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The Coming Meltdown In College Education & Why The Economy Won’t Get Better Soon

• cageface 14y ago
  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. Maybe there is a bubble in higher ed but this analogy is pretty shaky. The most obvious difference between a house and a degree is that you can't "flip" a degree.
  • wyclif 14y ago
    An analogy isn't supposed to be a 1:1 comparison of two things. I read Cuban here using "flip" not as selling your degree, but exchanging your degree for a job. You could call it a conversion or something else. I don't consider it shaky at all.
  • EzGraphs 14y ago
    Agreed. There are similarities between the higher ed and housing bubble: * Lots of quick money available * Government loans and programs, * Speculation about the relative return on investment that does not match the observed reality But a house is an asset with a specific tangible transferable value. A college degree is a certification and not transferable in any specific way. It muddies the waters to see the bubbles as identical, and it suggests that they will resolve themselves in exactly the same way (which is at least questionable).
• bryogenic 14y ago
  While this article talks about how bad things are I think an interesting solution was written up here [pdf] http://www.fixuc.org/wp-content/uploads/2012/01/FixUC-Proposal-03_28_2012.pdf http://www.fixuc.org/wp-content/uploads/2012/01/FixUC-Propos... The idea being you go to school for free and the University only makes money from a percentage of your future pay, thereby ensuring that it's students are actually prepared for the work force. More here: http://www.forbes.com/sites/jamesmarshallcrotty/2012/04/23/fix-uc-plan-ends-tuition-as-we-know-it-is-it-bloody-crazy-enough-to-actually-work/ http://www.forbes.com/sites/jamesmarshallcrotty/2012/04/23/f...
  • Swizec 14y ago
    The problem I have with this is that university should NOT prepare you for the work force. Universities are awesome! We ruined them when we started thinking of higher education as preparation (or even requirement) for the workforce. University should prepare you to be a thinker, a scientist and just generally an educated person. As soon as it becomes vocational the whole point is lost. We don't need to "fix higher ed", we need to remember why we created it in the first place - to teach a small percentage of the population how to use critical thinking.
    • wyclif 14y ago
      I'm partial to this argument, but it only works if you allow for technical education that does provide people with the STEM (or other) skills needed for the workforce. I think higher education in the US is actually very broken. The best example I can think of that embodies that division of purpose is the UK, where you have Oxbridge and other elite institutions which function in the sense you are referring to, but you also have the Polytechnics that train people for practical careers.
      • Swizec 14y ago
        In Slovenia we used to "solve" this by having two levels of university education, one was more practical and another was more theoretical. There were a lot of execution problems with the system, so they went ahead and ruined it further with the bologna reform. Now we still have two types of university educations (on the bachelor's level), except they're both very practical and the only difference there is that the one stemming from the old theoretical tier makes it harder to get into master's programs. Which then in turn ruins the master's because it needs to be dumbed down to enable people taking the "easier" tier to follow along and graduate. As a result, even the PhD isn't what it used to be anymore ... at least on my faculty (CS).
      • rbn 14y ago
        U.S has those. They are called Community College.
• gliese1337 14y ago
  Many people, me included, frequently complain about all of the politics required to get the least bit of funding for anything from my university. Then I read something like this and that kind of trouble suddenly seems much better than the alternative. According to NCES[1], the average total cost per year of attendance at a 4-year private institution in 2009-2010 was $32,475. The cost for BYU was $4,290[2]. There's tons of construction going on all the time, but BYU doesn't add floor space without a donor who can guarantee long-term financial support for the facility. And we still manage to have nationally and internationally recognized programs in among other things, computer animation and ancient languages, so clearly you don't need a whole lot more money to do good instruction and good research. It makes me wonder what exactly there is to cut that manages to use up all of the 9-times higher costs of other institutions. [1]http://nces.ed.gov/fastfacts/display.asp?id=76 http://nces.ed.gov/fastfacts/display.asp?id=76 [2]http://yfacts.byu.edu/viewarticle.aspx?id=85 http://yfacts.byu.edu/viewarticle.aspx?id=85
  • MaxGabriel 14y ago
    This disclaimer was on the BYU website. Do you know how much that is? "* A significant portion of the cost of operating the university is paid from the tithes of The Church of Jesus Christ of Latter-day Saints. Therefore, students and families of students who are tithe-paying members of the Church have already made a contribution to the operation of the university. Because others will not have made this contribution, they are charged a higher tuition, a practice similar in principle to that of state universities charging higher tuition to nonresidents."
    • gliese1337 14y ago
      Yes, I do. That's why I quoted the price for non-LDS students. The price for tuition for LDS students, as listed on the same page, is about half of that; but, as the disclaimer says, you also have to take into account that they're paying an additional 10% of their total income.
      • MaxGabriel 14y ago
        Thanks! I am not really familiar with tithing, and when I first looked at the chart I didn't understand that LDS meant you payed a tithe.
• MaxGabriel 14y ago
  This was the first comment on Cuban's blog. Can anyone comment on it? I listened to the NPR Podcast, it is specific to private colleges; I am not sure how public colleges fit in. "The most recent Planet Money on NPR was about the cost of college. [1] They point out that the price that has been rising is the “sticker price.” However, the average price a student pays for college hasn’t risen (except to adjust for inflation) over the past 20 years or so. The schools are raising the sticker price as a marketing tool, so they can give big need and merit based scholarships to woo desirable students. The reason student loan debt has ballooned isn’t because students are paying more, it’s because more students are paying. Federally subsidized loans aren’t increasing the cost of education, they are serving their purpose to give more people the opportunity to go to college. I suppose your point that it is a ton of debt and we don’t have a job to give to each college grad is valid. But, I am not sure the classification of it as a bubble is valid because we aren’t really seeing a rise in the cost of education." [1] http://www.npr.org/blogs/money/2012/05/11/152511771/the-real-price-of-college http://www.npr.org/blogs/money/2012/05/11/152511771/the-real...
