The Higher Education Bubble (Part 1)

I can't pin my finger on it, but this feels too hand-wavy to me. AFAIK, the housing market crash was caused by bad lending - people with bad credit were able to get loans for homes for far more than they could afford (in the hopes of flipping the home), they defaulted, and the banks are left holding the bag.<p>Could this happen to higher-education? Could too many graduating students defaulting on their loans cause problems for future students in obtaining loans? I don't know how student lending works (how does a bank know when or when not to issue a loan to a student?), but I'd wager that if they aren't taking into account a student's performance record and potential future earnings, they will soon.<p><i>Google break</i><p>Huh. It looks like they don't [1]. It would be interesting to learn why they haven't yet, it seems like a good idea. It's certainly reasonable to think that there are more factors to take into account (I'm thinking that of moral/ethical considerations mentioned in the linked paper).<p>[1] <a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1941070" rel="nofollow">http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1941070</a>

Not all degree's are equal.<p>I can't imagine any engineer saying that they cannot pay off their student debt because they cannot find a well paying job.

Taking the Harvard endowment's performance in 2008 (a year in which the S&#38;P 500 lost 40% of its value) as a measure of the change in the availability of financial aid is... strange.

It would be interesting to see how MOOCs (Coursera, Udacity etc.) will change the education landscape. Personally the MOOC courses have been far more useful to me than any university courses I took. If getting a job is the sole criteria, I can see a time where university courses can become irrelevant compared to free online courses.

I think the major problem with higher education is two things.<p>1) Inflation. So many people are now getting degrees that they are starting to mean less and less. But since so many people have a degree its starting to become a necessity for jobs that use to not require them.<p>2) People see Higher education as something it was not designed for. Training for a job. Historically (unless your going into a professional program such as engineering or medicine) education was designed to help in the quest for knowledge, not as a means to get a good paying job. And we are starting to see this more and more. A BA may give you tons of knowledge in literature, or history, or whatever your major is but more often then not this knowledge is not preparing you for a job, it is acquiring knowledge for the sake of knowing.

Is there a way to reconcile their graph, which shows the cost of education going up by 1000% on their index, with the statistic, lower on the same page, that says the cost of education has gone up by 439%?