July 24, 2010

Higher ed bubble increasingly going global

A new press release by the College Board warns that the U.S. is falling behind other countries in the percent of younger adults (aged 25-34) with at least a 2-year degree, whereas we used to be #1. To see whether this is even worth worrying about, let's see who's above and who's below us, which the press release and the various mainstream media regurgitations of it have not mentioned. It would only have taken them a few minutes by googling, but here is the executive summary of the report. The relevant graphs are on pages 5 and 7 of the PDF.

So who's dethroned us as the worldwide leader in higher education, who most threatens our global dominance? It's more or less a three-way tie between Canada, South Korea, and Russia. That fails the most basic reality check -- namely that none of them are nipping at our heels, whether economically, culturally, or otherwise. Especially not Russia. Following them are Japan, New Zealand, Ireland, Norway, Israel, France and Belgium. Again nothing very frightening. Just a hair above us is Australia, and a hair below are Denmark and Sweden. After that it's Finland, Spain, the UK, the Netherlands, Luxembourg, Switzerland, and Estonia. Then comes Iceland, Slovenia, Poland and Greece. Even lower than those are Germany, Hungary, Portugal, Mexico, Austria, Italy, Chile, the Slovak Republic, the Czech Republic, Turkey, and Brazil.

It's hard to see any clear implications from this ranking, other than that some wealthy countries have stricter standards to get a post-secondary degree -- like Germany, where 23% do -- while others encourage colleges to scrape further down the barrel for students -- like Canada, where 56% do. This also shows that "college degree" is not the same thing across countries. It means less in Canada than in Germany because it's not as hard to get. Hell, we already knew that from within a country -- a degree from New Outer Podunk University doesn't count for as much as one from Harvard because it's a lot easier to get.

Obviously since the rise of the modern university, the smart and hard-working people got in somewhere and got their degree. Therefore, in order to push the percent of young people with a degree even higher, a society must shove more and more less-qualified students into the higher ed scheme. The only growth possible, after the hard-working smarties were already going to college, comes from students who will get their degree in a joke major or at a community college.

Those degrees coming from laxer standards will not contribute as much to the economy or the society overall as the earlier degrees did -- there's that downer of an idea again, diminishing marginal returns. In fact the process may weaken the economy by tying up roughly 40% of younger adults in classwork than in productive work. (Only about 15% of the population would do well in a meaningful college setting, whereas the goal of the College Board Advocacy is 55%.) Not to mention all the loans and subsidies that will be flooded into lower and lower-quality hands, all to make sure they get a shot at the American dream -- gee, where have we heard that recently? That didn't end up too bad, right? Just destroying the global economy for several years.

Just as with the crummy mortgages that were given to people who could never pay them back, students who will never work as executives or professionals or whatever will not be able to pay back student loans -- loans which will grow immensely as more and more students pile into higher ed, increasing demand and thus prices. That's been going on since at least the early 1980s, maybe a bit earlier. It doesn't matter if you aren't legally allowed to default on student loans -- that's just the law. If you're broke, they can't make you earn a professional's salary that they could garnish, they can't take anything of value since you don't have anything at that point, etc.

Aside from the issue of loan defaults, there's the negative return on investment. The government and private foundations are going to dump a bunch of money into students' hands on the assumption that they'll eventually get good jobs and be able to pay them back, and maybe then some -- even if not, they'll somehow make the society a better place to live by having the values and lifestyles of college-educated people, even if they end up with a working-class job and salary. Sorry, but that's bound to fail, too. They definitely won't be able to pay much back, so there's negative ROI in the narrow financial sense. And even in the broader sense, they're not going to pick up middle-class or professional values from college, as it's not really a grooming school for the elite (except at the top, where they will not be). There are far cheaper ways of getting them to learn the value of hard work, getting along with others, and so on -- namely getting a job as a young person and learning that you're nothing special, and that you'll be fired if you get too big for your breeches.

Just as the recent housing bubble was a global phenomenon -- and it's still going strong in China -- the higher ed bubble clearly threatens more than just the U.S. No country's citizenry wants to look like a bunch of boorish losers or elitists who only let the smart people go to college. We've all got to compete with each other to see who can scrape the bottom of the barrel and ensure that every one of its citizens gets a college degree. Some strong economies like Germany seem to have resisted getting into this self-destroying battle, but most have not. The ending of this story does not look happy.


  1. Speaking as a junior in college, I think it's pretty hard to know how much debt to go into for college. Most people will concede that Harvard is worth full price. But is Columbia worth full price? What about Duke? What about Berkeley? How should one's willingness to go into debt vary against the spectrum of prestige?

  2. Also, as the number of people going to college has greatly increased, the number of *professors* has necessarily also increased, and this has probably sucked in quite a few individuals who didn't really either have the vocation or the skills for a life of scholarship and teaching...just as during the dot-com bubble, there were people running well-funded companies who shouldn't have really been entrusted with the running of a fast-food franchise. See my 2003 post an academic bubble?...I think we can now remove the question mark.

  3. yep, more people going to college that shouldn't, to then work at a job they could have pretty much worked fresh out of high school without having taken 120 credit hours at an "accredited" university


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