Anthony Kammer
I should be clear: I am delighted to be graduating with my degree. But in commemoration of my final week of law school, I’d like to use this opportunity to consider the macroeconomic implications of the increasingly hard-to-deny bubble in American higher education. Pointing out this bubble’s existence has become a kindof de rigeur exercise among online commenters. The basic point is this: the cost of higher eduction continues to rise rapidly while the real risk-weighted value of a degree declines.
Nevertheless, American families, banks, and even the U.S. government continue pouring more money into this depreciating asset. There are speculative aspects to the higher education industry (like online for-profit degree mills), but what’s driving this bubble is a Hobson’s choice: even if higher education is a scam, not having a degree looks like an even worse fate. Like housing, education is almost an economic necessity in our society. That is precisely why the housing crisis has been so virulent, and it’s why an education bubble is so troubling. What many commenters have found particularly ironic about this whole situation is the complicity of our most esteemed educational institutions in translating that necessity into massive profits and ballooning endowments.