The Coming Meltdown In College Education & Why The Economy Won’t Get Better Soon

http://blogmaverick.com/2012/05/13/the-coming-meltdown-in-college-education-why-the-economy-wont-get-better-any-time-soon/

by dwynings • 14 years ago

339 292 14 years ago

blogmaverick.com

cageface• 14 years ago

You borrow as much money as you can for the best school you can get into and afford and then you “flip” that education for the great job you are going to get when you graduate.

Maybe there is a bubble in higher ed but this analogy is pretty shaky. The most obvious difference between a house and a degree is that you can't "flip" a degree.

wyclif4• 14 years ago

An analogy isn't supposed to be a 1:1 comparison of two things. I read Cuban here using "flip" not as selling your degree, but exchanging your degree for a job. You could call it a conversion or something else. I don't consider it shaky at all.

EzGraphs2• 14 years ago

Agreed. There are similarities between the higher ed and housing bubble:

* Lots of quick money available

* Government loans and programs,

* Speculation about the relative return on investment that does not match the observed reality

But a house is an asset with a specific tangible transferable value. A college degree is a certification and not transferable in any specific way. It muddies the waters to see the bubbles as identical, and it suggests that they will resolve themselves in exactly the same way (which is at least questionable).

bryogenic• 14 years ago

While this article talks about how bad things are I think an interesting solution was written up here [pdf] http://www.fixuc.org/wp-content/uploads/2012/01/FixUC-Propos...

The idea being you go to school for free and the University only makes money from a percentage of your future pay, thereby ensuring that it's students are actually prepared for the work force.

More here: http://www.forbes.com/sites/jamesmarshallcrotty/2012/04/23/f...

Swizec3• 14 years ago

The problem I have with this is that university should NOT prepare you for the work force.

Universities are awesome! We ruined them when we started thinking of higher education as preparation (or even requirement) for the workforce.

University should prepare you to be a thinker, a scientist and just generally an educated person. As soon as it becomes vocational the whole point is lost.

We don't need to "fix higher ed", we need to remember why we created it in the first place - to teach a small percentage of the population how to use critical thinking.

wyclif4• 14 years ago

I'm partial to this argument, but it only works if you allow for technical education that does provide people with the STEM (or other) skills needed for the workforce. I think higher education in the US is actually very broken.

The best example I can think of that embodies that division of purpose is the UK, where you have Oxbridge and other elite institutions which function in the sense you are referring to, but you also have the Polytechnics that train people for practical careers.

gliese13373• 14 years ago

I see that as an argument that we do need to fix higher ed. We need to do some refactoring for good separation of concerns, and clearly delineate that these over here are special institutions for research and critical thinking and most people don't have any reason to go to them, and those over there are the institutions that will specifically teach you employable skills.

It's essentially impossible to ensure that you never improve your employment opportunities while engaging in Pure Education or to ensure that you never develop critical thinking skills while in a vocational program (and it would not be desirable to do so anyway), but we could certainly more clearly delineate the intent of different programs and institutions. And then people could just pay for the experience that they actually want, rather than bundling them together.

ntkachov3• 14 years ago

Great. They fail at that too. There have been a few studies that show that after 2 years of college, the difference in reading, writing, math, and critical thinking are negligible.

So if you're not good for the industry, you're terrible at what you're made for, what good are you?

ekianjo• 14 years ago

"Preparing for the Work Force" does not equal to "Vocational". After all, if universities do what you claim they should do, i.e. "prepare you to be a thinker, a scientist and just generally an educated person", you should become a useful member of society in the end and most probably you will be employed by someone who can use your skills.

This being said, I have a problem with the mentioned "solution". Why would you have to repay "based on 5% of their annual income, the University of California for 20 years"? - it seems like a ridiculous huge amount of money. It would make sense if it were a lot more limited, say, for the first 5 years of work, where your educational background still matters - after that threshold, I say your experience is more valuable than your academic background.

I'm with the author of the article. Let the new solutions invade the market to make current colleges rates obsolete. Change will occur by itself.

rbn2• 14 years ago

Yes I agree. There are 2 big problems with education.

1) The society requires you to have a degree. A self taught programmer will likley get paid less than a college educated programmer. Even though the self taught one is more skilled.

2) College students blindly trust that the college education will get them jobs. What many don't know is that the the stuff they are getting taught is obsolete already. Many Occupy Wall Street protestors said that "We went to college, where are our jobs?". Who said going to college will get you a job?

pyre2• 14 years ago

Then you would just have universities competing to crank out CEOs/MBAs in the hopes that they 'hit it big' a lot.

teeray• 14 years ago

Then we weight their percentage based on the number that they cranked out. That way, the more horses they have in the race, the less the payout is on the winning one.

thisrod• 14 years ago

Hold that thought: http://www.ycombinator.com/

I'm a traditional university type. If pg can drag the Zuckerberg set out my physics department, that's fine by me.

brc2• 14 years ago

It also creates a positive feedback loop problem - the ones that get a few hits in turn can get more money to attract the ones with the most potential. It also will get regional problems - those that produce graduates bound mostly for the NYC market will do better than those where the graduates go for Midwestern jobs.

I don't have a problem with rewards going to those who produce the best graduates - clearly this effect is already in play at the big name institutions.

I think that you need a certain amount of 'wildcard' where someone from a lesser known college can go on to be a big thinker or earner. I think otherwise you risk something with a positive feedback loop getting stuck in groupthink or turning itself into a formula which resists change and innovation.

gliese13373• 14 years ago

Many people, me included, frequently complain about all of the politics required to get the least bit of funding for anything from my university. Then I read something like this and that kind of trouble suddenly seems much better than the alternative.

According to NCES[1], the average total cost per year of attendance at a 4-year private institution in 2009-2010 was $32,475. The cost for BYU was $4,290[2]. There's tons of construction going on all the time, but BYU doesn't add floor space without a donor who can guarantee long-term financial support for the facility. And we still manage to have nationally and internationally recognized programs in among other things, computer animation and ancient languages, so clearly you don't need a whole lot more money to do good instruction and good research.

It makes me wonder what exactly there is to cut that manages to use up all of the 9-times higher costs of other institutions.

[1]http://nces.ed.gov/fastfacts/display.asp?id=76

[2]http://yfacts.byu.edu/viewarticle.aspx?id=85

MaxGabriel4• 14 years ago

This disclaimer was on the BYU website. Do you know how much that is?

"* A significant portion of the cost of operating the university is paid from the tithes of The Church of Jesus Christ of Latter-day Saints. Therefore, students and families of students who are tithe-paying members of the Church have already made a contribution to the operation of the university. Because others will not have made this contribution, they are charged a higher tuition, a practice similar in principle to that of state universities charging higher tuition to nonresidents."

gliese13373• 14 years ago

Yes, I do. That's why I quoted the price for non-LDS students. The price for tuition for LDS students, as listed on the same page, is about half of that; but, as the disclaimer says, you also have to take into account that they're paying an additional 10% of their total income.

forrestthewoods• 14 years ago

I'm extremely impressed that the non-tithing rate is $4,710 and the tithing rate is $2,355 [1]. By comparison UCLA is $12,686 in-state tuition and $35,564 out of state [2].

[1] http://yfacts.byu.edu/viewarticle.aspx?id=85 [2] http://www.admissions.ucla.edu/prospect/budget.htm

ajtaylor• 14 years ago

When I was attending BYU back in the mid 90's, my tuition bill was about $1200 a year (I'm LDS & it could have been per semester - I can't recall). Regardless of whether I paid per semester or year, that's an incredible lack of inflation 20 years later!

MaxGabriel4• 14 years ago

This was the first comment on Cuban's blog. Can anyone comment on it? I listened to the NPR Podcast, it is specific to private colleges; I am not sure how public colleges fit in.

"The most recent Planet Money on NPR was about the cost of college. [1] They point out that the price that has been rising is the “sticker price.” However, the average price a student pays for college hasn’t risen (except to adjust for inflation) over the past 20 years or so. The schools are raising the sticker price as a marketing tool, so they can give big need and merit based scholarships to woo desirable students.

The reason student loan debt has ballooned isn’t because students are paying more, it’s because more students are paying. Federally subsidized loans aren’t increasing the cost of education, they are serving their purpose to give more people the opportunity to go to college.

I suppose your point that it is a ton of debt and we don’t have a job to give to each college grad is valid. But, I am not sure the classification of it as a bubble is valid because we aren’t really seeing a rise in the cost of education."

[1] http://www.npr.org/blogs/money/2012/05/11/152511771/the-real...

AngrySkillzz2• 14 years ago

I believe that's true for many well-endowed and non-state institutions; the wealthy who can afford the full $45k tuition help to subsidize the poorer students who can't, and I don't see too much wrong with that.

The problem is that that isn't the entire story. Yeah, federally subsidized loans mean more kids are attending school, but not everyone is eligible for subsidized loans. Many of my friends, and myself, were offered standard unsubsidized loans as generally middle-class students. So for your average middle-class student, going to a less-endowed private or out-of-state institution means either paying full price out of pocket or taking out unsubsidized loans. And as we know, unsubsidized loans are reaching absurd levels under unrealistic terms and they're giving us a generation saddled with debt that will be very difficult to pay off.