  • AngrySkillzz 14y ago
    I believe that's true for many well-endowed and non-state institutions; the wealthy who can afford the full $45k tuition help to subsidize the poorer students who can't, and I don't see too much wrong with that. The problem is that that isn't the entire story. Yeah, federally subsidized loans mean more kids are attending school, but not everyone is eligible for subsidized loans. Many of my friends, and myself, were offered standard unsubsidized loans as generally middle-class students. So for your average middle-class student, going to a less-endowed private or out-of-state institution means either paying full price out of pocket or taking out unsubsidized loans. And as we know, unsubsidized loans are reaching absurd levels under unrealistic terms and they're giving us a generation saddled with debt that will be very difficult to pay off. More students are going to college, but I seriously doubt the price of education is rising. Spending time on any college campus will tell you that they are spending recklessly because of the education bubble, and I'm not talking high professor salaries (they deserve every penny). Administrators these days make frankly irresponsible amounts of money, schools purchase expensive and unnecessary equipment to have a selling point for certain departments, and construction/renovation is everywhere. The sticker price isn't rising because costs are rising, the sticker price is rising because demand is inelastic (due to promise of better jobs and easy financing) and colleges are finding reckless ways to spend the rest of the money. So the points are valid, but they don't speak to the entire situation. It sure smells like a bubble to me; student debt is ballooning because demand is inelastic and its easy to take out a loan, schools are spending the money irresponsibly, and I don't see any reasonable way that all of this debt is getting repaid in this economy, especially under the conditions the loans are given. I'd say there's likely to be an impending burst and credit crunch as my friends and I hit the workforce.
• impendia 14y ago
  I am in my first year as a mathematics professor at the University of South Carolina. Having moved here from Stanford, I've noticed several things. (1) Many students are woefully underprepared. In my calculus classes I have found that a great many of the students have not mastered high school algebra. And these are the students who pass our placement exam, and aren't obliged to take one of our many algebra and precalculus courses. (2) Many of the students aren't all that motivated, and resented me for asking a lot of them. (3) Many of the students really are highly motivated, and have impressed me with their talent, and more importantly with their eagerness to learn. But where will they work? There seems to be a relative lack of employers in South Carolina for talented, ambitious people. "Relative lack" doesn't mean none, but if I were advising, say, a talented and ambitious math and CS major who was graduating, my first advice to him/her would be to leave the state. And yet, we continue to enroll 5,000 new students each year. I wish I felt there was a better light at the end of the tunnel for my students, at least one that didn't oblige them to move far from home. But I am kind of feeling a bit of a bubble. For now, students continue to enroll in my calculus classes. Despite all their complaints to me, they busted their asses and I am proud of them. I hope that ten years from now they have reason to decide that their efforts were worth it.
  • ntkachov 14y ago
    Most students are crap at math. That's a fact. There is 0 encouragement to spend high school refining math skills. Also don't confuse motivation with laziness, priorities, or time management. To a psych major, calc might seem like one of those bullshit classes you have to take. To an EE Major it might just be more hours of work that could be spent sleeping.
    • _delirium 14y ago
      There is a relevance problem, yeah. I personally was motivated to really learn calc in 1st year college, mainly by physics classes. I wasn't a physics major, but I found the freshman physics class really interesting. In particular I found it interesting that via this tool, calculus, you could actually re-derive the entirety of elementary physics (stuff like dist = v0 t + (a t^2)/2), and much more, via a procedure with more internal logic and less arbitrary memorization. It almost felt like a successful good-cop/bad-cop setup: bad-cop high school made me memorize a bunch of bullshit special-case formulas, and then good-cop college explained to me that you could just do calculus to derive the answer. I could certainly see how those motivators wouldn't apply to all students, though. Honestly they applied to me mostly out of personal, side-project-esque interest. In CS I tend to use statistics and discrete math a lot more than calculus, though calculus comes up occasionally.
• ntkachov 14y ago
  The other end of the problem is that kid's aren't even trying to flip their degree. Most kids consider college and experience not an investment. You're kid is the worst investor on the planet. Because instead of majoring in Bioengineering they are majoring in psychology. And If they are majoring in psychology they aren't out to get the best damn research positions over the summer and publish papers, they are out working for the local supermarket. I don't think most students have been asked "What return do you expect on the $100,000 you are going to spend on this degree".
  • cantankerous 14y ago
    This is completely what's wrong with the system. Eventually everybody needs to work for money. That's not to say you can't go to University to better yourself and learn something that inspires you. Eventually, though, you have to eat and pay for creature comforts. If college has a huge sticker price, what's paying the bill? If not college, something else has to. Everybody who goes to school needs to make sure that they can cover the costs, either through the skills they learn in college or via some other means. Going to college to study liberal arts is still a very respectful thing to do, if that's what you actually intend to do...as opposed to going to college, cutting classes, getting wasted 5 days a week and graduating with a C average in psychology.
    • overgryphon 14y ago
      Going to college to study liberal arts is a respectful thing to do if you either pay for it up front without loans or have a reasonable path planned out after college that should pay the loans back. Studying something in college that will not lead to a future career is a hobby, not an investment. Spending large amounts of loan money on a hobby that cannot pay the loans back is a very silly thing to do. Liberal arts degrees are great, and a good learning experience for students. But they aren't worth taking out loans for if there are not jobs to pay those loans back.
