Higher Education: All Bubbles Are Not Created Equal

by Hap Aziz

In his article “The Dwindling Power of a College Education” (NY Times Magazine, November 23, 2011), Adam Davidson posits, “One of the greatest changes is that a college degree is no longer the guarantor of a middle-class existence.”He supports his statement with the data points that up to the early 1970s, most college graduates–11 percent of the adult population–could find relatively decent jobs, while now nearly a third of the adult population possess college degrees, and the employment picture is much less positive. Davidson goes on to reason that in addition to the degree, graduates need to have some sort of “special skill” that employers value. There may be some hair-splitting required to support that line of thought, however. Employers have always desired particular skill sets depending on the type of job, and certainly many of us remember the age-old chicken-and-hen conundrum for newly-minted college graduates: “I have a degree, but I can’t get a job without any real work experience. So how can I get work experience if no one will hire me for a job?”

The point not to be lost in this view is that there is a non-insignificant cost to education, and this cost is financed in large part by borrowing. According to the U.S. Department of Education, National Center for Education Statistics (2009), roughly two-thirds of all undergraduate students needed some sort of financial aid for the 2007-2008 school year. Factor in rising levels of unemployment among college graduates, and we see that repayment of loans becomes a hardship for steadily increasing numbers of students. Market forces converge, resulting in the decline of undergraduate degree value, and in effect the degree drops underwater; the perceived value of the degree falling below the actual debt burden.

Comparisons to the housing market abound. Peter Thiel speaks extensively on the Education Bubble in a National Review Online interview back in January of this year. Thiel’s commentary is sobering:

“Probably the only candidate left for a bubble — at least in the developed world (maybe emerging markets are a bubble) — is education. It’s basically extremely overpriced. People are not getting their money’s worth, objectively, when you do the math. And at the same time it is something that is incredibly intensively believed; there’s this sort of psycho-social component to people taking on these enormous debts when they go to college simply because that’s what everybody’s doing.

“It is, to my mind, in some ways worse than the housing bubble. There are a few things that make it worse. One is that when people make a mistake in taking on an education loan, they’re legally much more difficult to get out of than housing loans. With housing, typically they’re non-recourse — you can just walk out of the house. With education, they’re recourse, and they typically survive bankruptcy. If you borrowed money and went to a college where the education didn’t create any value, that is potentially a really big mistake.”

The last part of this quote is worth dissecting further: “a college where the education didn’t create any value.” Thiel does point out that a college education can often be a consumption decision rather than an investment decision, and therein lies the much of the valuation measure. The following list is a snapshot of some of the more unusual offerings available to students. As you go through the list, keep a mental checklist of those you would classify as consumption versus investment offerings.

  • Bowling Industry Management at Vincennes University
  • EcoGastronomy at the University of New Hampshire
  • Floral Management at Mississippi State University
  • Puppetry at the University of Connecticut
  • Adventure Recreation at Green Mountain College
  • Family Resource Management Studies at Ohio State University

While it can be argued that these degrees have at least some value in a specialized marketplace, it becomes a greater stretch to justify the cost of the degree given the salary earned through work in the field. I’m not going to consider attending Mississippi State University to pay out-of-state tuition for the Floral Management program if I’m looking at the average starting pay at the florist in my home town. Indeed, a wiser course might be for me to take part-time employment at a florist when I’m in high school and learn the trade as an apprentice instead.

The Governor of Florida, Rick Scott, got himself into a bit of hot water when he made the following statement:

“We don’t need a lot more anthropologists in the state. It’s a great degree if people want to get it, but we don’t need them here. I want to spend our dollars giving people science, technology, engineering, and math degrees. That’s what our kids need to focus all their time and attention on, those types of degrees, so when they get out of school, they can get a job” (October 10, 2011).

While Governor Scott’s phrasing was questionable and certainly elicited quite a bit of negative reaction from anthropologists as well as educators in general, it’s worth examining the statement to see if there is any validity. The U.S. Bureau of Labor Statistics is anticipating a 28 percent growth in Anthropology jobs from 2008 to 2018, and the BLS calls this “much faster than the average” for all occupations. But examination of the actual numbers show national growth of 1600 jobs in the field over the 10 year period, and that is across the entire country (with the main employer being the Federal Government). The calculus regarding the investment value of this degree is unclear on quick inspection. If you were making this decision for yourself or advising your son or daughter, what would your reasoning be?

Still, the issue goes deeper than whether or not the purpose of college degrees is purely or at least primarily gainful employment. When we consider the question regarding the purpose of education, it is important to recall the core ideas underlying the concept that liberal arts education has value beyond the proposition of facilitating employability. In discussing the societal value for liberal arts, Gregory Dunn looks to C. S. Lewis for clarity on the topic:

“Lewis contrasts liberal arts education with what he calls ‘vocational training,’ the sort that prepares one for employment. Such training, he writes, ‘aims at making not a good man but a good banker, a good electrician, . . . or a good surgeon.’ Lewis does admit the importance of such training–for we cannot do without bankers and electricians and surgeons–but the danger, as he sees it, is the pursuit of training at the expense of education. ‘If education is beaten by training, civilization dies,’ he writes, for ‘the lesson of history‘ is that ‘civilization is a rarity, attained with difficulty and easily lost.’ It is the liberal arts, not vocational training, that preserves civilization by producing reasonable men and responsible citizens.”

What we see happening now in terms of an “education bubble” is the clash between the ideal of liberal arts and the reality of cost-benefit ratios that point to unsustainable debt on both an individual as well as societal level. This, by the way, is one of the dangers of the State taking on the role of “provider” in society, whether it involves healthcare, education, or any other area of commerce. He who pays the Piper calls the tune, after all, so along with any funding a student receives from public sources will undoubtedly come greater and greater restrictions and requirements on how that funding may be allocated. The bottom line is that if I want to major in Puppetry, and I can absorb the consequences of my own decision, then I have every right to do so… and hopefully I’ll become a much more responsible citizen in the process. However, if my degree decision results in the accumulation of a tremendous amount of debt along with a lack of job prospects, I’ve merely set myself up for some difficult and frustrating times in life. At what point will the government step in and simply dictate what types of degrees are eligible for financing through student loans?


1 Comment

Filed under accountability, colleges and universities, education

One response to “Higher Education: All Bubbles Are Not Created Equal

  1. Pingback: Considering the Long-term Future When Selecting a Program of Study | Learning Through Play & Technology

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