The high education bubble in the United States is a claim that excessive investment in higher education can have negative consequences in the wider economy. According to claims - generally related to fiscal conservatives - while tuition payments are rising, the supply of college graduates in many areas of study exceeds the demand for their skills, which aggravates graduate unemployment and underemployment, which in turn increases the credit burden of failing students on financial institutions and payers tax. Also, some claim that employers have responded to the oversupply of graduates by increasing the academic requirements of much higher work than is absolutely necessary to do the job. These claims are generally used to justify cutting public spending in higher education, tax cuts, or shifting government spending toward the criminal justice system and the Department of Defense.
Video Higher education bubble in the United States
Discussion
Benjamin Ginsberg explains the relationship between increasing the ability to pay tuition and improving the services provided in his The Fall of the Faculty. According to Ginsberg, "there is a new type of demand for administrative services that require more managers per student or faculty members than is true in the past." The Goldwater Institute echoed this sentiment with its findings that, "Between 1993 and 2007, full time administrators per 100 students at leading American universities grew by 39 percent, while the number of employees involved in teaching, research, or service grew only 18 percent. "
As discussed below, the "higher education bubble" is controversial and has been rejected by some economists. Indeed, many Americans still believe in the value of college education, although they are unsure about its quality and affordability. The data indicate that wage premiums - the difference between what they earn with a four-year college degree and what they only get with secondary school income - have increased dramatically since the 1970s, but so does the 'debt burden' incurred by students due to tuition inflation. The data also show that, although there was a slight increase in 2008-09, the rate of student loan failure has declined since the mid-1980s and 1990s. Those with undergraduate degrees are much smaller than those who are unemployed, although they are more expensive to hire (they get higher wages). The global management consulting firm McKinsey and Company projects a shortage of trained workers in college, and a surplus of workers without a college degree, which will lead to a raise, and lead to a dramatic difference in the unemployment rate. It is also interesting that the tuition for the last 4 years from 2009-12 has been steadily increasing over the years while wages remain stagnant. Inflation has been at a very low level in the US in the last 4 years and there is no reason to explain why Masters/Graduation Costs go up higher than inflation
In 1971, Time spanned the article "Education: Graduate and Employment: A Grave New World," stating that the supply of graduate students is about twice as big as expected demand in the coming decades. In 1987, US Education Minister William Bennett first stated that the availability of loans could in fact lead to rising school prices and educational bubbles. This "Bennett hypothesis" claims that available loans allow schools to increase college prices regardless of the elasticity of demand. The college rating is partly driven by spending levels, and higher college prices are correlated with increasing public perceptions of prestige. Over the past thirty years, demand has increased as agencies improve facilities and provide more resources for students. In addition, schools tend to enroll fewer students as they increase student offerings and raise prices. This suggests that it is in the best interests of schools to increase the price of schools as much as possible, provided that financial assistance ensures the ability to pay for some students and parents.
The variation on the theory of higher education bubbles indicates that there is no general bubble in higher education - that is, average, higher education actually increases income and employment with more than enough to make it a good investment - but levels in some specific areas may be judged too high as they slightly increase earnings or improve job prospects, while degrees in other fields may actually be undervalued because students do not appreciate the extent to which these degrees can benefit their employment prospects and future earnings. Proponents of this theory have noted that schools charge similar fees for school fees regardless of what students are studying, federal student loan rates are not adjusted for risk, and there is evidence that undergraduate students in their first 3 years of college are not very good at predicting wages in the future front by major.
A 2011 article on The Huffington Post, concerned about the fact that new college graduates who hire rates rose by 10 percent and that achieving secondary education finally paid off. It is also suggested that high school graduates are three times more likely to live in poverty than students with college degrees. A recent study from the Department of Labor shows that earning a bachelor's degree "represents a significant advantage in the job market". However, the article also claims that those with only high school education - unemployment are slightly higher at the 9.3 percent rate. Proponents of the article also claim that the company will likely hire applicants directly from college rather than people who have been unemployed.
