The College Bubble

I laughed with glee when I heard that the NIA thinks that the US is in a major college education bubble.  Finally, there is someone else out there who thinks so too.  I predict that if things continue with the way things are now, ie the Fed constantly putting more money into the system, foreign countries getting fed up with the Fed's tactics and demanding the US sell its gold/silver piles and doing international trade without the USD, the US will see Greek style riots at public universities and maybe even government establishments.   If the NIA is correct,  then the riots at the universities have already begun.

Surprisingly, or perhaps not surprisingly, there was absolutely no national media coverage for the near riot at UCLA that took place on November 2009.   Students were protesting over a 32% tuition rate hike.  Why would the national media paid no attention to this kind of news is anyone's guess.  I just find it interesting that the mainstream media outlets find stories such as "What did Angelina Jolie eat today?" more important than the state of our college education.  It's strange what people take for granted and don't bother to question nowadays.

Take for example the long held belief that higher education will bring you wealth and opportunity.  No one questions this, except maybe for the graduates who are in debt up to their ears with college loans and can't find a job.  Another idea that people hardly think about is that colleges are nothing more than money making machines.  Somehow over the years, colleges have gained a kind of prestige and awe in the eyes of the public.  No one sees them as yet another company in the business of making money, but that's precisely what they are.  People get very upset over hearing CEOs of big companies and banks get million dollar bonuses, but hardly anyone raises an eyebrow when the president of a university gets a multi million dollar bonuses.  They should considering the students of that wealthy president's university just went into several thousands of dollars in debt only to find they still can't get a job!  So why is college tuition going up?

Well, because of the above.  A college is essentially a company in the business of making money.  Their product is a degree and depending upon how many people want their particular degree this sets the price for how much the university feels that they can charge the students.

If the universities see high demand then they will continue to increase their prices.  It definitely helps that people have the idea burned into their brains that if they can just get a college degree they will be all that much more richer and more successful than their peers.  With that kind of marketing being perpetuated by well meaning parents, universities will never have to look far for students willing to hand over thousands of dollars for a piece of paper that says they ought to know something useful.

Naturally, everyone wants to have the best chance in life so they will try to get into college if they have the money to afford it.  Thanks to the unbelievable expansion in credit, more and more people are able to borrow money from banks or the government.   Hence, the college education bubble grows ever larger.  I wonder when it will finally pop?   I suspect it will pop when riots break out on university campuses nationwide to such an extent that the mainstream media simply can not ignore it any longer.