graduate. So most remain stranded in debt with no way out.

The constant instability in the American job market makes it nearly impossible for most students to build their own households or even keep up with their bills. With most college graduates now working part-time minimum wage jobs that pay anywhere from $8-$10 an hour it can be next to impossible to keep up with student loan payments that vary from $300-$500 a month on top of rent, utilities and other daily living expenses.

With college graduates earning such low wages currently it will take over a century for a person to pay off their student loans and related debts. Unless the economy changes, most will die in debt.

The way I look at it the college bubble is going to burst the same way the housing market burst in 2007 and the comic book market imploded back in 1993. It’s just a matter of time.

The value of a college degree has clearly declined in the American workplace. As more college graduates saturate the workplace than are needed, it is no longer the asset that gave a prospective worker an advantage over competing candidates in the job market.

Worse, the price of an education continues to rise with each passing year. There is little incentive for people to invest in a college education if there is next to no chance for them to ever get a return on it. A family working for $50,000-$120,000 a year will never be able to see a return on an investment of $60,000-$200,000 for a single child’s college education if they can only get jobs that pay $8-$10 an hour that last two years or less.

With colleges not producing graduates with skills employers want and a student drowning in debt they can’t pay off, it’s clear that the American college system is in desperate need of an overhaul for the 21st century.

College isn’t for everyone. America needs to get off the one-size-fits-all college education mindset because it’s preventing people from accessing the job market. People need to have other options for learning skills for employment such as vocational schools, trades and apprenticeships.

And America needs to streamline its college coursework. Today colleges teach a lot of information, but not skills employers need. Sure it’s great that American students have read the literary classics, but do they really need 30-60 credits of required core classes of literature, science, and math courses like calculus and statistics before they start studying for their major? Do they really need to study things most won’t use once they graduate? And do students need to pay for two years of these worthless courses in their quest to complete a degree program?

I say they shouldn't. In fact I feel it’s just a way to pad out the college tuition bill to the overpriced over exaggerated state that it’s grown into.

Sure some professors will say that all these courses will make for more well-rounded students. People who will know how to think more logically.

They just love milking the captive audience they have for more and more tuition and textbook money each passing year. They tell us we need an education to develop the critical thinking skills we’ll use on the job.

But it’s clear that their logic doesn’t make sense anymore.

Not in an age where college graduates have created some of the worst economic conditions in close to a century. That Housing crisis? Created by college graduates. That comic book industry collapse? Created by college graduates. The screwed up banking industry? Created by college graduates. That screwed up American job market? Created by college graduates. Where were all their critical thinking skills they were supposed to learn in four years? Wasn’t college supposed to teach these people how to think? Weren't they supposed to learn about the mistakes people made in the past so they wouldn't mistake them themselves? 

Or were they too busy at parties getting drunk until they were smashed, getting high on weed, and getting sexed by sorority girls to develop those little parts of the brain?

Seriously, how much sense does it make for someone to come out of school drowning in five to six figures of debt in two to four years? Sure a “well-rounded” student from an American college has read Homer’s The Odyssey and Shakespeare, but what good is that gonna do someone who is working at a minimum wage job at a coffee shop, a retail job folding sweaters, or an entry level job at an office where they spend time filing papers and answering phones? How will any of this stuff help them as they advance in their careers in these fields?

It’s time for American colleges to get rid of some of the worthless majors at these universities and college or reduce them to elective status. Why should colleges offer degrees in CRAP no employer on earth can use? What can an anthropology major offer to an employer? A sociology major? Political Science? English? History? Women’s Studies? Liberal Arts? Master of Fine Arts? Why are colleges still offering degrees in this nonsense?

These areas of study are clearly obsolete in today’s job market.

Sure the diploma looks nice on the wall. But why are colleges allowing students an opportunity to waste student loan money on courses that won’t lead to future employment? And why is the government allowing colleges an opportunity to waste student loan money on this foolishness?

I feel people go to college they should take courses related to their majors. In fact, they should declare their majors on DAY ONE. College needs to STOP being a place for drifters and people who want to “figure out” what they want to do with their lives. It should become a place for those who are serious about getting an education in a field of study from the start.

And they should start taking courses related to their major from DAY ONE. It’d be a lot cheaper for the students and a more productive use of financial aid money than wasting thousands of dollars on garbage courses no one will use once they get out of school.

Moreover, it’d prepare people for the careers they’d go into. The U.S. college system needs to start focus on producing people who can innovate and produce new inventions. Those innovations and inventions will produce wealth long-term for the U.S. economy and open up new markets and industries.

The current U.S. college system only produces individuals who consume products and services. As they consume those existing products they create debt. Debt that can’t be paid off. Debt that can’t be eliminated in bankruptcy court. Debt that stays with an individual until they die.

Debt that has the U.S. economy currently stalled and going nowhere. Two generations of people are stranded in their parents’ homes due to this debt. Two generations are stuck in a financial pit with no way out. Something has to be done to reform the U.S. College system and the way it’s financed.

If the U.S. College system continues on this course it’s eventually going to collapse like the housing market in 2007 and the comic book market did in 1993. The government can’t just keep issuing student loans to individuals that can’t pay it off or have any way of being paying it off. Sure the debt is on the books, but it’s next to impossible to collect from people who can never pay it back due to long-term unemployment and underemployment.

College is supposed to teach people how to think. But most aren’t thinking about their financial futures when planning their college educations. The current college system is an archaic institution steeped in creating consumer debt without a plan for paying it back. It is a system that is crippling the American economy. It is a system that has to change if the U.S. economy has a hope of recovering and competing in the 21st century. 


  1. You did share it all wonderful. This is very effective and useful post.

  2. Very good article, Shawn!

  3. Shawn, this is one of the very best blogs you've written. It's an eye opener. I knew things were bad in this area, but did not know they were this bad.

    As with so many of your blogs, I'd like to see this get much wider dissemination. It has information that is useful to so many in so many areas.

    You really are to be commended for this one and for so many others lest I forget.