Just as government policy created the "housing bubble", with cheap money and subsidized and easily available loans, they've also created the "education bubble", which has allowed the exact same thing to happen in upper education. For generations now, the cost of a college education has been consistently exceeded the rate inflation by a factor of at least 2, as consumers (students) have continued to be able to bid up the price of a college education because of the continued availability of seemingly easy financing.
The only question is how long we will continue with the current policy. Once the easy money is gone, I assure you tuitions will come down as well.
Daniel Honan pulls no punches in a new Big Think piece on the toll soaring educational costs have on our society: It’s an innovation killer that is draining resources of potential talent:
“There is now more student loan debt in America than credit card debt (it is estimated to be $903.6 billion). According to [NYU Stern School of Business Professor Scott] Galloway, ‘it’s getting to a point where no graduate of a four-year college or graduate degree program can go out on their own and start their business because they have this incredible weight, this Albatross around their neck called student loan debt…. the key to innovation in the most powerful economy in the world is letting young people have the freedom to start their own businesses.’”
An entire generation of entrepreneurs is essentially being silenced, Galloway fears. And, entrepreneurship is the most promising path — or perhaps the only path — with the massive shifts taking place in the global economy, . A new US Census report finds only 55% of young adults 16-29 were employed in 2010, down from 67% in 2000.
This may also be one more factor in the coming creative destruction of the economics of education, in which coursework is offered on a more cost-effective, incremental basis as part of lifelong learning.
Now is not the time to price people out of college, or silence their entrepreneurial visions. More accessible and cost-effective forms of education are needed if North American companies are to secure the talent and innovation needed to compete in the emerging hyper-competitive global economy.
