Glenn Reynolds writes today about the higher education bubble:
Pretty much everyone agrees that the increases in tuition (which have vastly outpaced consumer prices and family incomes) and the growth in student-loan debt (which now exceeds credit-card or auto-loan debt) are unsustainable. As economist Herb Stein famously said, something that can’t go on forever, won’t. So, how should we respond?
For students, piece of advice No. 1 is: Don’t go into debt…
Debt is what gets people into trouble in bubbles: They borrow heavily because they think the value of what they’re buying, whether it’s a house or a tulip, will go up. When it stops going up, they’re sunk.
Today, the value of an education isn’t going up, but the price is. That’s a bad combination. So don’t borrow heavily.
Aside from the fact that most “higher education” is not really “higher” and much of it isn’t “education” in any sense, there is a tragic element to America’s structural defects. For most people seeking to avoid being upended by the vicissitudes of life, it used to be fairly straightforward: 1) get an education – you’ll always have “something to fall back on”; 2) buy property – your investment will be “safe as houses”; 3) take care of your health. Government distortion of the market has ruined three key pillars of stability. There isn’t a lot left to wreck, but I’m sure they’ll come up with something.