More students are going to college, but I seriously doubt the price of education is rising. Spending time on any college campus will tell you that they are spending recklessly because of the education bubble, and I'm not talking high professor salaries (they deserve every penny). Administrators these days make frankly irresponsible amounts of money, schools purchase expensive and unnecessary equipment to have a selling point for certain departments, and construction/renovation is everywhere. The sticker price isn't rising because costs are rising, the sticker price is rising because demand is inelastic (due to promise of better jobs and easy financing) and colleges are finding reckless ways to spend the rest of the money.

So the points are valid, but they don't speak to the entire situation. It sure smells like a bubble to me; student debt is ballooning because demand is inelastic and its easy to take out a loan, schools are spending the money irresponsibly, and I don't see any reasonable way that all of this debt is getting repaid in this economy, especially under the conditions the loans are given. I'd say there's likely to be an impending burst and credit crunch as my friends and I hit the workforce.

learc838• 14 years ago

>unnecessary equipment to have a selling point for certain departments, and construction/renovation is everywhere.

Exactly. When I started college I remember how ridiculous it was that every damn monitor on campus was a flat panel (this was when flat panels where still a few hundred dollars more expensive than CRTs)

Now that I'm going back to school I'm shocked by the amount of construction going on. They've doubled tuition since I was last there in 2007 and there using it on to buy a multi million dollar skyscraper and build pretty fountains.

AngrySkillzz2• 14 years ago

And as far as in-state institutions go, the prices can generally be anywhere up to the $20k range. I'm sure a significant amount of the loans are being spent on in-state institutions and, because of budget cuts, they don't have as many need/merit-based scholarships to give. That's not doing us any favors either.

learc838• 14 years ago

>The reason student loan debt has ballooned isn’t because students are paying more.

That's not true, I've seen numerous articles on the cost of public colleges increasing much faster than inflation.

Anecdote: I dropped out of Georgia State in 2007, I'm going back now to finish my last few semesters of a math degree.

The cost has more than doubled in the last 5 years.

Retric4• 14 years ago

He just refuted that argument by denoting that 'price' as the sticker price. New Mexico for example gives all students attending a state school with a high school GPA over 2.5 a scholorship. The state could just directly give public schools the same money for in state students and avoid the 'scholorship' angle. But, this approach offers better publicity and if you have below a 2.5 GPA in a public high-school you might not be ready for collage.

tzs• 14 years ago

The situation seems to be quite different at private schools. Here's a graph of Stanford tuition from 1920 to 2011, plotted on a log scale:

http://imgur.com/dGiSi

I've put a linear regression line on top. It's a pretty good fit.

I can't find the data now to do a plot for it, but I saw similar numbers for Harvard from around 1970 to present, and they similarly showed a pretty steady growth.

Public schools are much more variable, I believe, because they are one of the few state institutions that is allowed and/or required to get a large part of its budget from fees to its users. Thus, when a state has budget trouble there is a tendency to make state colleges and universities raise tuition.

PS: the tuition data I have for Stanford gives the tuition at the start of each decade from 1920 through 1990, then gives yearly data. I probably should have plotted points, not lines.

gammarator2• 14 years ago

State contributions to higher education (via taxes) have dropped dramatically in recent decades [1]. Ergo, tuition increases. (Universities drive up costs themselves, too, of course.)

Back in 1961, state tuition at UNC was less than $100 [2].

[1] http://www.amazon.com/Unmaking-Public-University-Forty-Year-... [2] http://www.quickanded.com/2012/04/virginia-foxx-paid-87-50-i...

jellicle2• 14 years ago

The comment is incorrect. Student loan growth far outpaces the number of new students:

http://www.theatlantic.com/business/archive/2011/08/chart-of...

quandrum• 14 years ago

Your link doesn't support your claim. Worse, your link doesn't even consider the idea. All it says:

> Obviously the number of students didn't grow by 511%.

Why is it obvious? Show my a source.

impendia3• 14 years ago

I am in my first year as a mathematics professor at the University of South Carolina. Having moved here from Stanford, I've noticed several things.

(1) Many students are woefully underprepared. In my calculus classes I have found that a great many of the students have not mastered high school algebra. And these are the students who pass our placement exam, and aren't obliged to take one of our many algebra and precalculus courses.

(2) Many of the students aren't all that motivated, and resented me for asking a lot of them.

(3) Many of the students really are highly motivated, and have impressed me with their talent, and more importantly with their eagerness to learn.

But where will they work? There seems to be a relative lack of employers in South Carolina for talented, ambitious people. "Relative lack" doesn't mean none, but if I were advising, say, a talented and ambitious math and CS major who was graduating, my first advice to him/her would be to leave the state.

And yet, we continue to enroll 5,000 new students each year. I wish I felt there was a better light at the end of the tunnel for my students, at least one that didn't oblige them to move far from home. But I am kind of feeling a bit of a bubble.

For now, students continue to enroll in my calculus classes. Despite all their complaints to me, they busted their asses and I am proud of them. I hope that ten years from now they have reason to decide that their efforts were worth it.

ntkachov3• 14 years ago

Most students are crap at math. That's a fact. There is 0 encouragement to spend high school refining math skills.

Also don't confuse motivation with laziness, priorities, or time management. To a psych major, calc might seem like one of those bullshit classes you have to take. To an EE Major it might just be more hours of work that could be spent sleeping.

_delirium2• 14 years ago

There is a relevance problem, yeah. I personally was motivated to really learn calc in 1st year college, mainly by physics classes. I wasn't a physics major, but I found the freshman physics class really interesting. In particular I found it interesting that via this tool, calculus, you could actually re-derive the entirety of elementary physics (stuff like dist = v0 t + (a t^2)/2), and much more, via a procedure with more internal logic and less arbitrary memorization. It almost felt like a successful good-cop/bad-cop setup: bad-cop high school made me memorize a bunch of bullshit special-case formulas, and then good-cop college explained to me that you could just do calculus to derive the answer.

I could certainly see how those motivators wouldn't apply to all students, though. Honestly they applied to me mostly out of personal, side-project-esque interest. In CS I tend to use statistics and discrete math a lot more than calculus, though calculus comes up occasionally.

wyclif4• 14 years ago

I went to public HS in the US, and the math education there was terrible and completely sub-standard. The science was about average. Now, the school wasn't all bad. The humanities (English, Latin, German, French, Spanish, History) were all of very high quality. I had to do remedial math work before going to college, but had a perfect score on my verbal SAT. I've often wondered why that happened. The only reason I can come up with is that it's harder to get qualified and excellent math educators because those people end up making more money elsewhere.

InclinedPlane• 14 years ago

That's a horrible way to look at a college experience. As a student you're paying good money to get an education. If you treat it as a monetary transaction in exchange for a credential then you are unlikely to get your money's worth.

yummyfajitas2• 14 years ago

Fun fact: at at least one college, the psych department has too many students. They knew they would get into trouble with the dean if they started failing them, and there was no mechanism to impose a cap.

So they added a calculus requirement to cut the numbers.

learc838• 14 years ago

>I have found that a great many of the students have not mastered high school algebra.

That's been my experience tutoring all of my younger siblings.

I think that we'd be better served if all 4 years of high school were spent mastering basic algebra (with exceptions of course).

A mastery of basic algebra will better prepare you for college than a cursory understanding of trig and calculus.

zerohp• 14 years ago

I'm an older student attending my local community college, and I agree with you completely. I watch my classmates in Calculus and Physics courses struggle with algebra much more than the new material we are learning.

High schools should focus on algebra and geometry for the majority of students.

LockeWatts3• 14 years ago

This assumes a few things.

1) Teaching something repetitively means the students will learn more the second time. 2) Basic algebra is all that's needed as a general background in math for all majors. 3) Everyone in high school is there to prep for college.

Those are three massive assumptions. Your viewpoint is rather narrow minded when you consider all the possibilities.

LockeWatts3• 14 years ago

>I have found that a great many of the students have not mastered high school algebra.

Why should they have? It doesn't take 'mastery' to pass a class, it takes proficiency. Expecting perfection in all previous classes from students is silly.

>Many of the students aren't all that motivated, and resented me for asking a lot of them.

Are you teaching Math majors? If not, of course they aren't motivated. Most of them won't be using calculus in their daily life, they don't see it as valuable. Why should they, either, if nobody is presenting it's value?

Your post isn't a bad one, I just find a frustration with professors who forget sometimes that not everyone is interested in their subject. In an ideal world you would only teach people who want to learn your subject, but this is not an ideal world.

impendia3• 14 years ago

> If not, of course they aren't motivated. Most of them won't be using calculus in their daily life, they don't see it as valuable.

But that's my point, and I'm attempting to bolster the original article's point. I have a room full of calculus students, many of whom don't terribly need or want to learn calculus.

Then why are they there? In many cases you can trace this back to some ambition for which calculus is a prerequisite for some reason or other. But in many cases, they are there because they feel they are "supposed" to be there, or else they feel that a college degree will get them a better job.

Hence the concerns about a bubble.

codeonfire• 14 years ago

Are you surprised by this? This is just how it works anywhere. At many schools the graduation rate is below 60% and the average math course GPA university wide is probably around 2.5. Math and Physics are the most difficult subjects at any university. Half or more of a calc I class is going to drop out or change to a non STEM major. The important thing is to not let the inevitable ruin their interest in education (if there is any).

kitsune_5• 14 years ago

To be fair, many math professors have the didactic abilities of a monkey.

I remember a professor and made no sense whatsoever. You felt that he was bored teaching Analysis and decided that he'd do everything but.

At one point he was talking about his theoretical work on the Riemann-Zeta function, on another point he talked about his childhood memories. He did this every lecture, hopping back and forth to what he was actually supposed to be "teaching". The equations were splattered across three blackboards in an absolutely illegible handwriting. No one could read that handwriting. On top of that, he switched from English to French to German every other minute. He was not able to maintain a consistent train of thought for longer than 30 seconds. Then, regularly, one minute before the lecture ends, he realizes that there is an error on the blackboard and starts to erase half of all the variables (which we couldn't read to begin with) and starts to doctor around.

In short, we had no clue what that guy was talking about. Not a single fucking clue. And at first, you just think that you are that dumb. That you are going to fail miserably. After all, this was the beginners course! There was one for advanced students! Because I had worked as a web dev after high school for a year and after that, I had to do one year of mandatory army service, I naturally enrolled in the beginners course.

After a month I changed to the advanced course. Of course now I had also no idea what was going on. Good times. Just reciting this story makes me angry.

dasil0032• 14 years ago

I've had an absent-minded professor or two, but that's far worse than anything I experienced in 4 years of college.

High school on the other hand is another story. They hired a chemistry "teacher" off the street who turned out to be drunk every day in class (mind you, this is first period, 7:15am!), it took several weeks to figure it out because her personal hygiene was so bad you couldn't get close enough to smell the liquor.

On the other hand that was public school, so I didn't pay anything. Still a better deal than most people pay for college these days.

stalcottsmith• 14 years ago

Do not underestimate your importance and the impact you can have for the category 3) students.

My first year Calculus professor 20 years ago had very similar feelings and frustrations, but through his passion he connected with some of us. Lots of great students don't apply to the best schools and for whatever reason end up stuck somewhere close to home. He eventually encouraged me to take his Modern Algebra class and that opened my mind to a whole world of Mathematical beauty.

Enjoy the opportunity to touch young minds as long as you can.

agumonkey• 14 years ago

There should be a facebook for those teachers.

One math teacher managed to bring a group of lazy failing monkeys to volunteer for supplementary classes on saturday morning. So much passion, inspiration, and efforts towards us .. there's a threshold above which `bad students` will start to surrender and bring good will into the game.

jsnrkd• 14 years ago

I'm a 2010 Computer Science Alumnus from USC and I can attest to the lousy market for Software Engineers in Columbia. Your job choices are pretty much insurance companies, consulting, the state or moving away. This equates to nowhere. There's practically no startup market or cool software products here in the capitol city. Not to mention scarce funding for software.

It's hard to be entrepreneurial when you're crushed by student loan debt. I'm trying to start my own company on side while continuing to pay the bills :/.

To any serious developers looking for a new team member in Columbia: If you're out there let me know ;)

impendia3• 14 years ago

Just today I was talking to this guy who was a serial entrepreneur out in Silicon Valley, and got hired by USC's business school to teach entrepreneurship. Apparently there is at least a small startup community here, and he is trying to grow it.

This guy has balls, and he definitely seemed to know what he was doing. I was very impressed. Would be happy to put you in touch if you like -- my contact info's in my profile.

ntkachov3• 14 years ago

The other end of the problem is that kid's aren't even trying to flip their degree. Most kids consider college and experience not an investment.

You're kid is the worst investor on the planet. Because instead of majoring in Bioengineering they are majoring in psychology. And If they are majoring in psychology they aren't out to get the best damn research positions over the summer and publish papers, they are out working for the local supermarket.

I don't think most students have been asked "What return do you expect on the $100,000 you are going to spend on this degree".

cantankerous2• 14 years ago

This is completely what's wrong with the system. Eventually everybody needs to work for money. That's not to say you can't go to University to better yourself and learn something that inspires you. Eventually, though, you have to eat and pay for creature comforts. If college has a huge sticker price, what's paying the bill? If not college, something else has to. Everybody who goes to school needs to make sure that they can cover the costs, either through the skills they learn in college or via some other means.

Going to college to study liberal arts is still a very respectful thing to do, if that's what you actually intend to do...as opposed to going to college, cutting classes, getting wasted 5 days a week and graduating with a C average in psychology.

overgryphon8• 14 years ago

Going to college to study liberal arts is a respectful thing to do if you either pay for it up front without loans or have a reasonable path planned out after college that should pay the loans back.

Studying something in college that will not lead to a future career is a hobby, not an investment. Spending large amounts of loan money on a hobby that cannot pay the loans back is a very silly thing to do.

Liberal arts degrees are great, and a good learning experience for students. But they aren't worth taking out loans for if there are not jobs to pay those loans back.

randomdata7• 14 years ago

Most kids consider college and experience not an investment.

How many are there due to pressure? At the end of my high school career, I was ready to enter the workforce. I was already working in the industry I wanted to be in; there was little value to going from that perspective. Yet, the pressure from teachers and peers persisted. I was going to fail in life if I didn't go to school. You know the meme, I'm sure. I eventually succumbed and enrolled. Thankfully, I realized in my first year that I was wasting my time.

I picked up another job, used it to hone my experience in the industry, and by the time my friends were graduating, I was able to move myself into my dream job. I really don't see how a post-secondary education could have improved anything. It would have only been a hobby, which too is respectable, but not the right fit for me at that point in my life.

There's so much malarkey that goes around about education, it leads young people, without a clear view of how the world really works, to make hasty decisions that often ends with a massive amount of debt. I admire those who are in school for the right reasons, I just question how many really are there for the right reasons. I know I wasn't. I'm just glad I realized sooner than later.

brc2• 14 years ago

I think this is the relevant point that most people are missing by looking at the trees instead of the forest.

It's patently absurd to think that every single person should go to college and receive a 3 or 4 year degree. For a start, some people will not be suited to study, and for a second, increased numbers of higher education qualifications simply reduce the value of said qualification.

More people would be better served by direct time in the workforce and specific vocational training.

But the meme of 'go to college or miss out' is pervasive, and continues to cause massive amounts of people to put major time and money into their qualifications. Education has become a sacred cow that nobody is allowed to criticise, yet objectively there is no evidence that increased amounts of college graduates are making a positive difference.

I'm all for continuing education - education should be a lifetime pursuit for everyone - but the current model of growing universities and growing student debt is clearly unsustainable. The growth has to at least stop at some point, and probably reverse.

Until people start looking at the cost/benefit ratio objectively instead of emotionally, nothing is going to change.

TheFuture• 14 years ago

> Most kids consider college and experience not an investment

Fantastic point.

Not only should the students/parents be asking themselves about what return they expect on $100k, the people loaning the money should be too. And because the feds are the ones guaranteeing the money, they don't care about the return, they just care about politicizing it to their advantage.

overgryphon8• 14 years ago

Most students do not spend 100k on a degree. While some are under massive amounts of debt, most have a much more manageable level of debt, but still can't pay without a job.

Tsagadai• 14 years ago

First off, I know education != going to college. But let's be honest, some people who spend years of their life studying full time are probably learning more than people who watch a few videos after work. It takes a long time for most people to learn certain skills and without a dedicated place, timeframe and support network they probably won't learn those skills by themselves.

I don't think spending too much on education is going to cause the next bust of America. I think it will be a case of everyone else spending so much more than the US. In a services-based economy your main capital is your people. Many traditional universities will fail, because there are too many mediocre schools (also cheaper alternatives and expanding high-end schools). This will, however, result in fewer people studying anything past high school.

There are significant problems in the US higher education market but hoping for its demise will not fix things. Good luck competing in a hypothetical free market against far more educated populations.

hristov• 14 years ago

I really do not like housing bubble to education analogies. There is a big and quite obvious difference between housing and education. You cannot flip a diploma. You can try to monetize it by getting a good job but it is not something you can sell. The way you monetize it is by living your life a certain way.

Education would be a big investment even if it were free. You still have to go to classes. You still have to expend effort. And if you want to get your money's worth out of your education you still have build a career. So you cannot buy 20 diplomas on credit and flip them in a month for profit (as some people used to do with houses). Which means that education is a completely different beast. Every housing analogy is utterly idiotic.

Now that is not to say that there are no problems with education. Of course there are. But they are different type of problems.