A 2010 article in the Christian Science Monitor suggested the top ten benefits of obtaining a degree through higher education. It also shows that a graduate degree is financially and intangibly paid for graduates, and as a whole for the community. In November 2011, The Chronicle of Higher Education published an article stating that the future is bright for college graduates and is expected to increase. A 10% quick increase is anticipated for new bachelor employees. A survey conducted by The Chronicle of Higher Education shows that 40 percent of the 3,300 employers plan to employ graduates from all fields of study. The survey suggested stability in the upcoming job market.
A 2009 article in The Chronicle of Higher Education, concerned concerns from parents wondering if it is worth the price to send their children to college. The Economist in turn hypothesizes that bursting bubbles can make it more difficult for colleges to fill their classes, and that some building projects will stop. The Boston Herald further suggests the possibility of smaller mergers, closures and even college bankruptcies that have spent too much and taking on too much debt. National Review Writer Dan Lips has proposed that bubble bursts can lower the price of higher education.
Glenn Reynolds writes on the Washington Examiner that those who have financed their education with debt may be devastated. Reynolds continues to debate his case at The Higher Education Bubble where he notes that higher education, as "the product grows more and more complicated - and more expensive - but the cost is offset by the cheap credit provided by the sellers who eager to encourage buyers to buy. "
Further speculation about higher education bubbles is the focus of a series of articles at The Economist in 2011.
Maps Higher education bubble in the United States
Controversy
The view that higher education is a controversial bubble. Most economists do not think college education returns are declining - in fact, the data show the rate of return increases. Indeed, the educational return is much higher than the return of other forms of investment such as stock markets, bonds, real estate, and private equity. It shows a lack of investment in higher education - the opposite of bubbles. Studies typically find a causal relationship between growth and education, despite the quality and the type of education important, and not just the number of school years.
In a financial bubble, home-like assets are sometimes bought for the purpose of reselling at a higher price, and this can result in a rapidly rising price when people speculate about future prices. Ending a spiral can provoke asset sales suddenly, resulting in sudden price collapse - bubble burst. Since assets acquired through college attendance - higher education - can not be sold (rented only by wage), there is no such mechanism that would cause a sudden collapse in the value of existing degrees. For this reason, this analogy can be misleading. However, one rebuttal to the claim that a misleading bubble analogy is the observation that the 'bubble burst' is a negative effect on students who bear student debt, for example, as the American Association of Colleges and Universities reports that "Students are deeper in debt today than ever..The burden of heavy debt burdens threatens to restrict access to higher education, especially for low-income and first-generation students, who tend to carry the toughest debt burden, has continued to put resources into student loan programs rather than need-based grants, a trend that is holding back the next generation with a high debt burden.Even students who receive federal grant assistance find it harder to pay for college. "In this analogy, the increased inability of students to pay their debts would represent an explosive accident or bubble, thus causing taxpayers to save the government because of m giving bad loans - as aggregate debt ratios as compared to aggregate earnings the potential grows to a critical point, due to the limited number of high paying positions, the limiting factor in this analogy.
However, the data actually show that, despite a slight increase in 2008-2009, the rate of student loan failure has declined since the mid-1980s and 1990s. And even during recessions, those with undergraduate degrees are much smaller than those who are unemployed, even though they get higher wages.
Ohio University economist Richard Vedder has written in the Wall Street Journal that:
"The key measure of degree benefits is the potential income of college graduates - and at this score, their advantage over secondary school graduates has deteriorated." Since 2006, the gap between what the median graduate college graduates receive compared to the median high-graduate school has narrowed by $ 1,387 for men over 25 who work full-time, falling 5% Women in the same category are worse off, losing 7% of their earnings profits ($ 1,496).The undergraduate degree grades are declining even heavier for younger ones.According to data collected by the College Board, for those aged 25-34 years, the difference between college graduates and high school graduates rose by 11% for men, to $ 18,303 from $ 20,623. The decline for women was exceptional 19.7%, to $ 14,868 from $ 18,525 Meanwhile, tuition fees have increased by 16.5% in 2012 dollars since 2006, according to the tuition index of higher education Bureau of Statistics T work. "
Nader Habibi, who manages the overeducation.org website, writes in The New Republic, cites this evidence:
In a study of 2014, two economists affiliated with the Federal Reserve Bank of New York found that since 1990 at least 30 percent of all workers (aged 22 to 65) with undergraduate degrees have been consistently employed in jobs that do not require a bachelor's degree for assignment needed, even ten years after graduation. Not surprisingly, the percentage of recent college graduates (aged 22 to 27 years) with such work has been much higher than the above figures and has ranged from 38 percent to 49 percent since 1990.... The Obama administration has recently created a valuable online database called the College Scorecard to offer a more realistic picture of the earnings prospects with a bachelor's degree. One indicator in this database shows that more than half the graduates in hundreds of colleges earn less than the average income of a person holding a high school degree ($ 25,000 per year) ten years after registration. Ideally, this ratio should be zero. A large number of unemployed and underemployed graduates are also burdened with high student lending debts - more than $ 100 billion by 2013 alone - they have trouble paying back. We should not forget the billions issued by the federal, state and local governments for higher education through subsidies and financial assistance - $ 157.5 billion in 2014. This share of expenditure in favor of unemployed graduate education can be used more effectively for job creation or training of students in the more necessary vocational skills.
