Is Higher Education a Bubble?

Or to put it more accurately, is the cost of Higher Education a bubble?

Article 1 compares higher Ed. to the Housing market in terms of consumer sentiment:

"It's a story of an industry that may sound familiar.

The buyers think what they're buying will appreciate in value, making them rich in the future. The product grows more and more elaborate, and more and more expensive, but the expense is offset by cheap credit provided by sellers eager to encourage buyers to buy.

Buyers see that everyone else is taking on mounds of debt, and so are more comfortable when they do so themselves; besides, for a generation, the value of what they're buying has gone up steadily. What could go wrong? Everything continues smoothly until, at some point, it doesn't."

 Article 2 displays the information graphically:






The graph, however, undermines the point that higher ed. is a bubble - it doesn't display the bubble shape of the housing market. Perhaps it would look like a bubble if we expanded the graph and looked toward future projections?

Houses and degrees are not really comparable anyway. You pay for a degree once and it can't be resold, for example.

Despite the obvious differences, I still think I agree with the argument. Higher Education is in many ways overpriced. And, like with housing, the pricing problems are not at the top of the market but in the middle and at the bottom. Nobody really argues that elite universities aren't worth the price. Rather, the second (and third and fourth) tier schools may not be priced properly. When the cost of tuition at a school like Georgia Southern is mostly the same as a school like UGA, shouldn't we ask whether the degrees and education received are really equal? At the low end of the scale, for-profit schools like U of Phoenix charge extremely high rates for classes. Their students are not usually the best academic performers and are rarely middle class. Yet, the availability of government loans means they can get a degree too. So what is the value of that degree? Is it the $40,000 that they borrowed? I doubt it.

So we end up with a large number of people saddled with debt and who've earned degrees which may not provide them with any real benefit (of they graduate, most don't). To me that says the demand is too high and is being propped up by external forces (loans). As long as the money keeps flowing, the demand stays strong. Since the major lender in student loans is the government, I don't think the lending will decrease any time soon. The only thing decreasing is the utility of having a degree. The major benefit of a degree is either specialization (think Lawyer) or signaling (I'm competent my Liberal Arts degree says so). When the standards are lowered, the product's quality decreases. College is simply assumed to be a necessary stepping stone to a career but I'm starting to think that we've taken that belief too far. I know that when I'm in a classroom, I'll urge students to consider trade schools as a valuable alternative. (Side note: guidance councilors at the school I worked at weren't allowed to tell kids about trade schools. "All of you are college bound!"; there was no vocational tech. program either.)

As long as college = success in the public mind, loans will be easy to come by and degrees will continue to proliferate to their detriment.