How the College Bubble Will Pop

I've spent time around a couple of research universities (the kind where the degrees do pay for themselves), and I've known a lot people who pursued PhDs, post-docs and faculty positions. Most of these people are extremely bright and incredibly hard-working, and many of them were paid less than than third of what a typical programmer makes. Why did they put up with it? Because they loved their subject, and they convinced themselves they had a shot at tenure.

But tenure is incredibly hard to obtain at an elite university. You've got to sacrifice your 20s and much of your 30s in a haze of work, and the odds are still very slim that you'll win the tenure lottery. And if you do win it, well, you've just spent the last 15 years proving you're a workaholic who can't stop. And if you do manage to slack off? I know at least one professor who was told, "Absolutely, you're a professor for life, no question. But your salary is paid for by the research you bring in. If you can't bring in the grants, we can't afford to pay you. At least not much."

So for every piece of tenured deadwood, there are probably at least 4 crazed workaholics (and in my personal experience, far more). And beyond that, there's 50 or 100 grad students, postdocs and young faculty all working for ridiculously low wages in hopes of getting tenure.

So let's do a little thought experiment: What happens if we do what this writer from the American Enterprise Institute wants, and get rid of tenure? Well, to make an analogy, how would the behavior of startup founders change if they no longer had a tiny chance of a big payout someday?

I do not know why US education keeps getting more expensive. But tenure, ironically, seems to be one of the things holding down salaries at elite universities, in the same way that big chunks of equity hold down startup wages. Unless somebody can provide actual numbers demonstrating that tenure is a problem, I'm inclined to look elsewhere.

1. Extremely easy access to loans for higher education. This, along with systematic misinformation makes for tons of philosophy/liberal arts majors that do not know what to do with themselves and their massive debt at the end of education.

2. Lack of student motivation. I went to college in order to obtain skills and knowledge. On the other hand, many people have other priorities as evidenced by amount of fraternities/sorrorities as well general alcohol consumption in college (Can anyone find number of liters of alcohol purchased in area near universities vs average? I remember seeing quite stark figure few years ago).

So, #1 was brought by college for everyone mantra. Problem with that is illustrated in #2, college should be only for people that want to and are willing to learn. IMHO, until those two issues are reconciled this particular higher education problem will not go away.

> The Obama administration has dubbed college "the ticket to the middle class,"

Indeed, the problem is that higher education is deemed a "ticket" to ride. Even the president is implying (whether he really believes it or not) that a college degree entitles someone to a good standard of living. Not effort, hard work, or other qualities commonly associated with the American dream.

Even if it's just selling yourself to a potential employer.

Even big time universities are getting into this - witness executive programs offered by many prestigious programs. On the flip side, companies like Treehouse and more exotic options like MOOCs and "learn a language as a service" style instruction are becoming formidable, low risk options.

I think the future will see a reversion to 4 year institutions serving those students who always used to go to college, a reduction in the amenities arms race that others on this thread have pointed out, and an increasingly level playing field (and better perception) of those people who didn't go to college, but do have highly valuable (and demonstrable) skills acquired through for-profit teaching avenues.

Many here will find this distasteful. That's OK. Many who are over 40 find internet dating inherently distasteful too, but that hasn't changed the perception among younger people or stopped its explosion as a real alternative to traditional dating.

Disclosure: I work for an educational technology company who serves a lot of commercial training providers but also many four year institutions.

Imagine this. Lets say a good private college costs $40,000/yr (making up but pretty close) on paper. The actual amount that a student pays out of pocket is wayyyyy less say $10,000. The rest is covered by student loans/grants etc. So the student still ends up with a huge debt of $40,000 while the college makes a profit from the govt. This is true for both private/public colleges.

How strong is the evidence to support this statement?

One of the root causes of the "college bubble" might just be completely overlooking this question, or taking any number of half-hearted answers for granted... or thinking that the relativistic mindset which has beset academia in the last 50 years is the final frontier.

Currently reading "The Closing of the American Mind" (as an American, wearily) and finding the history of the university as laid out there very interesting.

(Trying to formulate a general opinion but the deeper I go, the harder it is.)

There are countless difficult questions and choices which face man, and in most institutions of higher learning, they've taken a backseat to questions of employability & cost.

On an unrelated note, the new undergraduate business school building at my alma mater cost $55 million.

http://www.washingtonmonthly.com/magazine/septemberoctober_2...

So much so that at the moment, I'm working full-time and a full-time student.

I'm not sure what to say about this article. It makes a few points, but there's a lot there which is just odd.

I see this issue being less about what colleges are providing than the motivations and expectations of the students and particularly parents paying into them.

The common perception seems to be that degree is a binary thing, a membership with guarantees on either side. A princely income in a related field for members and a lifetime of poverty beneath a glass ceiling for non-members.

Recognize college as a multiplier more than a membership and none of this is particularly surprising.

Freakonomics did a pretty interesting series on College [0] providing an outlook far less dreary than this piece.

0: http://freakonomics.com/2012/07/30/freakonomics-goes-to-coll...

A 6-month vocational course training people in some specific in-demand skill is started at a college/technical institute, partly funded by some big company, and everyone who graduates gets a job. A bottleneck is created at the admission stage as applications soar, and only some get selected. A year or two later, the course is converted into a one-year program, teaching/admin staff numbers increased, and the original staff rise up the ladder. The course is then converted to a two-year program, the curriculum generalized to include other related skills, and enrollments for each year increased. When the student loan system recognizes the course as eligible for loans, the fees go up. When the course becomes a 3 or 4 year diploma or degree, enrollments have gone up so much the bottleneck is now at the job-seeking or internship-seeking stage and the original program creators are attending frequent overseas conferences.

Does the median tell the whole story though? What about the skewness? Maybe non-degree-holders' income has a heavy negative skew, while for degree holders a heavy positive skew. So while the mean income may not be very different, the two paths still offer very different prospects. How much is the chance that your income will not have a low ceiling worth to you?

We have a lot more degrees, but also a lot more unemployment and underemployment.

2. What is "working in retail"? A couple of cousins with business degrees started "in retail" out of college. They weren't that I know of stocking shelves or mostly operating cash registers, and both have done quite well, though only one works in a related field now.

3. There is a rage for credentials that goes a ways back and is not helpful.

I wonder how much of the rise is cost is tied to our inefficient healthcare system?