  • randomdata 14y ago
    Most kids consider college and experience not an investment. How many are there due to pressure? At the end of my high school career, I was ready to enter the workforce. I was already working in the industry I wanted to be in; there was little value to going from that perspective. Yet, the pressure from teachers and peers persisted. I was going to fail in life if I didn't go to school. You know the meme, I'm sure. I eventually succumbed and enrolled. Thankfully, I realized in my first year that I was wasting my time. I picked up another job, used it to hone my experience in the industry, and by the time my friends were graduating, I was able to move myself into my dream job. I really don't see how a post-secondary education could have improved anything. It would have only been a hobby, which too is respectable, but not the right fit for me at that point in my life. There's so much malarkey that goes around about education, it leads young people, without a clear view of how the world really works, to make hasty decisions that often ends with a massive amount of debt. I admire those who are in school for the right reasons, I just question how many really are there for the right reasons. I know I wasn't. I'm just glad I realized sooner than later.
• chadmalik 14y ago
  $1 trillion in student loan debt you say? Simple solution, let the Fed print up and loan out 0% interest loans that roll over indefinitely and hand them out to students, just like the $16 trillion they handed out to the banks. Oh wait, I forgot only bankers get free money in America. Serious solution: repeal the law that says student loan debt cannot be discharged in bankruptcy. Then lenders will need to do a serious assessment of whether the money they are loaning out can be paid back based on assessing the student. I will also like to mention that somehow other nations seem to not require massive tuition fees. A basic college education should be MUCH lower cost.
• Tsagadai 14y ago
  First off, I know education != going to college. But let's be honest, some people who spend years of their life studying full time are probably learning more than people who watch a few videos after work. It takes a long time for most people to learn certain skills and without a dedicated place, timeframe and support network they probably won't learn those skills by themselves. I don't think spending too much on education is going to cause the next bust of America. I think it will be a case of everyone else spending so much more than the US. In a services-based economy your main capital is your people. Many traditional universities will fail, because there are too many mediocre schools (also cheaper alternatives and expanding high-end schools). This will, however, result in fewer people studying anything past high school. There are significant problems in the US higher education market but hoping for its demise will not fix things. Good luck competing in a hypothetical free market against far more educated populations.
• hristov 14y ago
  I really do not like housing bubble to education analogies. There is a big and quite obvious difference between housing and education. You cannot flip a diploma. You can try to monetize it by getting a good job but it is not something you can sell. The way you monetize it is by living your life a certain way. Education would be a big investment even if it were free. You still have to go to classes. You still have to expend effort. And if you want to get your money's worth out of your education you still have build a career. So you cannot buy 20 diplomas on credit and flip them in a month for profit (as some people used to do with houses). Which means that education is a completely different beast. Every housing analogy is utterly idiotic. Now that is not to say that there are no problems with education. Of course there are. But they are different type of problems. Personally I think too many loans are being given out because of the recent proliferation of for profit schools with dubious teaching abilities and academic standards. I think we need some kind of merit based system that will limit the number of loans being given out. The merit based system may test either the students or the schools or both, and only give out loans to those that pass the test. Thus, we can limit the loans to only those that can beneficially use them.
  • rsanchez1 14y ago
    In both situations, people get themselves in deep debt with the expectation that they'll end up with a lot more money than they started. The housing market collapsed because prices fell after everyone realized the majority of the housing market was built on promises that could not be kept. The education market will collapse because available jobs and salary fell (analogous to prices in the housing market, and largely because of the housing market collapse) and the promises made to young people that they will be able to build a career cannot be kept for every student graduating today. I do not like the analogy either, because it ends with the country hurting hard, very hard. It's easy to dismiss such analogies as idiotic when you assume that all you need to do is "live your life a certain way" for the diploma to pay off, and when you want to ignore the eventuality that the education market collapse will cause tremendous damage. Both the housing and education market collapses depend on promises made to homeowner and students that cannot possibly be kept for everyone involved. Of course, limiting loans based on merit is a great solution, but it's not a politically palatable one. On one hand, politicians love to say that everyone will get an education and it will be paid for no matter what. On the other hand, what happens when students from well-off community meet merit-based standards for loans while students from poor communities don't? Banks and universities will be slammed for practicing discrimination. Sort of like how banks were slammed for discrimination when they were lending less to minorities and accused of discrimination based on race, when in reality they were limiting loans only to those who could pay for them, but banks were ultimately forced to give out subprime loans through legislation and we ended up with the housing market collapse. Common sense solutions are not adopted when you have politicians involved who only appeal to the emotion of voters and seduce voters with promises of cheap housing and education, and slam politicians who are fiscally responsible and want to limit mortgages and student loans to those who have the ability to pay for them.
• ahsanhilal 14y ago
  For those who are interested in student debt, there is a really good website called Project on student debt: http://projectonstudentdebt.org/state_by_state-data.php http://projectonstudentdebt.org/state_by_state-data.php The problem really lies in the fact that the US cannot find the right answer for the basic question: Is Higher Education a public or private good? There is no wrong answer, just that answer is really required to form good student expectations regarding the economic system, and what they should invest in a degree. Right now the US government subsidizes higher ed in various forms and manners, in order to bring the cost burden down. Pre-2008 crisis, the US govt used to mostly guarantee debt taken out by college students in order to bring down the rates. Banks would then securitize these loans, cut them up in tranches and sell them on to investors, pretty much like MBS's (mortgage backed securities). However, in the financial fallout a lot of students could not get loans so the US government decided to give out more grants etc. However, the example of UK is quite interesting as well. The average student debt in the UK is lower due to a large part of costs being carried by the govt. Though, this does not effectually increase unemployment rate either. Lower debt != great unemployment and greater happiness. Also, historically civilizations with higher quantity of credit flowing around in the economy seem to do better as well.
