Glenn Reynolds on The Brian Lehrer Show talking about the higher ed bubble.
Students are more likely to live at home during college. Some of the findings from the Sally Mae report.
More about MOOCs in the New York Times.
24 thoughts on “Higher Ed Links”
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Apt. 11d 
When we bought our house in 2002, we were convinced that we were buying at the top of a bubble, and would never be able to get our money out, if we needed to. Optimistic that we wouldn’t be moving soon, we bought anyway (and haven’t moved).
We were correct that we were buying in a bubble, but I am so glad that we did not wait the 6+ years until the bubble popped before we bought. Identifying a bubble may make you feel smart, but it doesn’t really give you any idea of how to respond.
I mean, how can I “short” college?
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“I mean, how can I “short” college?”
Refuse to spend $50k a year per kid on it?
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When there was a internet stock bubble, companies like pets.com could raise hundreds of millions of dollars without any plans to make profits. When there was a housing bubble, some people were bidding up the prices of houses that they wanted to flip and other people were getting their real estate licenses, flooding the market for real estate agents.
It seems to me that, if there were an actual “bubble,” we would be seeing lots of new colleges opening. Are we? If I wanted to buy a plot of empty land, open “South Jersey University,” hire a staff full of new PhDs who couldn’t get a job, and more seasoned teachers stuck in adjunct hell, and pay them all 80-90% of what tenure-track professors earn at Rutgers, could I do that? Could I streamline the administration and cut down on costs and charge “only” $12K per year and provide a good education?
If there is a bubble, there should be lots of people with that idea opening lots of colleges to get the “free” loan money and pick up all the kids who aren’t making it through the existing schools. But I don’t think we are seeing that.
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But you know what I am seeing, Ragtime? Lots of online colleges and MOOCs. Admissions at community colleges are going up, up, up. The higher system is really a big mystery to people, so they’ve continued to pay for mediocre classes at Fairleigh Dickinson and other nonsense schools. There’s a pushback happening and a LOT of anger out there. Not so much with our towns. Our kids will go to the elite schools no matter what they charge. The anger is happening at students who are getting chewed up in the lower tier schools.
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I don’t see new colleges (except the online ones), but I do see lots of new programs at existing colleges and a fair number existing colleges opening of whole new campuses.
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I completely agree that there is a problem. I am just pushing back on the idea that the problem can be logically or best considered to be a “bubble.” In particular, the lack of added capacity makes it hard for me to see how the higher education bubble is going to “pop.”
People are getting angry about mediocre classes at Fairleigh Dickinson, sure, but there is also a 68% acceptance rate. So, even a 25% drop in applicants wouldn’t require FD to do anything differently except increase their admissions rate.
Meanwhile Community Colleges are largely subsidized by governments beyond just making loans available. People are having problems now finding classes they need to take to graduate. If people stopped going to Community Colleges, that would be less of a bubble popping, and more of a relieving of the pressure on an overworked and underfunded system.
To be a bubble that is going to pop, there has to be a point where funding dries up and demand drops well below supply. That could completely happen if someone had opened a new “Mega University” with 100,000 undergraduates paying $50K per year.
Maybe I am wrong, and next year or in three years there there will be a real “pop” and admissions applications will drop by 33% and bottom tier schools will not be able to fill up all of their seats without dropping their prices. But I think it is more likely that “bubble” is the wrong framework to view the problem through. Or, if there is a bubble, we are just at the beginning of it — not the peak.
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Aren’t we seeing new for-profit schools?
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“Or, if there is a bubble, we are just at the beginning of it — not the peak.”
No way. For that to be true, there would have to be lots more money available to pour into higher education, and I don’t think that’s true. Everybody’s pretty much tappped out and people are started to calculate the return on investment of college spending (hence the recent influx of more affluent students into the community colleges).
http://gawker.com/5888596/fancy-rich-kids-expect-community-college-to-not-suck
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Tulip — I think so, but I don’t think there’s a lot of overlap. People who are overpaying for Fairleigh Dickinson are not the same people who are going to University of Phoenix for a certificate in phlebotomy.
In particular, a University of Phoenix student is more likely to be a 33 year old teacher taking online courses to get a Masters Degree, which qualifies her for a higher salary — not a 19 year old who wants to major in Communications.
University of Phoenix has 600K students, but if it were to suddenly disappear, I don’t see it affecting the applications levels at Rutgers or Fairleigh Dickinson significantly.
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No way. For that to be true, there would have to be lots more money available to pour into higher education, and I don’t think that’s true.
1. Everybody is not “pretty much tapped out.” The extreme cases of six-figure debt are, but lots more people have more “reasonable” debt of $20K or so. Could that go up to $30K? Sure. People were calling the internet a bubble in 1996 and housing a bubble in 2003. They were right, then, but would have gone broke trying to short the markets well before the bubbles burst.