Personally I think too many loans are being given out because of the recent proliferation of for profit schools with dubious teaching abilities and academic standards. I think we need some kind of merit based system that will limit the number of loans being given out. The merit based system may test either the students or the schools or both, and only give out loans to those that pass the test. Thus, we can limit the loans to only those that can beneficially use them.

rsanchez1• 14 years ago

In both situations, people get themselves in deep debt with the expectation that they'll end up with a lot more money than they started. The housing market collapsed because prices fell after everyone realized the majority of the housing market was built on promises that could not be kept. The education market will collapse because available jobs and salary fell (analogous to prices in the housing market, and largely because of the housing market collapse) and the promises made to young people that they will be able to build a career cannot be kept for every student graduating today. I do not like the analogy either, because it ends with the country hurting hard, very hard.

It's easy to dismiss such analogies as idiotic when you assume that all you need to do is "live your life a certain way" for the diploma to pay off, and when you want to ignore the eventuality that the education market collapse will cause tremendous damage. Both the housing and education market collapses depend on promises made to homeowner and students that cannot possibly be kept for everyone involved.

Of course, limiting loans based on merit is a great solution, but it's not a politically palatable one. On one hand, politicians love to say that everyone will get an education and it will be paid for no matter what. On the other hand, what happens when students from well-off community meet merit-based standards for loans while students from poor communities don't? Banks and universities will be slammed for practicing discrimination. Sort of like how banks were slammed for discrimination when they were lending less to minorities and accused of discrimination based on race, when in reality they were limiting loans only to those who could pay for them, but banks were ultimately forced to give out subprime loans through legislation and we ended up with the housing market collapse.

Common sense solutions are not adopted when you have politicians involved who only appeal to the emotion of voters and seduce voters with promises of cheap housing and education, and slam politicians who are fiscally responsible and want to limit mortgages and student loans to those who have the ability to pay for them.

ahsanhilal• 14 years ago

For those who are interested in student debt, there is a really good website called Project on student debt:

http://projectonstudentdebt.org/state_by_state-data.php

The problem really lies in the fact that the US cannot find the right answer for the basic question: Is Higher Education a public or private good? There is no wrong answer, just that answer is really required to form good student expectations regarding the economic system, and what they should invest in a degree. Right now the US government subsidizes higher ed in various forms and manners, in order to bring the cost burden down. Pre-2008 crisis, the US govt used to mostly guarantee debt taken out by college students in order to bring down the rates. Banks would then securitize these loans, cut them up in tranches and sell them on to investors, pretty much like MBS's (mortgage backed securities). However, in the financial fallout a lot of students could not get loans so the US government decided to give out more grants etc.

However, the example of UK is quite interesting as well. The average student debt in the UK is lower due to a large part of costs being carried by the govt. Though, this does not effectually increase unemployment rate either. Lower debt != great unemployment and greater happiness. Also, historically civilizations with higher quantity of credit flowing around in the economy seem to do better as well.

glesica5• 14 years ago

This is just absurd. Non-accredited, branded schools will provide better education for less money? Really? I assume he's referring to the growing for-profit college industry.

Yet for-profit colleges are actually the biggest culprits driving up the student debt. Students at for-profit colleges run up more debt, are more likely to drop out, and are more likely to end up under-employed than those at traditional universities.

This paragraph also bothers the crap out of me:

> The competition from new forms of education is starting to appear. Particularly in the tech world. Online and physical classrooms are popping up everywhere. They respond to needs in the market. THey work with local businesses to tailor the education to corporate needs. In essence assuring those who excel that they will get a job. All for far far less money than traditional schools.

Yes, students need relevant, modern, education, but education that is "tailored" to corporate needs is a little worrisome. Extremely targeted education might be sweet for the corporations hiring the graduates, but it sucks for the students themselves.

Economists draw a distinction between general human capital and specific human capital. General capital includes things like math and critical thinking, skills that can be applied in a variety of situations. Specific capital includes things like how to use a particular piece of software or knowing which forms need to be filled out for a requisition.

General capital benefits employees because the employee is free to take his capital and go elsewhere; the skills are transferable. This is what we see in silicon valley where companies acquire startups just for their employees.

Specific capital, on the other hand, benefits the employer since the capital is only valuable to a specific industry or company so the employee is limited in where he can take his skills.

Everyone needs a mix of general and specific capital. But the balance has implications for the economy as a whole.

One of the things that traditional universities have been pretty good at is general capital. This provides flexibility and resiliency to the economy. People can move between jobs and even careers, from dying industries to growing ones. They can fill jobs that hadn't even been invented when they were in school. And they can actually acquire specific capital more readily (the "ability" to learn).

Shifting focus to specific capital by allowing companies to control our educational system threatens to turn the entire country into one big company town, and that's a little frightening.

EDIT: Typo

DTrejo• 14 years ago

He might mean things like http://www.khanacademy.org/ and http://devbootcamp.com/experience.

talmand4• 14 years ago

Not trying to complain since it looks like a good program, but why does Dev Bootcamp lump Jquery, Coffeescript, SASS, HAML, AJAX, and others under Advanced Rails Technologies? Shouldn't that be Advanced Web Technologies or are they just simplifying things for their Rails program?

jrs2352• 14 years ago

I think he is referring to startups like codeacademy, not for profit schools. He's saying and betting that people like kahn will start more kahnacademy online schools and education. People who aren't driven by greed will cause the for profit schools, rising tuitions, and maximum student loan amounts to be unneccesary.

glesica5• 14 years ago

Yeah, I thought about that, and that could be the case (in which case I would have different, but less serious, concerns).

overgryphon8• 14 years ago

Isn't it a tad ridiculous to compare something like codeacademy to a college degree? Less than a semester's worth of time spent learning programming is not at all the same as a computer science degree, and I doubt employer's think they are comparable.

moocow012• 14 years ago

I agree about the non-accredited schools. That statement made me cringe more than a little bit.

I also cringed when tech was pointed to as a model of innovation in education assuming he is referring to codeacademy and the likes. Don't get me wrong I like those services for what they aim at but I absolutely do not think they are a good model for core education - the kind of education that produces general capital as you note. Core education consists of building critical and analytical thinking skills - something that is very difficult to teach effectively through online or automated education.

eli_gottlieb10• 14 years ago

What I find disturbing here is the complete, total, hegemonic shift to thinking of education as job-training.

dopkew• 14 years ago

We must differentiate between 'Education' in the ideal sense, and 'technical education' or 'training'. People don't go to technical colleges for 'Education', but for competency in a knowledge domain, and in applying it.

glesica5• 14 years ago

Agreed. While job-training is certainly a significant component of the value of education today, it isn't even close to being the most important one.

Most of us live in countries with representative governments (those who don't probably would like to if the movements in Africa and elsewhere are any indication). One of the funny things about this sort of government is that in order for it to function properly, it requires that all participating citizens have a basic understanding of the issues of the day. For better or worse, in the modern world, this requires a fairly extensive, general (liberal, little 'L') education.

For example, there aren't many people who apply the scientific method directly at work (though many jobs benefit from clear, logical thinking). But having an understanding of what "science" entails is critical to a number of public debates.

The same goes for economics, history and even literature and philosophy. These are all subjects that most people don't really need to do their jobs, but that are incredibly important for countless public issues.

For example (and at the risk of starting an unrelated argument, please refrain), Ayn Rand seems to be popular these days. But I wonder how many people out there have actually read "Atlas Shrugged" or "Fountainhead" carefully, or even have the skill necessary to do so.

potatolicious• 14 years ago

When education costs so much that one needs to take out a loan that then takes decades to repay, it must necessarily be job-training. It's practically impossible to justify otherwise.

IMO it's impossible to expect the education system to be more holistic and less training-oriented unless the costs drop to the point where it's realistic to pursue it knowing there is not necessarily a monetary reward at the end.

anamax2• 14 years ago

> Yet for-profit colleges are actually the biggest culprits driving up the student debt. Students at for-profit colleges run up more debt, are more likely to drop out, and are more likely to end up under-employed than those at traditional universities.

They're also the people that traditional universities don't admit for the most part.

We can find a subset of students at traditional universities who are like the students at for-profit schools. Are you certain about the results of comparing apples to apples?

glesica5• 14 years ago

I think that's an excellent and important point. Certainly there is some sample bias going on: if you're qualified for college in the first place you are probably at a traditional college.

However, I think my original point remains relevant for two reasons:

First, the author of the article used rising aggregate debt as evidence that the traditional college system is broken beyond repair. But if a significant portion of that debt is being taken on by unqualified students attending for-profit colleges, then the growing debt could have absolutely nothing to do with traditional colleges (likely the reality is somewhere in the middle, but the author's "doom and gloom" outlook on traditional colleges seems a bit extreme to me).

Second, the author presented for-profit higher education as a replacement for traditional higher education. But the incentives faced by for-profit colleges seem every bit as broken as those he claimed are faced by traditional colleges.