• glesica 14y ago
  This is just absurd. Non-accredited, branded schools will provide better education for less money? Really? I assume he's referring to the growing for-profit college industry. Yet for-profit colleges are actually the biggest culprits driving up the student debt. Students at for-profit colleges run up more debt, are more likely to drop out, and are more likely to end up under-employed than those at traditional universities. This paragraph also bothers the crap out of me: > The competition from new forms of education is starting to appear. Particularly in the tech world. Online and physical classrooms are popping up everywhere. They respond to needs in the market. THey work with local businesses to tailor the education to corporate needs. In essence assuring those who excel that they will get a job. All for far far less money than traditional schools. Yes, students need relevant, modern, education, but education that is "tailored" to corporate needs is a little worrisome. Extremely targeted education might be sweet for the corporations hiring the graduates, but it sucks for the students themselves. Economists draw a distinction between general human capital and specific human capital. General capital includes things like math and critical thinking, skills that can be applied in a variety of situations. Specific capital includes things like how to use a particular piece of software or knowing which forms need to be filled out for a requisition. General capital benefits employees because the employee is free to take his capital and go elsewhere; the skills are transferable. This is what we see in silicon valley where companies acquire startups just for their employees. Specific capital, on the other hand, benefits the employer since the capital is only valuable to a specific industry or company so the employee is limited in where he can take his skills. Everyone needs a mix of general and specific capital. But the balance has implications for the economy as a whole. One of the things that traditional universities have been pretty good at is general capital. This provides flexibility and resiliency to the economy. People can move between jobs and even careers, from dying industries to growing ones. They can fill jobs that hadn't even been invented when they were in school. And they can actually acquire specific capital more readily (the "ability" to learn). Shifting focus to specific capital by allowing companies to control our educational system threatens to turn the entire country into one big company town, and that's a little frightening. EDIT: Typo
  • DTrejo 14y ago
    He might mean things like http://www.khanacademy.org/ http://www.khanacademy.org/ and http://devbootcamp.com/experience http://devbootcamp.com/experience.
• jellicle 14y ago
  Mark Cuban writes: "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." So, I suppose I could be wrong, but I would be willing to bet a great deal of money that Mark Cuban does not employ anyone in any sort of white-collar job who doesn't have a college degree from an accredited college. It's nice for Mark Cuban to say that, but the reality is if you submit your resume to Mark Cuban Enterprises, Inc. where you list your education as being from the First Internet School of Book Learnin', Mark Cuban's HR people are going to delete it offhand. They're not going to call you. They're not going to try to find out if you're the best and brightest. They're going to delete it and call the guy who has Yale on his resume. Sorry.
  • davyjones 14y ago
    Correct. I have found blog posts where there are snippets about how they are "looking for bright and interesting minds and college degree does not matter" but when you look at their Jobs page, you have a BS Computer Science or equivalent requirement listed there.
    • jey 14y ago
      It does say "BS Computer Science or equivalent" -- so they're asking for a certain level of education, which doesn't necessarily have to be in the form of a college degree.
      • randomdata 14y ago
        It is interesting that they still choose to use college-level credentials as the baseline metric though. Why not "Four years of demonstrable self-directed learning in the study, or equivalent"?
        • stdgy 14y ago
          In my mind that's not really the same thing. Universities have requirements you need to cover in order to graduate. So when a job lists a BS CS degree as a requirement, they're saying they expect you to be familiar with the core subjects of the field. Certainly not an expert in any one subject, but at least familiar. (If they want subject area experts they'll usually be advertising for MS/PhD with a focus in [blah]) Obviously this still gives the Universities a great deal of trust, with the implication that in order to receive the degree, you had to demonstrate your capability. That's a sizable question mark, even though it's what University accreditation is supposed to be for... Sorry, went off on a bit of a tangent there. Anyways, four years of self-directed learning won't necessarily cover the same subject matter they may expect you to be familiar with.
• moocow01 14y ago
  I think the bigger question is what will the meltdown look like and how will it change our society?
• scoofy 14y ago
  Student debt is not like housing. 1. Education is an game-theoretic arms race. It's very valuable iff you are the only few who have it. If you do not have it your are at a serious disadvantage. This creates an incentive to perpetuate the current overspending. This, obviously, is a recipe for entirely too much wasteful spending on education, and that needs to change, but i don't see how it creates a higher education 'crash'. 2. A diploma is not a commodity. You cannot sell it; you cannot flip one. You cannot speculate on it beyond the initial investment. No one is going to give you a education equity loan. It is not treated as collateral. Your diploma will not be repossessed, therefore the lenders need to be more conservative when issuing student loans (leave that to the actuaries). While i will admit there is the potential for losses in the ABS market, these are typically guaranteed loans. Will this create problem for the Fed? If the economy continues in the doldrums it's certainly a possibility, but comparing these securities to the chaos the CDS market sent us through, i doubt it.
• ender7 14y ago
  I agree that the price of a college education is too high. I don't see how this justifies the conclusion that "therefore, people should stop going to college and take online courses." Most medical care is overpriced, but that doesn't mean that you shouldn't get a heart transplant. I am deeply skeptical that online courses or for-profit education will result in anything but a horrible mess. (this is not to say that it's impossible to succeed and do quite well without a college degree, but it's much harder - it's harder to get hired and it's harder to acquire the knowledge and experience necessary to be qualified for a position)
  • randomdata 14y ago
    but it's much harder - it's harder to get hired and it's harder to acquire the knowledge and experience necessary to be qualified for a position Is there any data to back this up? If we assume college is a four year undertaking, even if it takes you three years of work to find the job you are looking for without a degree, you're still expending less effort. My anecdotal experience says it's not even difficult at all. I was able to land my first job in the industry I still work today on my first attempt in high school. Though I recognize that not everyone is so lucky.
    • rayiner 14y ago
      Try getting a job in any non-software engineering field without a college degree.
• fumar 14y ago
  I graduated from college three years ago. When I signed the loan I was 18 and did not fully understand how much a loan would affect my life. It was very easy to receive an unsubsidized loan. I did not really think about too much to be honest. Growing up in a nice suburb. It was just the norm. My friends older brothers took out loans. My older friends did the same. I grew up middle class. My parents had good jobs. I started working when I was sixteen. I did not do great in high school. In college I did very well. My last two years were the hardest. I worked fulltime. Having no free time was difficult. Still, I loved learning and it was a valuable learning experience. I was able to manage fun life, work life, and school life. I worked hard at getting a good internship and a high GPA. At the end, in 2009, it was very hard to get job interviews. As a recent graduate, I could not get my foot in the door anywhere. I ended up a high end luxury store. It paid the bills. I recently quit because of family stuff I had to take care off. Now, I am jobless. I realized I have to start from square one. I am applying for internships at startups in Chicago. Working for thirteen dollars an hour was just enough to make a living. I saw how many people without loans or college degrees had a better lifestyle. They did not have to worry about a large percentage of their income going back to the government. I am still unsure if it was the wrong choice. I learned more than I ever planned. College changed my life in many positive ways. I am still an avid learner. I started reading news.ycombinator because I wanted to learn more about programming. I am enrolled in Udacaity right now. I also taught myself graphic design in the last year.
• reader5000 14y ago
  I think the more interesting aspect is how long are we going to keep the choke hold on graduates who are currently drowning in debt and will be for a while. Is it a net win that the Dept of Education gets paid while a substantial chunk of would-be middle class Americans can't purchase cars / houses / children and are generally disincentivized to produce by their $1300/mo debt service? Will we start to see a parade of law suits from former students against their universities? The situation really is absurd.
  • lintroller 14y ago
    > Will we start to see a parade of law suits from former students against their universities? I'm unsure of what legal recourse these students would have. I do not have a legal background, but signing off on a loan seems like a pretty cut and dry matter.
  • ChristianMarks 14y ago
    The 1 Trillion in debt will be used to fund lobbying for additional state and federal budget cuts; outsourcing and off-shoring more jobs; lowering taxes for wealthy corporations; adding to the 1600 companies in 18 states that get to keep some or all of the state withholding taxes their employees pay; raising the cost of medical care and health insurance; and funding think tanks to persuade people to believe that universal health insurance is evil, so that private insurance companies will continue to flourish at the expense of entrepreneurs and to ensure that labor and capital remains immobile.
• ninguem2 14y ago
  Mark Cuban should be able to afford to hire some unemployed English major to proofread his blog posts.
  • deleted 14y ago
    [deleted]
  • jongalloway2 14y ago
    Yes, or use a browser or blog client with basic spell check / grammar check. That was painful to read.
  • djt 14y ago
    Yet thousands of people still read his blog, probably something to think about.
• Lednakashim 14y ago
  There is no clear financial connection. The only way to make a strong financial connection is to imagine a default scenario; where thousands of students can't pay off their loans. There is little evidence for this as student loans tend to be cheaper then housing loans (It is impossible get 300K of student loans) and they tend to have nicer terms less ways to default. Perhaps whats happening is some kind of social slavery where it is harder to peruse ones dreams due to loans, but its not a financial bubble.
  • colinshark 14y ago
    I'm 27. Suburban lifestyle. Went to college. I'm thinking of my 15 or so closest friends. None of them have ever bought a house or a new car. I'm drawing my own conclusion that the economy is going continue to be depressed for a long time.
• mathattack 14y ago
  He nails the key issue - cheap easy money that can be flipped later for a high paying job. Of course the job may or may not be there. It's worth it for Harvard, but perhaps not for Bradley.
  • hedgie 14y ago
    not sure that's the case. "Here, however, is what was explosive: Dale and Krueger concluded that students, who were accepted into elite schools, but went to less selective institutions, earned salaries just as high as Ivy League grads. For instance, if a teenager gained entry to Harvard, but ended up attending Penn State, his or her salary prospects would be the same. In the pair's newest study, the findings are even more amazing. Applicants, who shared similar high SAT scores with Ivy League applicants could have been rejected from the elite schools that they applied to and yet they still enjoyed similar average salaries as the graduates from elite schools. In the study, the better predictor of earnings was the average SAT scores of the most selective school a teenager applied to and not the typical scores of the institution the student attended." there's a guy at work with a phd in math from princeton. there are plenty of people with his job title that didn't spend all that money to get there. most of them went to the great in state engineering school and spent far less money for the same result. http://www.usnews.com/education/blogs/the-college-solution/2011/03/01/the-ivy-league-earnings-myth http://www.usnews.com/education/blogs/the-college-solution/2...
    • gammarator 14y ago
      Interesting, although the authors note a caveat: "As with the earlier study, there were some students who did fare better financially if they attended elite schools. The students who fell into this category were Latino, black, and low-income students, as well as those whose parents did not graduate from college." Its worth noting, though, that the Ivys provide much smoother entry into jobs in high finance than less selective schools, so if one's only goal is maximizing salary it does make a difference.
      • hedgie 14y ago
• vannevar 14y ago
  Can someone please explain to me how what is happening in higher education is any different ? Sure. The big difference (enormous, really) is that unlike homes, there is no secondary market for diplomas. We talk about an education as an investment, but in truth the 'asset' is us. One reason the housing bubble was so devastating was that if one person defaulted, it marginally depressed the value of everyone else's home. If someone defaults on their student loan, it doesn't make everyone else's education less valuable. The student loan debt problem is much more like the credit card debt problem, which exacerbated the housing bubble but on its own had nowhere near the cascading impact. Student loans are a problem, but they are not a crisis. We should be much more concerned that there has been no meaningful banking reform since the 2008 crisis, and that banks are still gambling on dangerous derivatives whose real risks are unknown and quite possibly incomputable.
• deleted 14y ago
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• robomartin 14y ago
  During the early part of my working life I had the experience of not getting a job due to the fact that I did not have a degree. It was a junior embedded programming job. I was 19 and just getting going with the college thing. The guy that got the job had a degree in landscaping and had taught himself some programming with an 8085 board that was popular at the time. I know because the owner of the joint was kind enough to tell me. I was probably too young to put-up a fight and state my case with authority. By the time this interview came about I had probably built and programmed no less than eight computers of my own design. I had programmed in assembler and written my own Forth compiler. I probably knew the architectures of nearly every popular microprocessor available at the time (80xx, 65xx, 68xxx). I had been an electronics hobbyist since probably the age of 13. I knew more and had certainly done more than the aforementioned job-robbing landscaper. Again, I'll mark that off to, at 19, not having the chops to state my case and fight to demonstrate that I was the better candidate. As it turns out a few months later, as luck would have it, I would land an entry level engineering job where skills and work ethic were valued far more than anything else. I rose to a level of being solely responsible for multi-million dollar engineering projects while still attending school. In my case it turned out OK in the end. The issue is that a degree is a check-mark item that a lot of companies use for filtering. Just one look through job on Monster and you can see that lots of them have degrees as minimum requirements. If you are dealing through an agency you might not get past the first filter, no matter what you know and what you've done. In the case of Mr. Cuban, it'd be interesting to hear about examples where his organization has hired people in spite of not having a degree from a traditional institution.
  • krschultz 14y ago
    Sadly, it's never too late for it to backfire onm you. Although it has 'worked out ok' up to this point, I had a neighbor who was 58, and in 2008 when the company did a round of layouts, they fired him because he was the only guy in the department without a degree. They had to pick someone 'objectively', and that was their criteria.
• dkrich 14y ago
  I agree with everything he wrote, except for the predicted outcome. With the housing crisis, there was a bubble that burst because the credit markets froze and suddenly nobody had access to capital. That is what caused home prices to collapse. It wasn't that people suddenly realized that homes weren't a good investment. With college, most of the loans are guaranteed by the federal government. Some are issued by the federal government. If there is a bubble, the fallout will be with the American taxpayers and not the colleges. Politicians can't (and shouldn't) allow universities to go belly-up. Recently there has been a backlash against traditional colleges, and much of that criticism is well-deserved. But the reality is that the U.S. has the greatest higher education system in the world. It is probably our single greatest competitive advantage. Mark Cuban talks a good game, but where does he think scientific research and development takes place? I can assure you it isn't the University of Phoenix. If student loan debt continues to accumulate at the pace it has been, then the power will shift from the government to the students. What happens if tens of thousands of college grads simply cannot pay their debts or choose not to? After all you can't pay back money you don't have, and it's not as if there are tangible assets for the government to take. It's like the saying goes- if you owe the bank $1,000, you've got a problem. If you owe the bank $1,000,000, they've got a problem. The government has to start limiting these loans and the problem will correct itself. People should never be enabled to buy things they can't afford. Much of the housing crisis was caused because the government wanted everybody to own a home, and now the student loan crisis is happening because the government wanted everyone to attend college. But not everybody can own a nice home, and not everybody can afford to attend a college with $40,000 tuition.
• BarkCuban 14y ago
  Mark Cuban needs to take an college writing class. I thought this was written by an 8th grader.
• linuxhansl 14y ago
  One more example why "let's fix the problem by providing cheap money" never actually fixes the problem. The "cheapness" of the money will just be priced into the goods (houses or education in this case). (As an aside, the same is true for the tax-deductible interest on mortgages nonsense. People think they actually save money, when in fact that advantage is immediately priced into the houses.) Where I am from university education is free. Of course seats are limited, so you need to be reasonable smart (but by no means a genius) to get in. Not ideal either, but at least your education is not defined by your wealth or your willingness to go into debt.
• ThomPete 14y ago
  The only thing that will make the economy better is if more people try and create businesses and find niche areas that allow them to hire people. To do this risk taking and courage is needed. Two things you do not learn in the university. We need more people who are ready to challenge their fear of failure than their intellectual score card.
• gfodor 14y ago
  The author is right about some things, wrong about others. He's right that student debt is a timebomb. Anyone who knows a student struggling with it realizes this. The amount of debt students are saddled with is astronomical, and has turned this generation into a one of indentured servitude to their financiers. Something is going to have to give. He's wrong, at least somewhat, on what the future holds. There are multiple roles to a university, and multiple motives to developing a higher education. I think some of these roles are ripe for disruption, others not so much. It's hard to imagine graduate-level research happening in any other environment than an academic university. It's easy to imagine an undergraduate education in engineering or mathematics being delivered and certified completely through the internet. Harder to imagine, but possible, are "micro-universities" which pop up organically that criss-cross with meatspace, which re-use existing course materials for information transfer but also incorporate the less tangible things such as "learning to learn" and in-person collaboration. I can imagine seeing job candidates walk in the door that have a completely custom education, self-driven by their own particular desires and nurtured and accredited as focused, disciplined study by these micro-universities. It's truly an exciting time in education. I imagine the initiatives we're seeing now from Khan Academy, Coursera, and Udacity will be looked back upon as groundbreaking but charmingly rudimentary 10 years from now. I expect big things as more and more smart people begin to tip-toe away from traditional educational models and take bigger risks, both as students and as teachers, by inventing new models for education.
  • tmh88j 14y ago
    >It's easy to imagine an undergraduate education in engineering or mathematics being delivered and certified completely through the internet. Mathematics, yes. Engineering, no. Am I one of the outliers that feels labs are essential to solidify what you've learned that week in class? Sure you can learn EE basics such as mesh analysis, but when you start to venture into logic design courses where software alone won't cut it things get tricky. For the majority of people, debugging a robot in even the most introductory courses would be a nightmare without an experienced person or even someone to look over it with.. How about chemistry students. Good luck setting up a lab at home. How ME classes dealing with material properties and testing? There are plenty of courses that do work out well online, but some cannot simply stand alone.