2. Even if everybody in the school were “pretty much tapped out,” there is a waiting list of people who are not tapped out because they weren’t admitted. All those people who expect community college to “not suck” are paying $4K for a couple of years for the chance to get “tapped out” later when they re-apply to Fairleigh Dickinson with an Associates Degree.
That’s why I am having problems seeing a “bubble.” Calling it a bubble is a little like Yogi Berra’s “No one goes to that restaurant any more — it’s too crowded.” First, it doesn’t make sense, and second, even if the bubble popped, you still end up with a normal restaurant. In order for there to be a bubble, you need the restaurant to be surrounded by a dozen copycats first.
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Or people could just stop going to college for some of the stupid degrees in hair dressing and plumbing that nobody needs.
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Speaking of plumbing, if you can lift 60 pounds or so, changing a toilet isn’t that hard. The bottom portion of the old toilet will be heavy and awkward as you can’t really get the water out of the U bend until you have it outside.
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I’m a fan of competency-based learning, which we’ve dabbled with at my college but seem to be turning away from. This was in today’s IHE.
I also saw this article today on the limitations of lecture in the sciences.
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Or people could just stop going to college for some of the stupid degrees in hair dressing and plumbing that nobody needs.
?
People don’t to college for plumbing and hair dressing, they go to technical school. They go because that’s the licensing requirement to work in those fields.
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They also go to school because they can’t think of anything else to do.
I’m seeing a definite trend (mostly online) in parents looking for “merit” aid. In general, that means parents looking for schools to replace NYU (and, maybe Farleigh-Dickinson, but maybe not) with that will offer more assistance in paying for school. In my day, those schools used to be the flagship state colleges. But, these days, those aren’t inexpensive. So, people are looking at University of Alabama in Huntsville (and their National Merit Scholarships) and other schools like that (kids who would have gotten into NYU, and, occasional, even east coast elite, Williams, but whose parents officially can afford to pay, but don’t think they can afford the cost).
I think schools like NYU an Reed are feeling the effect of this “bubble” popping, a little bit. But, they do have a solution, as Ragtime says, they can price themselves out of the reach of the families earning 100K and take the kids who can pay. There might be a real popped bubble if there aren’t enough of those kids. But, that’s not happening yet, because there are plenty of parents who want to buy the experience for their kids, as part of the extreme parenting most of us have bought into.
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Seconded Scantee’s comments. Most states require X number of school or apprenticeship hours to become licensed, which is legally required to practice the trade. You can’t just list your name in the yellow pages as a plumber and be one after watching videos on youtube. Also, I thought the relatively affordable training a trade school or CC provides is exactly the sort of higher ed you support for most people?
The problem in our current economy is that no field is great to get into. People keep looking for an expanding career which offers decent money, but there aren’t any. Since we’re gutting white collar and skilled blue collar professions, the future lies in 1) servicing the 1%, where with luck you’re the 100k nanny, 2) working barely minimum wage jobs at places like McDonald’s & Walmart or Target, or 3) being in the 1%, generally through banking, law, or medicine (or inherited wealth). However, since not everyone can be in the 1%, these careers are also hyper competitive winner-takes-all sorts of stakes. At some point, you might as well hope for your kid to be a professional basketball player or platinum artist. Trophy wife/husband is a possibility for the 99% to tap into the 1%, if you’re good looking not young enough to make it as a model or movie star. My plan Z is to marry a Chinese multi-millionaire, since my looks go much farther in China than they do here.
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“The problem in our current economy is that no field is great to get into.”
Yup. People keep looking for the model that’s low risk & solid reward. Most of the people I know are aiming for your option #3, but are stymied by the “winner-take-all” stakes, especially when the tournament doesn’t end until later and later (say, for example, in academia, well into a woman’s child-bearing years). Medicine has the benefit that the tournament occurs when applying to medical school (right now, at least; I think medicine will change as we tweak our health care dollars, so that the tournament will shift further into finding the right lucrative employment and specialty).
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So why aren’t there any “great fields” to get into?
There was a nice column by Steve Perlstein in the WaPost about the life guard story (life guard, fired for leaving post to participate in a rescue out of his area).
http://www.washingtonpost.com/business/lifeguards-ordeal-is-parable-about-outsourcing/2012/07/13/gJQAN6TtkW_story.html
In it the author talked about “outsourcing” which was his words for increasing efficiency in professions that might have once been professional by using rules and systems that can be implemented by less trained individuals. In the author’s outsourcing model, one outsources the activity to a private company that specializes in that activity (in this case, a water safety company that apparently has a good reputation in developing systems to increase safety). The foray into hiring lifeguards was fairly new, according to the article, but the idea was the same. Hire individuals who will follow the rules and systems that supervisors set up while denying them the right to make judgments on their own. If the rules and systems you’ve designed are good, the less trained individual (more easily replaceable) can do the job. This allows you to suppress wages and hire a continuing stream of temporary workers.