Alternative to bubble theory
Different proposals for the causes of increasing tuition are reduced state and federal allocations to college, making them rely more on tuition fees. As such, it is not a bubble, but a form of cost shift from state and federal funds to students. This is largely applied to state universities which in 2011 for the first time have taken more tuition than in state funding, and has the greatest increase in tuition fees. The implication of this shift from public to tuition is privatization, although The New York Times reports that such claims are exaggerated.
Another proposed reason for raising tuition fees is sometimes the US Congress raises the borrowing limits of student loans, where the increased availability of students to take on a deeper loan sends messages to colleges and universities that students can buy more, and then, In response, the higher education institution increases the tuition fee to fit, leaving the student back where he started, but deeper into debt. Therefore, if the student is able to pay a much higher amount than the free market if it will not support the student without the ability to take the loan, then the tuition fee is 'bid' to a new, higher level that the student can do. now able with subsidized loans. One of the rebuttals to the theory is the fact that even in the years when the borrowing limit has not gone up, the tuition is still on the rise. However, it may not deny the proposed cause: This can mean that factors other than the increase in the borrowing limit play a part in the rise in tuition fees.
The third theory claims that as a result of federal legislation severely limiting the ability of students to release their federally guaranteed student loans in bankruptcy, lenders and colleges know that students are on the hook for the amount they borrow, including late fees and interest ( which can be capitalized and increase the number of principal loans), thus eliminating the incentive to simply lend to students that students can be expected to pay back. As evidence of this theory, it has been shown that the return of bankruptcy protection (and other Standard Consumer Protection) to Student Loans will lead to more cautious lenders, leading to a sharp decline in the availability of student loans, which, in turn, will reduce the entry of dollars into colleges and universities, which, in turn, must sharply lower tuition fees to match the availability of lower funds. Based on this theory, if a student loan does not have the ability to file for bankruptcy, it would be more advantageous for the lender if the student fails (due to an increase in the loan amount after cost and interest are capitalized), and thus no motive type of free market pressure for lenders or college to help students avoid default. This is especially true because the government, if the lender or guarantor of the loan, has the ability to cut the borrower's pay, tax returns, and income of the Social Security without a court order. Some people call the Federal Government's 'predatory' to make loans that will have high default rates, since the default rate for Student Loans is projected to reach 46.3% of all federal dollars channeled to students at nonprofit colleges in 2008 ( The default lifetime rate budget, the default loan rate is only 18.6%, which means that 18.6% of all loans contain 46.3% of all dollars lent).
Economic and social commentator Gary North told LewRockwell.com that "Speaking of campus as a bubble is ridiculous, the bubble does not appear for months or years after funding stops.There is no indication that funding for college education will stop."
Azar Nafisi, professor of Johns Hopkins University and bestselling author of Reading Lolita in Tehran , has stated in PBS NewsHour that pure economic analysis of the higher education bubble is incomplete:
"Colleges become a kind of canary in a mine for a culture, they become a standard in which a culture is running.Dynamism, the authenticity of this entrepreneurial experience, the fact that society allows people to be genuine, to take risks, all comes from the love of knowledge , and the university represents all the different fields and fields in society, and students and faculty come from all these areas.This is the community that represents the best that society has to have and there is a reference to our university as the best in the world. "
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Source of the article : Wikipedia
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