Background on The Higher Education Bubble

President Obama has publicly stated that he believes every American should have a college education. But in the last few years, an anti-higher education movement has begun to take shape.

A Bubble

The term "bubble" was first used in regards to technology, then housing and now higher education. It refers to anything which is believed to be valued more than it's actually worth. Many people attributed the 2009 economy crash to the burst of the housing bubble in which housing prices became so high that buyers weren't able to keep up. A bubble of any kind will burst in a similar situation. Those who predict that the higher education bubble is bound to burst foresee a radical shift in the American college system—the tuition costs must go way down or enrollment will.

The Higher Ed Bubble

In the context of higher education, the bubble refers to the popular American belief that a college degree is incredibly valuable—at least valuable enough to pay the steeply increasing costs of college tuition. College tuition prices have increased by 440% in the last 25 years. But because post-'09 stock market crash graduates aren't making as much money as they would have had they graduated 10 years ago (despite the very high costs of their college degrees) the education they received isn't as valuable. Many students who take out loans to pay for the high costs of college and then aren't making enough money once they graduate to pay off their loans, as only 56% of the 2010 graduating class had a job by the following spring.

Criticisms of Higher Ed

A book called "Academically Adrift: Limited Learning on College Campuses" discusses the failure of higher education to actually educate, let alone guarantee jobs. According to the authors' study of 2,300 students at 24 college campuses, 45% of students do not improve in critical reading or writing skills after two years of college. Another book called "In the Basement of the Ivory Tower: Confessions from an Accidental Academic" tells of the misguided belief that all people should get a college education. The author, who calls himself "Professor X," claims that many of his students simply shouldn't be in a college classroom. He calls on institutions of higher education to quit padding the classroom to make it a comfortable place for everyone. Instead, he argues for a policy of "sink or swim." Both books call for a society where higher education is no longer seen as a necessary stepping stone for the masses.

College Alternatives

Peter Thiel, co-founder of PayPal and one of the leading figures in the discussion about the higher education bubble, has responded to the high-cost/low-value of college by offering an incentive for some of the most highly-qualified college students to drop out. The Thiel Fellowship awards $100,000 to 20 people under 20 if they promise to stay out of college for at least two years. The Thiel Foundation assists fellows in their start-ups and provides mentoring from some of the leading figures in technology and entrepreneurship. One of the Thiel Fellowship recipients, 19-year-old Dale Stephens, started a website called UnCollege dedicated to promoting his movement for "self-directed higher learning." He aims to teach people the essential tools they'd learn at a four-year institution for zero cost.

H&R Block Dollars and Sense