If traditional college presidents have an incentive to grow their endowments and build grand edifices on the backs of their students, then for-profit college CEOs have an incentive to cut large dividend and bonus checks on the backs of their students. This just doesn't seem like an improvement to me.

jellicle2• 14 years ago

Mark Cuban writes: "As an employer I want the best prepared and qualified employees. I could care less if the source of their education was accredited by a bunch of old men and women who think they know what is best for the world. I want people who can do the job. I want the best and brightest. Not a piece of paper."

So, I suppose I could be wrong, but I would be willing to bet a great deal of money that Mark Cuban does not employ anyone in any sort of white-collar job who doesn't have a college degree from an accredited college.

It's nice for Mark Cuban to say that, but the reality is if you submit your resume to Mark Cuban Enterprises, Inc. where you list your education as being from the First Internet School of Book Learnin', Mark Cuban's HR people are going to delete it offhand. They're not going to call you. They're not going to try to find out if you're the best and brightest. They're going to delete it and call the guy who has Yale on his resume. Sorry.

davyjones• 14 years ago

Correct. I have found blog posts where there are snippets about how they are "looking for bright and interesting minds and college degree does not matter" but when you look at their Jobs page, you have a BS Computer Science or equivalent requirement listed there.

jey2• 14 years ago

It does say "BS Computer Science or equivalent" -- so they're asking for a certain level of education, which doesn't necessarily have to be in the form of a college degree.

talmand4• 14 years ago

How many job postings for the tech field actually make sense? Most of them are written by people who have no idea what they speak of. Shoot, most recruiters have no idea either. If the job seems interesting submit anyway and just hope to get someone who understands what's written on your resume. Can't get the job if you don't try.

bennesvig• 14 years ago

It's probably easier to get a response from Cuban himself than any of his HR people. Didn't he invest in a teenagers company on Shark Tank?

grannyg00se• 14 years ago

If that's all your resume says, then you're probably right. But there should be something on there that indicates that you can do the job otherwise you wasted your time applying. The point is that education says nothing about being able to do the job in many cases.

If you are applying for an engineering position and you have MIT on your resume, that is certainly going to imply that you very likely have what it takes. But it still doesn't prove anything. On the other hand, if you have no formal education on your resume but you've built a fusion reactor in your basement, I'm pretty sure your resume wouldn't get thrown away.

ender73• 14 years ago

Unfortunately, "went to MIT" is both easily recognizable and easily verified.

"Built a fusion reactor in my basement" is neither of those things.

Similarly, "check out my GitHub" has many of the same problems. I'm sorry, but most employers don't have time to look you up on GitHub to crawl through all your commits. That will happen if you get past the first cut, but it won't do anything beforehand.

Sure, you can put "Main developer for <some project>" on your resume. Hopefully the person who is in charge of culling applications has heard of <some project>. If they haven't, they will hopefully take the time to go look it up. Hopefully.

I'm not saying that this is the way it should be, but you have to understand that the average person in charge of hiring is constantly inundated with applications. They simply don't have the time to do research on each one. As with anything, you have to find some way to stand out, but in a way that doesn't require them to visit your basement.

toemetoch2• 14 years ago

The point is that education says nothing about being able to do the job in many cases.

I work with students for development projects. We don't get to pick them, they pick the projects we propose. Here's a question that tells us in seconds whether we're going to have a tough project with a lot of pussyfooting or one that'll go mad with ideas:

Do you have tech-related hobbies?

Most barely have a few hobbies but some are pretty much involved in every electronics/software niche they come across.

flurie• 14 years ago

The great irony of this is that the vast majority of these free offerings from which one could conceivably cobble a degree are in STEM, and yet the numbers of students graduating with STEM degrees has been flat for decades.

watmough• 14 years ago

The first mistake here is submitting a resume.

You need to be calling your contacts at Mark Cuban and saying, "Yeah, I'm in good shape here, but I'm willing to look at other things."

malandrew• 14 years ago

TBH, I have never really looked at the education section on a résumé when hiring unless the person is an existing graduate.

After a few years of work experience, all that really matters is the last 3-5 years.

You could pretty much omit everything before that, because just the last 3-5 years is usually enough to figure out the caliber of work a candidate may have been doing before that.

If all résumés only included the last 3-5 years of an employees life whether or not that includes their education, would it really be worth that much less as a factor using in the decision to interview or hire?

mkramlich2• 14 years ago

Fuck college. It's not the only way to learn, to meet people, or to show your expertise, capabilities and accomplishments anymore. We have this thing called the Internet now. Write a book. Put a PDF online. Record a video of yourself giving an intelligent speech or showing some useful talent. Put it on YouTube. Write software. Put on GitHub. Answer technical questions well on StackExchange (or whatever for your particular industry/field.) Apply your supposed skills and talents on something tangible then put it on the web and be findable. Fuck 4-6 years of your life and $100k in debt. Fuck all that.

lordlicorice3• 14 years ago

It's hard to overstate the value of a university education... Why are you so vehement? Never went to college?

Locke1689• 14 years ago

There are certainly people who have the self-motivation, drive to learn, and grade themselves accurately using self-teaching tools -- but I think you'll find those people are few and far between.

Also, most of the useful information I obtained in my degree was which resources are the best.

earl• 14 years ago

In theory, I agree. In practice, college is a very useful signal. And it's not just the coursework from the college major. College demonstrates a variety of soft skills: time management, the ability to plan and meet deadlines, the ability to work on what's necessary when it's necessary, a willingness to suck it up and do some unglamorous but necessary drudge work, etc. I've worked with a variety of people that haven't gone to college and with few exceptions they were lacking in these areas.

Obviously all those skills can be learned elsewhere, but as a hiring manager, it's a major time investment to try and suss that out whereas having a college degree with good grades means more likely than not that the candidate possesses those skills.

juiceandjuice• 14 years ago

College isn't just for web programmers.

krschultz3• 14 years ago

Fuck people who bitch about how expensive college is.

You know how much I paid for college? $0.

You know why I paid that? Because in high school I did a lot less than what you outlined above, but it was enough to get a scholarship to go to college. Six great schools looked at my application and offered me somewhere between a discounted rate and a full ride + stipend on top of that. And I was only 20th in my high school class by GPA rank.

If you think that you can match a college degree based solely on self-guided learning, then you should be smart enough to get a scholarship. It's the same damn process. You need the self discipline to stick with a program of learning and working, and you need the intelligence to learn without support. It's just a question of whether you realize that in high school or later in life.

rayiner4• 14 years ago

I taught myself to program (which I have no degree in). There was no way I could've taught myself aerospace engineering (which my degree is in).

Not everything is like the software industry. Indeed, most things aren't.

gavanwoolery• 14 years ago

False. Many of the Mavericks players do not have college degrees.

sp332• 14 years ago

Mavericks players are not in white collar jobs. https://en.wikipedia.org/wiki/White-collar_worker

vladd2• 14 years ago

Today the same institutions provide education and certify skills. If nothing else, it's an obvious conflict of interests that's tolerated only because historically there was no other practical way around it. The war for talent and the online classes will soon disrupt that - you'll be able to give interviews/tests in a 2-day examination and get a paper saying what you really know (like SAT is for pupils).

And when that link fails, when you can get a certificate in 3 days as opposed to 3 years, when you can study interactive online courses with top-notch content at your own rhythm as opposed to a 4-year outdated programs, then it will happen: certification will be independent and traditional universities will have serious disruption in their tuition prices and budgets.

What will not happen is the demise of high-end education and student loans. The senate & president won't let it fall; US needs to keep itself competitive, especially versus EU where most states heavily subsidize education from taxes. The society and the police can't afford uneducated children.

WalterBright6• 14 years ago

> 4-year outdated programs

A good STEM program teaches you how to think, and that never gets outdated.

Colleges offer a smorgasbord of courses to take. If you select courses for the easiest route to a degree, you won't be that employable. If you select courses that will give you the best foundation for your chosen career, that'll do much better.

For example, although I got a degree in engineering, I made sure I also took a class in business accounting. (That class has paid off well for me.)

lordlicorice3• 14 years ago

Certificates are fine for IT work, but they can't replace degrees for programmers. A degree at a good school shows that you're smart, not just knowledgeable.

shioyama• 14 years ago

20 years ago, if you had told people that the world's most widely-read source of general knowledge would go out of print and be replaced by a website editable by anyone, anywhere, people would have said you were crazy.

But that did happen. Yale may not "go out of print", but I don't find it hard to imagine new online schools competing and winning in the battle to redefine education.

maigret• 14 years ago

At least some data seems to agree with you http://www.businessinsider.com/busted-hypocritical-peter-thi...

moocow012• 14 years ago

I think the bigger question is what will the meltdown look like and how will it change our society?

scoofy• 14 years ago

Student debt is not like housing.

1. Education is an game-theoretic arms race. It's very valuable iff you are the only few who have it. If you do not have it your are at a serious disadvantage. This creates an incentive to perpetuate the current overspending. This, obviously, is a recipe for entirely too much wasteful spending on education, and that needs to change, but i don't see how it creates a higher education 'crash'.

