Is The Education Bubble About to Burst?


Glenn Reynolds writes in the Washington Examiner about suggestions that the higher ed bubble is at a bursting point.

Bubbles burst when people catch on, and there's some evidence that people are beginning to catch on. Student loan demand, according to a recent report in the Washington Post, is going soft, and students are expressing a willingness to go to a cheaper school rather than run up debt. Things haven't collapsed yet, but they're looking shakier—kind of like the housing market looked in 2007.

Back in March, Tim Cavanaugh noted that students are borrowing twice as much as they were in the good ol' 20th century, that defaults on student loans are up, and that the feds are pumping even more money into the system. That's a recipe for disaster.

Random but important points: 1. Getting a college edjumication does not (NOT) raise your lifetime earnings by $1 million. When you control for inflation, opportunity costs of going to school, advanced degrees, and the kitchen sink, you're looking at about $280,000 more over a lifetime. 2. Where you go to college is far less important to future earnings than that you go to college. According to Princeton economist Alan Krueger, the returns to attending an elite university (defined as one that will put you in the poor house) are far from clear. In fact, where you apply to college is a better indicator of future earnings than where you actually go (Memo to my kids: Apply to Harvard, enroll at Wright State, and we'll split the difference in the 529 accounts!)

Reason.tv on the education bubble and new flows of federal money to same: