Sun, Apr 24, 2011 in News by admin, Comments Off

Higher Education’s Toughest Test


In the debate sparked by Peter Thiel’s “20 Under 20 Fellowship” (which pays bright students to drop out of college), one fact stands out: the cost of U.S. post-secondary education is spiraling upward, out of control. Thiel calls this a “bubble,” similar to the sub-prime mortgage crisis, where hopeful property owners over-leveraged themselves to lay claim to a coveted piece of the American dream: home ownership.

Higher education is another piece of this dream, offering a chance at social advancement and the potential for a high return on investment. During the sub-prime crisis, brokers financed home sales on the belief assets would appreciate. A similar situation is brewing on U.S college campuses, where institutions extract high tuitions from consumers in exchange for degrees and credentials that are thought to be like homes—assets that will always appreciate in value.

An investment in college education has historically been a smart bet. However, in the same way sub-prime housing models didn’t accommodate for potential price falls, the belief that the value of a college degree will always appreciate is potentially flawed. And, if the value of a degree stagnates while its price tag soars, our higher education system will become unsustainable.  Some are going so far as to claim that some university degrees already lead to a negative return on investment.

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Higher Education’s Toughest Test

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