It’s the McDonalds model of employment, but spreading to more and more professions. More and more cogs and fewer and fewer “1%” who make decisions, exercise thought (and have the right to exercise thought). I’m seeing implementing the model as a major goal of the education reform movement. First develop systems of teaching, then hire temporary teachers who follow the system, ultimately, pay them less. Then, the money in education centralizes, making the companies/supervisors who develop the system 1%ers, while skimming the wages that now go to frontline teachers. Depending on how much you can depress wages, the overall system might cost less (while still reaping a significant benefit for the system developers).
And, of course, all of the “system developers” jobs are going to be tournaments, and as parents, we’re faced with training our children to join/try to win the tournament, or to become cogs.
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bj,
Yeah. Ironically, Marx pretty accurately described this process around 150 years ago. We’re seeing the proletarianization of white collar careers, much like he witnessed the same with traditional industries like weaving. He also got the surplus labor stuff right too–it behooves the system to have a large pool of idle workers who can instantly replace existing workers if they try to get too uppity (and, of course, this only works if the workers are fairly unskilled). We’re definitely seeing that right now. As companies try to squeeze more and more out of current employees, those who complain are told they should just feel lucky to have a job.
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So why aren’t there any “great fields” to get into?
If I had to guess — and it’s just a guess — I would say that we’re living in an unusual time where over a third of the world (China and India and a few others) are developing really, really quickly in a way that they are getting rich and skilled enough to take Western jobs, but not rich enough to buy Western imports.
By the end of the next decade, China and India will either have stopped growing so fast, so fewer of our jobs will go there and will start growing at home, or else they will have gotten so rich that they’ll need more accountants and middle managers than their economies could produce and will start to need Westerners.
Either way, people will look back at 2000-2020 and see a blip where the Western world that successfully absorbed Japan and South Korea and Hong Kong got stuck digesting India and China for a while, and then moved on.
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That’s some economic optimism you got going there. I’m not disputing that some kind of an economic “digestion” is happening and causing many of the current problems. It’s just the timeline seems too fast by decades and ignores the large amoungs of shooting that have frequently happened when similar economic transitions have happened in the past.
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Ragtime said:
“The extreme cases of six-figure debt are, but lots more people have more “reasonable” debt of $20K or so. Could that go up to $30K? Sure.”
That sounds reasonable with a mid to high 5-figure salary, but what if the person with $20k in debt is a barista or similar? The ratios of income vs. debt are very important.
“By the end of the next decade, China and India will either have stopped growing so fast, so fewer of our jobs will go there and will start growing at home”
I think that’s probably already happening in China, which is an explanation for their ghost cities–it may represent a desperate effort to maintain forward motion. Some of their empty cities are like Three Gorges Dam-size versions of our empty Florida, Arizona, Nevada, and interior California exurban ghost towns.
http://news.sky.com/story/903086/chinas-ghost-cities-fuel-boom-to-bust-fears
http://www.businessinsider.com/chinese-ghost-cities-2011-5?op=1
From the second article:
“China plans to build 20 cities a year for the next 20 years. The unacknowledged problem is finding buyers for those hundreds of millions of new homes.
Last year we published images of ghost cities based on a report from Forensic Asia Limited. This week we asked analyst Gillem Tulloch what has happened in the past six months.
“”China built more of them,” Tulloch said. “China consumes more steel, iron ore and cement per capita than any industrial nation in history. It’s all going to railways that will never make money, roads that no one drives on and cities that no one lives in.””
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That sounds reasonable with a mid to high 5-figure salary, but what if the person with $20k in debt is a barista or similar? The ratios of income vs. debt are very important.
The decision to take out $100K in loans for law school assumes in the end you will be a lawyer and be able to pay back the loans. Similarly, the decision to take out $20K or $30K or more for college loans assumes you will not end up a barista. You generally don’t start paying back the loans until after you graduate and have your first real job (or not).
Once you’ve decided to start taking out loans to go to college, I’m not sure what a “realistic” assumption would be about how much you could afford to pay back. The average college graduate job pays $46K. If I reasonably believed that I was going to be an average college graduate, would you council me to not go to college if doing so would require me to take out $46K in loans?
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“If I reasonably believed that I was going to be an average college graduate, would you council me to not go to college if doing so would require me to take out $46K in loans?”
I have an MA in Russian lit and I’ve never made anything resembling $46k a year. I would totally discourage an 18-year-old me not to take out that kind of loan. As it was, my $6k in undergraduate loans stuck around for about 12 years, before we finally got around to killing the thing off. And those loans were at 7 or 8%–somebody did very well off of me, and they would have done even better if I’d allowed the thing to live out its natural life.
I’m a Dave Ramsey gal, so I would have a hard time even getting out the words, “You should borrow $46k for college.” For one thing, if two $46k debtors meet, fall in love and marry, that produces a $92k household debt, which is much nastier sounding and almost enough to pay for a tolerable house in these parts. Understanding that not everybody has parents who can contribute, I think I am comfortable with up to $20k in undergraduate borrowing. I don’t like it, but that’s the world we live in, and it’s realistic to think that a new graduate should be able to take a substantial bite out of that debt within a few years.
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