2. A diploma is not a commodity. You cannot sell it; you cannot flip one. You cannot speculate on it beyond the initial investment. No one is going to give you a education equity loan. It is not treated as collateral. Your diploma will not be repossessed, therefore the lenders need to be more conservative when issuing student loans (leave that to the actuaries).

While i will admit there is the potential for losses in the ABS market, these are typically guaranteed loans. Will this create problem for the Fed? If the economy continues in the doldrums it's certainly a possibility, but comparing these securities to the chaos the CDS market sent us through, i doubt it.

ender73• 14 years ago

I agree that the price of a college education is too high. I don't see how this justifies the conclusion that "therefore, people should stop going to college and take online courses."

Most medical care is overpriced, but that doesn't mean that you shouldn't get a heart transplant.

I am deeply skeptical that online courses or for-profit education will result in anything but a horrible mess.

(this is not to say that it's impossible to succeed and do quite well without a college degree, but it's much harder - it's harder to get hired and it's harder to acquire the knowledge and experience necessary to be qualified for a position)

randomdata7• 14 years ago

but it's much harder - it's harder to get hired and it's harder to acquire the knowledge and experience necessary to be qualified for a position

Is there any data to back this up? If we assume college is a four year undertaking, even if it takes you three years of work to find the job you are looking for without a degree, you're still expending less effort.

My anecdotal experience says it's not even difficult at all. I was able to land my first job in the industry I still work today on my first attempt in high school. Though I recognize that not everyone is so lucky.

rayiner4• 14 years ago

Try getting a job in any non-software engineering field without a college degree.

fumar• 14 years ago

I graduated from college three years ago.

When I signed the loan I was 18 and did not fully understand how much a loan would affect my life. It was very easy to receive an unsubsidized loan. I did not really think about too much to be honest. Growing up in a nice suburb. It was just the norm. My friends older brothers took out loans. My older friends did the same.

I grew up middle class. My parents had good jobs. I started working when I was sixteen. I did not do great in high school. In college I did very well. My last two years were the hardest. I worked fulltime. Having no free time was difficult. Still, I loved learning and it was a valuable learning experience. I was able to manage fun life, work life, and school life.

I worked hard at getting a good internship and a high GPA. At the end, in 2009, it was very hard to get job interviews. As a recent graduate, I could not get my foot in the door anywhere. I ended up a high end luxury store. It paid the bills. I recently quit because of family stuff I had to take care off. Now, I am jobless. I realized I have to start from square one. I am applying for internships at startups in Chicago.

Working for thirteen dollars an hour was just enough to make a living. I saw how many people without loans or college degrees had a better lifestyle. They did not have to worry about a large percentage of their income going back to the government. I am still unsure if it was the wrong choice. I learned more than I ever planned.

College changed my life in many positive ways. I am still an avid learner. I started reading news.ycombinator because I wanted to learn more about programming. I am enrolled in Udacaity right now. I also taught myself graphic design in the last year.

reader5000• 14 years ago

I think the more interesting aspect is how long are we going to keep the choke hold on graduates who are currently drowning in debt and will be for a while. Is it a net win that the Dept of Education gets paid while a substantial chunk of would-be middle class Americans can't purchase cars / houses / children and are generally disincentivized to produce by their $1300/mo debt service? Will we start to see a parade of law suits from former students against their universities? The situation really is absurd.

lintroller• 14 years ago

> Will we start to see a parade of law suits from former students against their universities?

I'm unsure of what legal recourse these students would have. I do not have a legal background, but signing off on a loan seems like a pretty cut and dry matter.

ChristianMarks• 14 years ago

The 1 Trillion in debt will be used to fund lobbying for additional state and federal budget cuts; outsourcing and off-shoring more jobs; lowering taxes for wealthy corporations; adding to the 1600 companies in 18 states that get to keep some or all of the state withholding taxes their employees pay; raising the cost of medical care and health insurance; and funding think tanks to persuade people to believe that universal health insurance is evil, so that private insurance companies will continue to flourish at the expense of entrepreneurs and to ensure that labor and capital remains immobile.

ninguem2• 14 years ago

Mark Cuban should be able to afford to hire some unemployed English major to proofread his blog posts.

jongalloway2• 14 years ago

Yes, or use a browser or blog client with basic spell check / grammar check. That was painful to read.

djt• 14 years ago

Yet thousands of people still read his blog, probably something to think about.

Lednakashim2• 14 years ago

There is no clear financial connection. The only way to make a strong financial connection is to imagine a default scenario; where thousands of students can't pay off their loans. There is little evidence for this as student loans tend to be cheaper then housing loans (It is impossible get 300K of student loans) and they tend to have nicer terms less ways to default. Perhaps whats happening is some kind of social slavery where it is harder to peruse ones dreams due to loans, but its not a financial bubble.

colinshark• 14 years ago

I'm 27. Suburban lifestyle. Went to college. I'm thinking of my 15 or so closest friends. None of them have ever bought a house or a new car. I'm drawing my own conclusion that the economy is going continue to be depressed for a long time.

mathattack• 14 years ago

He nails the key issue - cheap easy money that can be flipped later for a high paying job. Of course the job may or may not be there. It's worth it for Harvard, but perhaps not for Bradley.

hedgie3• 14 years ago

not sure that's the case.

"Here, however, is what was explosive: Dale and Krueger concluded that students, who were accepted into elite schools, but went to less selective institutions, earned salaries just as high as Ivy League grads. For instance, if a teenager gained entry to Harvard, but ended up attending Penn State, his or her salary prospects would be the same.

In the pair's newest study, the findings are even more amazing. Applicants, who shared similar high SAT scores with Ivy League applicants could have been rejected from the elite schools that they applied to and yet they still enjoyed similar average salaries as the graduates from elite schools. In the study, the better predictor of earnings was the average SAT scores of the most selective school a teenager applied to and not the typical scores of the institution the student attended."

there's a guy at work with a phd in math from princeton. there are plenty of people with his job title that didn't spend all that money to get there. most of them went to the great in state engineering school and spent far less money for the same result.

http://www.usnews.com/education/blogs/the-college-solution/2...

gammarator2• 14 years ago

Interesting, although the authors note a caveat:

"As with the earlier study, there were some students who did fare better financially if they attended elite schools. The students who fell into this category were Latino, black, and low-income students, as well as those whose parents did not graduate from college."

Its worth noting, though, that the Ivys provide much smoother entry into jobs in high finance than less selective schools, so if one's only goal is maximizing salary it does make a difference.

vannevar• 14 years ago

Can someone please explain to me how what is happening in higher education is any different ?

Sure. The big difference (enormous, really) is that unlike homes, there is no secondary market for diplomas. We talk about an education as an investment, but in truth the 'asset' is us. One reason the housing bubble was so devastating was that if one person defaulted, it marginally depressed the value of everyone else's home. If someone defaults on their student loan, it doesn't make everyone else's education less valuable. The student loan debt problem is much more like the credit card debt problem, which exacerbated the housing bubble but on its own had nowhere near the cascading impact. Student loans are a problem, but they are not a crisis. We should be much more concerned that there has been no meaningful banking reform since the 2008 crisis, and that banks are still gambling on dangerous derivatives whose real risks are unknown and quite possibly incomputable.

robomartin• 14 years ago

During the early part of my working life I had the experience of not getting a job due to the fact that I did not have a degree. It was a junior embedded programming job.

I was 19 and just getting going with the college thing. The guy that got the job had a degree in landscaping and had taught himself some programming with an 8085 board that was popular at the time. I know because the owner of the joint was kind enough to tell me.

I was probably too young to put-up a fight and state my case with authority. By the time this interview came about I had probably built and programmed no less than eight computers of my own design. I had programmed in assembler and written my own Forth compiler. I probably knew the architectures of nearly every popular microprocessor available at the time (80xx, 65xx, 68xxx). I had been an electronics hobbyist since probably the age of 13. I knew more and had certainly done more than the aforementioned job-robbing landscaper.

Again, I'll mark that off to, at 19, not having the chops to state my case and fight to demonstrate that I was the better candidate. As it turns out a few months later, as luck would have it, I would land an entry level engineering job where skills and work ethic were valued far more than anything else. I rose to a level of being solely responsible for multi-million dollar engineering projects while still attending school.

In my case it turned out OK in the end. The issue is that a degree is a check-mark item that a lot of companies use for filtering. Just one look through job on Monster and you can see that lots of them have degrees as minimum requirements. If you are dealing through an agency you might not get past the first filter, no matter what you know and what you've done.

In the case of Mr. Cuban, it'd be interesting to hear about examples where his organization has hired people in spite of not having a degree from a traditional institution.

krschultz3• 14 years ago

Sadly, it's never too late for it to backfire onm you. Although it has 'worked out ok' up to this point, I had a neighbor who was 58, and in 2008 when the company did a round of layouts, they fired him because he was the only guy in the department without a degree. They had to pick someone 'objectively', and that was their criteria.

dkrich• 14 years ago

I agree with everything he wrote, except for the predicted outcome. With the housing crisis, there was a bubble that burst because the credit markets froze and suddenly nobody had access to capital. That is what caused home prices to collapse. It wasn't that people suddenly realized that homes weren't a good investment.

With college, most of the loans are guaranteed by the federal government. Some are issued by the federal government. If there is a bubble, the fallout will be with the American taxpayers and not the colleges. Politicians can't (and shouldn't) allow universities to go belly-up. Recently there has been a backlash against traditional colleges, and much of that criticism is well-deserved. But the reality is that the U.S. has the greatest higher education system in the world. It is probably our single greatest competitive advantage. Mark Cuban talks a good game, but where does he think scientific research and development takes place? I can assure you it isn't the University of Phoenix.

If student loan debt continues to accumulate at the pace it has been, then the power will shift from the government to the students. What happens if tens of thousands of college grads simply cannot pay their debts or choose not to? After all you can't pay back money you don't have, and it's not as if there are tangible assets for the government to take. It's like the saying goes- if you owe the bank $1,000, you've got a problem. If you owe the bank $1,000,000, they've got a problem. The government has to start limiting these loans and the problem will correct itself. People should never be enabled to buy things they can't afford. Much of the housing crisis was caused because the government wanted everybody to own a home, and now the student loan crisis is happening because the government wanted everyone to attend college. But not everybody can own a nice home, and not everybody can afford to attend a college with $40,000 tuition.

BarkCuban• 14 years ago

Mark Cuban needs to take an college writing class. I thought this was written by an 8th grader.

linuxhansl• 14 years ago

One more example why "let's fix the problem by providing cheap money" never actually fixes the problem. The "cheapness" of the money will just be priced into the goods (houses or education in this case).

(As an aside, the same is true for the tax-deductible interest on mortgages nonsense. People think they actually save money, when in fact that advantage is immediately priced into the houses.)

Where I am from university education is free. Of course seats are limited, so you need to be reasonable smart (but by no means a genius) to get in. Not ideal either, but at least your education is not defined by your wealth or your willingness to go into debt.

ThomPete• 14 years ago

The only thing that will make the economy better is if more people try and create businesses and find niche areas that allow them to hire people.

To do this risk taking and courage is needed. Two things you do not learn in the university. We need more people who are ready to challenge their fear of failure than their intellectual score card.

gfodor• 14 years ago

The author is right about some things, wrong about others. He's right that student debt is a timebomb. Anyone who knows a student struggling with it realizes this. The amount of debt students are saddled with is astronomical, and has turned this generation into a one of indentured servitude to their financiers. Something is going to have to give.

He's wrong, at least somewhat, on what the future holds. There are multiple roles to a university, and multiple motives to developing a higher education. I think some of these roles are ripe for disruption, others not so much.

It's hard to imagine graduate-level research happening in any other environment than an academic university. It's easy to imagine an undergraduate education in engineering or mathematics being delivered and certified completely through the internet.

Harder to imagine, but possible, are "micro-universities" which pop up organically that criss-cross with meatspace, which re-use existing course materials for information transfer but also incorporate the less tangible things such as "learning to learn" and in-person collaboration. I can imagine seeing job candidates walk in the door that have a completely custom education, self-driven by their own particular desires and nurtured and accredited as focused, disciplined study by these micro-universities.

It's truly an exciting time in education. I imagine the initiatives we're seeing now from Khan Academy, Coursera, and Udacity will be looked back upon as groundbreaking but charmingly rudimentary 10 years from now. I expect big things as more and more smart people begin to tip-toe away from traditional educational models and take bigger risks, both as students and as teachers, by inventing new models for education.

tmh88j2• 14 years ago

>It's easy to imagine an undergraduate education in engineering or mathematics being delivered and certified completely through the internet.

Mathematics, yes. Engineering, no. Am I one of the outliers that feels labs are essential to solidify what you've learned that week in class? Sure you can learn EE basics such as mesh analysis, but when you start to venture into logic design courses where software alone won't cut it things get tricky. For the majority of people, debugging a robot in even the most introductory courses would be a nightmare without an experienced person or even someone to look over it with.. How about chemistry students. Good luck setting up a lab at home. How ME classes dealing with material properties and testing?

There are plenty of courses that do work out well online, but some cannot simply stand alone.

jeffool2• 14 years ago

Here's a revolutionary idea: let's make bankruptcy easier.

I've paid more than I borrowed, and I still owe more than I've paid. I have dozens of thousands of dollars in student loan debt, and I'm on the doorstep of defaulting on some of it.

Mark Cuban's right. The money is insanely easy for everyone to get. Sallie Mae, AES, and the rest are happy to give students money. Colleges are happy to take money from students, and pass or fail (I failed), bad situation or not, the guarantors will get their money from the student. Legally, you can't escape that loan via bankruptcy. The guarantor can even garnish your wages.

I don't WANT to support bankruptcy. I certainly didn't think I'd be in the situation to have looked into it when I took that first loan out in 2002. But a funny thing happened on October 17, 2005. On that date, all federal student loans, even private ones, became effectively immune to dismissal via bankruptcy.

Now, the law still says "excepting such debt from discharge under this paragraph would impose an undue hardship on the debtor and the debtor's dependents", but call a lawyer. They will tell you, flatly, "you can't dismiss any federal student loan debt through bankruptcy." Not "it's hard", but "you can't". (Seriously, call one up for free and ask if they handle bankruptcy cases with large amounts of student loan debt.)

As it is, currently the only loser in the system is the borrower. The school gets their money up front, the lender gets theirs from the guarantor, and the guarantor gets theirs from the borrower, even when it's blood from a stone.

1/5th of students default on their debt. That's not even counting those that make payments, but are barely getting by. Let people get out from their student loan debt, and, well, I'm not talking about dumping a trillion dollars into the economy. But many people who can barely make rent (or those like me who can't), are suddenly covered. I'm off couches and renting an apartment. People in apartments are buying homes. People scraping buy are making leisure purchases.

atlbeer• 14 years ago

So when this debt is dismissed from your balance sheet who repay's the lender?

Apart of the reason of the low cost to borrow for student loans is baked in the non-dismissal of the debt. It lowers counter-party risk for the lender therefore they will give a lower rate to the borrower.

If you allow student loan debt to be dismissed with bankruptcy then you increase counter-party risk and increase the cost of those loans originally.

jeffool2• 14 years ago

No one? (Or the guarantor, who then isn't paid back.) That's what I meant by "bankruptcy." Maybe, if they had "skin in the game", they'd be more inclined to be more responsible in their lending.

Or maybe the answer comes in capping the amount that can be paid back on amounts given, so that after paying for $x for $y borrowed, or paying for Z years, it doesn't matter how much you have left (thanks to compound interest), the debt is considered "paid".

Either way, loans will be harder to get, yes. Fewer people will be able to afford school at its current prices. Schools will have to make a choice of cutting back significantly, or trying to cater to those students who can't afford loans that would have paid for Ivy league schools. Community colleges will have to be community colleges again, vocational schools vocational.

I do know that currently, schools don't care where the money comes from, and lenders (and guarantors) don't really care where it goes to, and each loan that is too much for the borrower to pay back essentially becomes a money printing press. We keep paying, and many keep going further in debt to them.

Our system now can not last forever. A quick Google tells me that in the past 35 years, tuition has risen >900%. That number will continue to balloon as large as possible, until there is reason for it to stop. Maybe those alternative education models Cuban mentions vaguely (we probably know well what we means), but maybe this is what changes it. Allowing bankruptcy.

As long as possible, schools will continue to take as much money as they can get, to offer more, and bigger. And so far, lenders/guarantors seem content to let every person take that loan, and put a noose around their necks, as we've been told since we were children "go to school, do well, go to college, do well, you will do well in life". And as much as people here may value independent drive and self-teaching, I think we can agree that "the system" very much encourages people to attempt a college degree.

At least when the multi-billion dollar banks got into trouble, they had two options: go bankrupt and strike a deal with those they owed, or get bailed out. People only have one, "keep paying." And at some point, that just becomes indentured servitude.

arnoldwh• 14 years ago

The point I thought was interesting was how Mark Cuban talked about the Innovator's Dilemma for many universities that don't believe in or support online learning.

I'd venture to say the education model experienced this same sort of ID (Innovator's Dilemma) when writing/print became available to the masses.

What was traditionally taught via in-person sessions (e.g. Socrates => Plato => Aristotle) could now be written down and distributed. Sure, if you optimize for depth of learning, you won't get anywhere near the quality of having Aristotle teach you in person. Then again, unless your last name is "The Great" (Alexander), you're probably not going to get Aristotle as your teacher.

What we're seeing now is remarkably similar. You have elite legacy institutions available to a few, while technology has progressed enough to make it available to the masses. I understand the point about how great a "signal" it sends to potential employers and why that's necessary, but now that more and more of your work can be online, it's easier than ever before to send the right signals.

josscrowcroft• 14 years ago

This is a fantastic article but I really wish people would stop saying "I could care less"

It's "I couldn't care less", as in, it wouldn't be possible for me to care any less if I tried, because I care so little.

