The Education Bubble

Last updated on November 15, 2017

What is the Education Bubble? The education bubble compares the growing interest in college education to previous boom markets that failed, such as the housing and dotcom markets. A bubble describes that which is overvalued. Due to today’s economic downturn and record high unemployment rates, a college education has been used as a safety net or insurance policy.

The assumption is that if you receive a college education you will be safe from unemployment, which is not the case. With the rising cost of college tuition and a stagnant job market, a college education may not be a safety net after all.

Will the bubble pop?

Some experts suggest that the bubble is real and that, like other oversaturated markets, it will burst at some point. According to the president himself, regardless of efforts to provide financial aid to students, the cost of a college education is still on the rise, making it more difficult than ever for individuals to attain an education.

It is important to understand what a college degree is really worth. Many parents automatically assume that sending their children off to college is the next step after high school graduation, but they don’t analyze whether this is the best option.

Just as the dotcom and housing bubbles led many people to overcommit to what they thought would provide a sure return on their investment, some parents push their children to go to college because they have been taught that education is a sure investment.

Is a College Degree Really Worth the Cost?

For the first time in decades, people are asking themselves whether earning a college degree is worth the price tag. College tuition and fees are rising at a faster pace than the average household income, and students are graduating with staggering student loans that closely resemble mortgages.

Consider the financial cost and salary difference

Unfortunately, there is no single answer to whether a graduate degree is worth the cost. It is true that college graduates do earn significantly more over a lifetime than workers without a college degree, but the answer to whether a degree is worth the price depends almost completely on the field you are entering and whether you will have to take out student loans to finance your education.

This discussion is slightly different at the graduate level. If there is very little difference in salary at the graduate level in your field, it does not make sense to take on student loans in order to go to school full time. However, if you are currently employed and receive a significant amount of tuition reimbursement, the benefit of a graduate degree begins to outweigh the cost, even in fields where the salary of professionals with a graduate degree is only 10% higher than the salary of those with an undergraduate degree.

In order to answer the question of whether a graduate degree is worth the price, you’ll have to conduct a thorough analysis of projected earnings of professionals in your field, and more specifically, those who studied at the school you are considering. Ask your preferred school for detailed employment and salary data for graduates of the program you want to pursue. Also, the Bureau of Labor Statistics outlines detailed salary information for professionals in your field across various degree levels.

In answering the question of whether a degree is worth pursuing, money is not the only factor to consider. A college education, at any level, enhances your critical-thinking skills and your knowledge of research methodology, which are assets that can be transferred to any field. Also, if you are passionate about a field and the only path to that career is a graduate degree, student loans might seem like a small price to pay to do something you enjoy.

Are Too Many People Attending College?

Implicit in the concept of the education bubble is the idea that too many people are attending college. Some deny this, arguing that a more educated workforce is beneficial to everyone. What’s more, jobs that did not require a degree five or ten years ago are requiring one now.

For example, to get a job as a waitress years ago, experience was enough, but today some restaurants look for those who hold a degree in hospitality. You may ask why, but the answer is simple: Companies can request a college degree of workers because there is a surplus of qualified candidates.

Colleges and universities are producing more graduates than there are jobs for, so the result is increased eligibility requirements for many jobs that did not previously require a college education.

Given the abundance of college-educated candidates, there are students that graduate with mounds of debt and never find a job in their field. Meanwhile, recent data demonstrate a shortage of workers in the trades, especially in the home construction industry, where an expensive college degree isn’t necessary to find employment.

Surviving the Education Bubble

As a prospective college student, the more informed you are, the less likely you are to fall victim to the education bubble.

  • Do your research now in order to make sound decisions and avoid overinvesting in an education.
  • Examine your situation carefully to determine if a college education is really the best option for you.
  • Analyze the field you want to go into and decide if you really need to pursue higher education to achieve your dream job.

After you have exhausted all the field-specific resources online, contact professionals in the field to get their input. They may have valuable insider information about the latest trends in your field that can help you make your decision.

Also, conduct a thorough analysis of your financial situation. Contact a college financial advisor and calculate exactly how much your degree will cost, taking into account tuition increases throughout your program. Leverage all scholarships and grants, not just financial aid. Winning a generous scholarship might tip the scale in favor of pursuing a degree.

While the bubble is worth serious consideration, knowledge will help you beat the bubble and defy the statistics.