• jeffool 14y ago
  Here's a revolutionary idea: let's make bankruptcy easier. I've paid more than I borrowed, and I still owe more than I've paid. I have dozens of thousands of dollars in student loan debt, and I'm on the doorstep of defaulting on some of it. Mark Cuban's right. The money is insanely easy for everyone to get. Sallie Mae, AES, and the rest are happy to give students money. Colleges are happy to take money from students, and pass or fail (I failed), bad situation or not, the guarantors will get their money from the student. Legally, you can't escape that loan via bankruptcy. The guarantor can even garnish your wages. I don't WANT to support bankruptcy. I certainly didn't think I'd be in the situation to have looked into it when I took that first loan out in 2002. But a funny thing happened on October 17, 2005. On that date, all federal student loans, even private ones, became effectively immune to dismissal via bankruptcy. Now, the law still says "excepting such debt from discharge under this paragraph would impose an undue hardship on the debtor and the debtor's dependents", but call a lawyer. They will tell you, flatly, "you can't dismiss any federal student loan debt through bankruptcy." Not "it's hard", but "you can't". (Seriously, call one up for free and ask if they handle bankruptcy cases with large amounts of student loan debt.) As it is, currently the only loser in the system is the borrower. The school gets their money up front, the lender gets theirs from the guarantor, and the guarantor gets theirs from the borrower, even when it's blood from a stone. 1/5th of students default on their debt. That's not even counting those that make payments, but are barely getting by. Let people get out from their student loan debt, and, well, I'm not talking about dumping a trillion dollars into the economy. But many people who can barely make rent (or those like me who can't), are suddenly covered. I'm off couches and renting an apartment. People in apartments are buying homes. People scraping buy are making leisure purchases.
  • atlbeer 14y ago
    So when this debt is dismissed from your balance sheet who repay's the lender? Apart of the reason of the low cost to borrow for student loans is baked in the non-dismissal of the debt. It lowers counter-party risk for the lender therefore they will give a lower rate to the borrower. If you allow student loan debt to be dismissed with bankruptcy then you increase counter-party risk and increase the cost of those loans originally.
• arnoldwh 14y ago
  The point I thought was interesting was how Mark Cuban talked about the Innovator's Dilemma for many universities that don't believe in or support online learning. I'd venture to say the education model experienced this same sort of ID (Innovator's Dilemma) when writing/print became available to the masses. What was traditionally taught via in-person sessions (e.g. Socrates => Plato => Aristotle) could now be written down and distributed. Sure, if you optimize for depth of learning, you won't get anywhere near the quality of having Aristotle teach you in person. Then again, unless your last name is "The Great" (Alexander), you're probably not going to get Aristotle as your teacher. What we're seeing now is remarkably similar. You have elite legacy institutions available to a few, while technology has progressed enough to make it available to the masses. I understand the point about how great a "signal" it sends to potential employers and why that's necessary, but now that more and more of your work can be online, it's easier than ever before to send the right signals.
• josscrowcroft 14y ago
  This is a fantastic article but I really wish people would stop saying "I could care less" It's "I couldn't care less", as in, it wouldn't be possible for me to care any less if I tried, because I care so little. If you say "I could care less" you're logically implying that you do care
• zissou 14y ago
  The real problem with college education in the US is that the majority of the students don't start to plan their career until after college is over. Far too many believe the value is in the piece of paper, so that's all they care about, which turns out to be a terrible allocation of your resources. Obtaining a job is a signalling game. Having a degree is one signal you can provide to employers, but there are also many other equilibria. In other words, there are many ways to signal a good match to an employer. A person's "college years" need to not only be treated as a time to figure out what you want to do with your life, but perhaps more importantly, what you DON'T want to do with your life. The notion of leaving high school then going to college and finishing in 4 years as being the "right way to do it" lacks some key pieces of relevancy. Figuring out what you don't want to do doesn't just teach you what you don't want to do, but it also teaches you wisdom; wisdom that can only be gained by real world experience.
• SagelyGuru 14y ago
  Having taught at a university for many years, I came to realise that I can predict students' final results really well just by setting them a simple exercise in the very first lecture, before they learned anything. In other words, the results are dependent entirely on their ability. The employers should be able to set similar tests themselves. Furthermore, it might make more sense to both employers and employees to hire bright 16-18 year olds and give them an in-house apprenticeship. Even if they are paid initially less than graduates (do the accounting on that, versus servicing huge loans after four years of no earnings). What I am trying to say is that a typical recruitment target, a bright graduate, was just as smart at 18 and you could have got him first, cheaper and happier, then. After those four years with you, if you are any good at inspiring and advising, he should also be a lot more use to you than straight out of college.
• kennethcwilbur 14y ago
  The analogy to the mortgage market is wishful thinking. Remember the massive fraud that led to the easy lending that led to the money drying up when the fraud was discovered? There is no similar pattern of activity in traditional education. Higher education disruption is unlikely. It is difficult for an uneducated person to accurately assess the value offered by a school.
• Ra1d3n 14y ago
  In the USA. Don't forget that. I'm a masters student of computer science in Austria and my debt is (depending on month) 0€ - 500€. Same in Germany. Same probably everywhere in the western world except the USA.
• galfarragem 14y ago
  One of my college teachers used to say: "People should come to college just for one thing: to make friends". It seems funny but in college you get the possibility to meet people that excel within any field of knowledge (mentors or other students that can become your partner in a startup for example). People in college have TIME to hang out together, that is crutial. I took already some online courses and is not the same. They are just a complement in any education. Sorry.
• rs3123 14y ago
  "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." - a counterpoint: I teach in the business school at an accredited public land-grant university in the US northeast and interface with several HR managers / campus recruiters from major companies nearby, including a fortune-5 and three fortune-50 cos. Almost all companies have minimum GPA cutoffs to even interview a student. Higher GPA increases a student's chances of getting hired. Recruiters frequently ask professors to recommend the best students in their class. That "piece of paper" mentioning the student's grade is fairly important, as are people-skills and attitude. Doing well in class signals a candidate's work ethic.