If you say "I could care less" you're logically implying that you do care

zissou• 14 years ago

The real problem with college education in the US is that the majority of the students don't start to plan their career until after college is over. Far too many believe the value is in the piece of paper, so that's all they care about, which turns out to be a terrible allocation of your resources.

Obtaining a job is a signalling game. Having a degree is one signal you can provide to employers, but there are also many other equilibria. In other words, there are many ways to signal a good match to an employer.

A person's "college years" need to not only be treated as a time to figure out what you want to do with your life, but perhaps more importantly, what you DON'T want to do with your life. The notion of leaving high school then going to college and finishing in 4 years as being the "right way to do it" lacks some key pieces of relevancy. Figuring out what you don't want to do doesn't just teach you what you don't want to do, but it also teaches you wisdom; wisdom that can only be gained by real world experience.

SagelyGuru• 14 years ago

Having taught at a university for many years, I came to realise that I can predict students' final results really well just by setting them a simple exercise in the very first lecture, before they learned anything. In other words, the results are dependent entirely on their ability. The employers should be able to set similar tests themselves.

Furthermore, it might make more sense to both employers and employees to hire bright 16-18 year olds and give them an in-house apprenticeship. Even if they are paid initially less than graduates (do the accounting on that, versus servicing huge loans after four years of no earnings).

What I am trying to say is that a typical recruitment target, a bright graduate, was just as smart at 18 and you could have got him first, cheaper and happier, then. After those four years with you, if you are any good at inspiring and advising, he should also be a lot more use to you than straight out of college.

kennethcwilbur• 14 years ago

The analogy to the mortgage market is wishful thinking. Remember the massive fraud that led to the easy lending that led to the money drying up when the fraud was discovered? There is no similar pattern of activity in traditional education.

Higher education disruption is unlikely. It is difficult for an uneducated person to accurately assess the value offered by a school.

Ra1d3n• 14 years ago

In the USA. Don't forget that. I'm a masters student of computer science in Austria and my debt is (depending on month) 0€ - 500€. Same in Germany. Same probably everywhere in the western world except the USA.

galfarragem• 14 years ago

One of my college teachers used to say: "People should come to college just for one thing: to make friends".

It seems funny but in college you get the possibility to meet people that excel within any field of knowledge (mentors or other students that can become your partner in a startup for example). People in college have TIME to hang out together, that is crutial. I took already some online courses and is not the same. They are just a complement in any education. Sorry.

rs3123• 14 years ago

"As an employer I want the best prepared and qualified employees. I could care less if the source of their education was accredited by a bunch of old men and women who think they know what is best for the world. I want people who can do the job. I want the best and brightest. Not a piece of paper." - a counterpoint: I teach in the business school at an accredited public land-grant university in the US northeast and interface with several HR managers / campus recruiters from major companies nearby, including a fortune-5 and three fortune-50 cos. Almost all companies have minimum GPA cutoffs to even interview a student. Higher GPA increases a student's chances of getting hired. Recruiters frequently ask professors to recommend the best students in their class. That "piece of paper" mentioning the student's grade is fairly important, as are people-skills and attitude. Doing well in class signals a candidate's work ethic.

mfieldhouse• 14 years ago

Every time I see a discussion about university education, the wrong question is always being asked and debated: "Do you really need degree X for job Y?".

Of course domain specific knowledge and further education is a good idea. The 3 questions that need to be asked are:

1: Is it relevant to the job? 2: Could the material be learned quicker and more in depth working on the job instead? 3: Is university overpriced?

drone2• 14 years ago

This general topic has been of a lot of discussion in my household lately. My partner, let's just say she's been pursuing a career in the arts (as a classical performer). Her and I both recognize that the median salary for people in her career path is around $38k/year. She has been conditioned to believe that no one can even attempt to get into her chosen career (many times more applicants than available positions, to use the terms loosely) without a master's degree from one of the top schools, and again through one of the top studios in one of the top schools.

The problem here is that once she was accepted, we did the math. We'd be taking on an additional $60k in debt for this two year program, in addition to the existing $40k in debt already accrued. That makes a total of $100k in debt, at an average interest rate of 3.5%. All, for the "opportunity" to get a $38k/year job.

Even though she recognizes that the financials simply don't work, she has a hard time with the concept, and still is looking for ways that we could afford it. I've been working hard with her to show her different paths into the market (using more standard entrepreneurial tactics: building a team, creating opportunity one step at a time, building a market for your "product" over several years, etc.) but the professors keep telling her she can't get the job without the additional degree.

Sometimes, I wonder if the professors are not simply selling themselves and "capturing" their market. Then again, I consider they're likely not being manipulative, they simply only know the paths they took...

saturdaysaint2• 14 years ago

You guys should look up the forums full of angry law and humanities grads with no job prospects and devastating debt - http://chronicle.com/article/The-Big-Lie-About-the-Life/6393...

drone2• 14 years ago

The sad part is, she has plenty of real-world examples around her. Her part time job singing is also staffed with people who got their grad degree, who barely get by on a few part time private teaching jobs and the few part time singing jobs. She watches them struggle to even pay their loans, but the story keeps being told "But it may be that they're just not as good as you."

Part of it, I suspect, is that especially in music, they start training and teaching kids when they're very young. This is all they know by the time they leave their undergrad studies, and accepting the idea that the path they've been on their entire life may not be viable sounds a lot like "giving up before the race is over." Rational arguments be damned.

EzGraphs2• 14 years ago

The typical university tuition is over-priced. Once can get employable credentials or education with much less of an investment. That said, a comparison with the housing market does not provide a particularly clear parallel of the dynamics involved.

* In the housing market, there were a significant number of investors speculating and "flipping" properties. A major difference with college degrees is that they have a single owner.

* A brand new pool of college applicants becomes available each year. Based upon borrowing practices and selection of majors, they for the most part appear unaware of the consequences of the expense. The initial four-year degree is generally only acquired once per buyer.

* A house could be sold or re-possessed to immediately recapture some of its value. There is no way to resell a degree to effectively withdraw a portion of its cash value.

The common factor that will have a more immediate effect is the availability of government loans. If there would be a "credit crisis" for education that would result in student loans becoming more scarce, the resulting reduction in demand could lead to something of a "bubble burst" scenario.

crazygringo• 14 years ago

I would love to see some kind of "university achievement test" that you could take at the end of college, or at the end of simply studying on your own.

A test that would actually evaluate real critical reasoning and analysis of the sort that you're "supposed to" develop at university. (Of course, writing such a test well would be extremely difficult, and it would probably have to have a different version tailored for each kind of major.)

But it could serve two purposes: first, it could allow intelligent and driven students to bypass college completely, but still have something that will give them equivalent respect from employers.

But secondly, it could also reveal that many colleges aren't providing educations worth anywhere near what they're charging, and thus either drive prices down, or else force them to raise their standards.

ch00• 14 years ago

Good idea, but I think some sort of achievement test at the high school level would be even more effective at revealing the quality of preparation students have received for college.

Fortunately we already have tests like this and not surprisingly, they show that students are terribly underprepared for an undergraduate education in nearly every subject.

Clearly an undergraduate education received today is not commensurate with the costs to the student, especially when the student hasn't be rigorously prepared for a collegiate education in high school. But the problem is so much more than the price of tuition.

Havoc• 14 years ago

I agree with a lot of the points raised in the article. However, the author makes it sound like going to university is a foolish choice. Sure its overpriced & the crappy degrees aren't any good, but on the whole going to uni is still the correct call in most cases.

Round here its just a matter of selecting a sufficiently vicious degree. Worked for me: I had (multiple) employment offers lined up ~6 months into the 4 year course. So did the majority of my classmates.

Perhaps I'm biased since it clearly worked out for me, but still I think this whole thing about tertiary education being overrated is BS - at least for the proper degrees.

yashchandra3• 14 years ago

undergrad degree: 4 years is a waste of time. make it 2. rest should be spent doing practical work (not coffee making interns). initial 2 years: focus on communication skills, analytical skills and just simply how to carry yourself in the world. Learn how to manage money, time and your lazy ass. grad degree: Unless you want to be a researcher or you just like being in school, this is useless PHD degree: Enough said.

crasshopper5• 14 years ago

Cuban: "Can someone please explain to me how what is happening in higher education is any different ?

You can't refi an education or sell your education to someone else. You can't pay someone to refurbish your education while you're working at your day job. You can't rent out two thirds of your education while living in the crappy part. And so on.

I'm not saying there's no bubble, but the two asset classes are clearly different.

starrunningb• 14 years ago

The problem with most colleges is that the extrinsic cost doesn't equal the intrinsic value of most degrees. People go to college because of the "truth" that a degree will lead to a better salary, but the bubble pops when you graduate with a $100,000 in debt but can only get a minimum wage job.

The Coming Meltdown In College Education & Why The Economy Won’t Get Better Soon

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