The Coming Meltdown in College Education & Why The Economy Won’t Get Better Any Time Soon

What if the rising costs of education and increased burden of student loan debt is too much to handle?  Could it be that just as in the housing bubble where people were given access to loans that they could not afford the same could be said of higher education?  Can a person coming out of college making $35k a year really pay off the $75k in student loan debt they acquired?

This is precisely the point that Mark Cuban is making in one of his latest blog posts.  I don't see the education bubble as anything different than an equity, housing, or bond bubble that we have been exposed too and seen before.

There are many issues within the education system but there are outside forces that help to contribute to it's bubble.  In my opinion I see employers who require a college degree for no reason adding to the exiting bubble.  Rather than focus on actual skill and experience, employers say that you can have all of the tools in the tool box but unless you have that piece of paper there is no entrance into our company.  Think of it as "Charlie and The Chocolate Factory", if you don't have the golden ticket you can;t get in.

Here are a few points from Cuban's post

• The President has introduced programs that try to reward schools that don’t raise tuition and costs. They won’t work.  Right now there is a never ending supply of buyers. Students who can’t get jobs or who think that by going to college they enhance their chances to get a job. Its the collegiate equivalent of flipping houses. 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.
• At some point potential students will realize that they can’t flip their student loans for a job in 4 years. In fact they will realize that college may be the option for fun and entertainment, but not for education. Prices for traditional higher education will skyrocket so high over the next several years that potential students will start to make their way to non accredited institutions.
• 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. Cuban is the exception rather than the norm here with this point
• As far as the purpose of college, I am a huge believer that you go to college to learn how to learn. However, if that gaol is subverted because traditional universities, public and private, charge so much to make that happen, I believe that system will collapse and there will be better alternatives created.
• The Higher Education Industry is very analogous to the Newspaper industry. By the time they realize they need to change their business model it will be too late. Higher Education’s legacy infrastructure, employee costs /structures and debt costs will keep them from being able to re calibrate to a new generation of competitors.