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The Higher Ed Bubble Is No Myth


At Forbes, John Tamny takes issue with the notion of a higher ed bubble, claiming that it’s based on a misreading of what parents and students hope to get from a college education. If their goal were knowledge, he says, the bubble would have popped long ago; instead, they’re using a degree as a signifier of talent to employers, as well as a source of career networking. Online education, which provides neither of these things, is thus the bubble that’s more likely to burst, says Tamny:

There isn’t [a bubble] not because Yale and Stanford students learn anything of real world value, but because each school is a door opener. Attendance at either university properly signals to employers that the graduate (or dropout for that matter) is smart, probably hard working for having been accepted, and in possession of one or both of the attributes, that the individual can likely learn the skills necessary to achieve on the job.

Online education would bring with it real economic value if employers actually cared about the knowledge gained on campus. The problem is that they don’t. Education has little value no matter the school.

Tamny is right on a few points. The traditional college experience will remain a valuable investment for some, and for the foreseeable future the nation’s top schools will offer a product that will command a premium price. Campus networking at elite schools will be an important career-starter, and employers will also continue to view degrees from these top schools as signifiers of exceptional talent. Graduates of elite schools will still have a leg up on their peers in the job market.

But most schools are not Yale or Stanford. It’s at this middle tier of schools and below, home to the vast majority of students, where Tamny’s argument is much less persuasive. It may make sense to take out tens of thousands of dollars in loans for a Harvard degree; it’s harder to make the same case for doing so to pay for a degree from a lesser-known liberal arts college or state school.

And contrary to what Tamny argues, employers do value knowledge. To be sure, various studies have shown that employers find that recent college grads lack even basic professional skills. But this is a sign of misplaced educational priorities at universities more than it is a sign that employers don’t care what their employees know. Particularly for students who don’t get into an elite school, a college education would actually help them in the job market if it gave them marketable skills that made them workplace-ready upon graduation.

It’s these students, not those attending top-ten schools, that are inflating the bubble. They are the ones with the most to gain from the low-cost, “stuff-learned” models powered by MOOCs and other innovative approaches.

[Mortar boards image courtesy of Shutterstock]

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  • Daniel Fusch

    It’s interesting to see how much conversation there is around the idea that higher education might be the next financial bubble. In a new report “The Other Higher Ed Bubble: The Bubble We Aren’t Talking About” (June 2013), Amit Mrig makes a persuasive case that there is a more significant “bubble” that isn’t being talked about — a “denial bubble.” Mrig gathers data on higher-ed leaders’ denial of what changes will be needed over the next 5-10 years to keep at-risk institutions both viable and competitive.

    The report:

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