• mfieldhouse 14y ago
  Every time I see a discussion about university education, the wrong question is always being asked and debated: "Do you really need degree X for job Y?". Of course domain specific knowledge and further education is a good idea. The 3 questions that need to be asked are: 1: Is it relevant to the job? 2: Could the material be learned quicker and more in depth working on the job instead? 3: Is university overpriced?
• drone 14y ago
  This general topic has been of a lot of discussion in my household lately. My partner, let's just say she's been pursuing a career in the arts (as a classical performer). Her and I both recognize that the median salary for people in her career path is around $38k/year. She has been conditioned to believe that no one can even attempt to get into her chosen career (many times more applicants than available positions, to use the terms loosely) without a master's degree from one of the top schools, and again through one of the top studios in one of the top schools. The problem here is that once she was accepted, we did the math. We'd be taking on an additional $60k in debt for this two year program, in addition to the existing $40k in debt already accrued. That makes a total of $100k in debt, at an average interest rate of 3.5%. All, for the "opportunity" to get a $38k/year job. Even though she recognizes that the financials simply don't work, she has a hard time with the concept, and still is looking for ways that we could afford it. I've been working hard with her to show her different paths into the market (using more standard entrepreneurial tactics: building a team, creating opportunity one step at a time, building a market for your "product" over several years, etc.) but the professors keep telling her she can't get the job without the additional degree. Sometimes, I wonder if the professors are not simply selling themselves and "capturing" their market. Then again, I consider they're likely not being manipulative, they simply only know the paths they took...
  • saturdaysaint 14y ago
    You guys should look up the forums full of angry law and humanities grads with no job prospects and devastating debt - http://chronicle.com/article/The-Big-Lie-About-the-Life/63937 http://chronicle.com/article/The-Big-Lie-About-the-Life/6393...
    • drone 14y ago
      The sad part is, she has plenty of real-world examples around her. Her part time job singing is also staffed with people who got their grad degree, who barely get by on a few part time private teaching jobs and the few part time singing jobs. She watches them struggle to even pay their loans, but the story keeps being told "But it may be that they're just not as good as you." Part of it, I suspect, is that especially in music, they start training and teaching kids when they're very young. This is all they know by the time they leave their undergrad studies, and accepting the idea that the path they've been on their entire life may not be viable sounds a lot like "giving up before the race is over." Rational arguments be damned.
• EzGraphs 14y ago
  The typical university tuition is over-priced. Once can get employable credentials or education with much less of an investment. That said, a comparison with the housing market does not provide a particularly clear parallel of the dynamics involved. * In the housing market, there were a significant number of investors speculating and "flipping" properties. A major difference with college degrees is that they have a single owner. * A brand new pool of college applicants becomes available each year. Based upon borrowing practices and selection of majors, they for the most part appear unaware of the consequences of the expense. The initial four-year degree is generally only acquired once per buyer. * A house could be sold or re-possessed to immediately recapture some of its value. There is no way to resell a degree to effectively withdraw a portion of its cash value. The common factor that will have a more immediate effect is the availability of government loans. If there would be a "credit crisis" for education that would result in student loans becoming more scarce, the resulting reduction in demand could lead to something of a "bubble burst" scenario.
• crazygringo 14y ago
  I would love to see some kind of "university achievement test" that you could take at the end of college, or at the end of simply studying on your own. A test that would actually evaluate real critical reasoning and analysis of the sort that you're "supposed to" develop at university. (Of course, writing such a test well would be extremely difficult, and it would probably have to have a different version tailored for each kind of major.) But it could serve two purposes: first, it could allow intelligent and driven students to bypass college completely, but still have something that will give them equivalent respect from employers. But secondly, it could also reveal that many colleges aren't providing educations worth anywhere near what they're charging, and thus either drive prices down, or else force them to raise their standards.
  • ch00 14y ago
    Good idea, but I think some sort of achievement test at the high school level would be even more effective at revealing the quality of preparation students have received for college. Fortunately we already have tests like this and not surprisingly, they show that students are terribly underprepared for an undergraduate education in nearly every subject. Clearly an undergraduate education received today is not commensurate with the costs to the student, especially when the student hasn't be rigorously prepared for a collegiate education in high school. But the problem is so much more than the price of tuition.
• Havoc 14y ago
  I agree with a lot of the points raised in the article. However, the author makes it sound like going to university is a foolish choice. Sure its overpriced & the crappy degrees aren't any good, but on the whole going to uni is still the correct call in most cases. Round here its just a matter of selecting a sufficiently vicious degree. Worked for me: I had (multiple) employment offers lined up ~6 months into the 4 year course. So did the majority of my classmates. Perhaps I'm biased since it clearly worked out for me, but still I think this whole thing about tertiary education being overrated is BS - at least for the proper degrees.
• yashchandra 14y ago
  undergrad degree: 4 years is a waste of time. make it 2. rest should be spent doing practical work (not coffee making interns). initial 2 years: focus on communication skills, analytical skills and just simply how to carry yourself in the world. Learn how to manage money, time and your lazy ass. grad degree: Unless you want to be a researcher or you just like being in school, this is useless PHD degree: Enough said.
• crasshopper 14y ago
  Cuban: "Can someone please explain to me how what is happening in higher education is any different ? You can't refi an education or sell your education to someone else. You can't pay someone to refurbish your education while you're working at your day job. You can't rent out two thirds of your education while living in the crappy part. And so on. I'm not saying there's no bubble, but the two asset classes are clearly different.
• starrunningb 14y ago
  The problem with most colleges is that the extrinsic cost doesn't equal the intrinsic value of most degrees. People go to college because of the "truth" that a degree will lead to a better salary, but the bubble pops when you graduate with a $100,000 in debt but can only get a minimum wage job.