When the facts change, I change my mind. What do you do? -- John Maynard Keynes

Wednesday, December 21, 2011

The higher education bubble is about to burst

"just like the sub-prime mortgage crisis, there could be a new financial bubble ready to burst"

The idea of putting young people into thousands of dollars of debt just to get a higher education degree benefited the higher education complex--colleges and universities (and their employees), governments, and participating financial institutions--but certainly put young people at a financial disadvantage unlike any previous generations faced.  Yes, state governments could and did reduce support for public universities, and yet, ALL colleges and universities could and did continue to escalate salaries, benefits, and other costs much faster than the rate of inflation by merely passing the cost on to the "captive market" of students seeking an education and degree. "Just sign here," became the mantra of every student financial aid/loan officer and there was no pain--until after graduation.  Now those loans are coming due, and the pain is evident (as well as the "rip-off" of worthless degrees or at least worth a lot less than impliedly promised)--probably the worst examples are at the "for-profit" schools, but all are guilty to some degree (no pun intended). OWS can talk about the greed on Wall Street--but Wall Street has NOTHING on the higher education complex when it comes to GREED.

Peter Thiel (Peter Thiel: We're in a Bubble and It's Not the Internet. It's Higher Education) says the bubble that has taken the place of housing is the higher education bubble. “A true bubble is when something is overvalued and intensely believed,” he says. “Education may be the only thing people still believe in in the United States. To question education is really dangerous. It is the absolute taboo. It’s like telling the world there’s no Santa Claus.”

Thiel has it only partly right--it's not "education" per se, that is overvalued, it's the "degree." Getting "the credentials" is putting young people thousands of dollars into debt before they can even begin a career--is this the way to treat young people just starting out in life? No, and there are better ways--just look at the way other nations do it. I would suggest "grants" funded by the federal government on an 80/20 basis--government pays 80% and students pay 20% (provided one meets certain guidelines--grade average, degree programs in needed fields, etc.) and that the institutions receiving the funds be accountable for costs, etc.  Everyone acknowledges that the nation needs an "educated workforce." Then we need to "pay for it."  Send the "best and brightest" to the schools of their choice (within certain limitations) and encourage all to get an education of some sort--including vocational skills programs.

But there are other things at work that are going to "disrupt" and "change the paradigm" of higher education as we have known it in the United States. Bill Gates, Steve Jobs, and Larry Ellison are all college dropouts who did very well, thank you, in life. They all saw value in education (after all, lifelong learning is true education), but saw no need to "hang around" for the "degree."  Some of the best institutions of higher education are now "getting it" and it appears M.I.T. is leading the way--(technology, including online learning, is going to be a BIG disruptor)-- 

M.I.T. Expands Free Online Courses, Offering Certificates - NYTimes.com: "The M.I.T.x classes, he said, will have online discussions and forums where students can ask questions and, often, have them answered by others in the class. While access to the software will be free, there will most likely be an “affordable” charge, not yet determined, for a credential . . . . “The most important thing is that it’ll be a certificate that will clearly state that a body sanctioned by M.I.T. says you have gained mastery.” . . .  “It seems like a very big deal because the traditional higher education reaction to online programs was, yeah, but it’s not a credential,” said Richard DeMillo, director of the Center for 21st Century Universities at the Georgia Institute of Technology. “So I think M.I.T. offering a credential will make quite a splash. If I were still in industry and someone came in with an M.I.T.x credential, I’d take it. M.I.T. said its new learning platform should eventually host a virtual community of learners around the world . . . M.I.T. officials said they expected that other universities would also use it to offer their own free online courses. Mr. Reif said that M.I.T. was investing millions of dollars in the project, . . ."

The higher education complex has got a few things to "learn"--bubbles don't last forever and the globalization of higher ed online learning is going to change everything they thought they knew about higher education. The old saying of "lead, follow, or get out of the way" is apropos, as is "change, adapt, or find something else to do."

The Big Picture

Financial Crisis - The Telegraph

JohnTheCrowd.com | The Sailing Website

Craig Newmark - craigconnects