These days, it seems like every economic activity ends up in a bubble-like state where we believe that there’s no such thing as enough, and the price keeps rising until the excitement pops and demand instantly crashes. Because of the rate higher education costs have risen recently, some analysts are left wondering if this too, is a type of demand-bubble set to come crashing down on unsuspecting college students, professors and administrators.

However, people are actually more likely to turn to college when the workforce gets too competitive. Instead of crashing with the banks and investment funds that finance much of education, the schools themselves are seeing a lot of increased interest from people who were recently laid off or those who want to sharpen their skills as a means of protecting their current jobs.

While wages and therefor the value of a degree have dropped marginally in the last few years, the total net profitability of a college diploma still makes it an economically sound investment. For the most part, people with college degrees will make far more money than those who never achieve a post-high school specialization.

Yet despite the value of college, the way we approach funding it may very well be creating a sort of finance bubble that does inflate its costs. More than ever, students are turning to loans in order to pay for their educational bill – and this means interest payments and a secondary market for speculation on securitized loan values. Much like mortgages and their derivative positions are traded for profit on an open market, so are student loans traded and treated as a vehicle for speculative profit. Now, profit isn’t a bad thing, but if its being made in a way that is not essential to the product or service being provided, it isn’t very efficient.

And these days, we need all the social efficiency we can find. Decades of letting waste slide have put us on an unsustainable trajectory – and the best bet is to reduce middle-men costs wherever possible. Students should do what it takes to avoid debt, even if it means choosing a cheaper school or a slower degree time-frame, and voters & education advocates should demand highly affordable public college choices. A well-educated population benefits everyone, so there’s no reason to cut back here when we need every business advantage we can get.

4 Responses to “College is not a bubble, but the way we pay for it might be”

  1. Student loans are always positive when they enable people to have access to education which is so beneficial. This is a free market economy so of course there will be profit made

  2. The info you have provided is fantastic and really puts the student loan debacle in perspective. What have we learned from the housing market? In other words, how can we fix this now?

    Julie Abbott

  3. I really hope that the situation with the colleges will be improved, otherwise a great number of societies will be undermined as education plays an extremely important role if we talk about development of whole countries and the modern world itself.


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