The College Bubble - Denver Content + Social Media Agency

The College Bubble

by Ryan Estes, January 16, 2012

Should I Borrow Money to Go to School?

College education is way too expensive with tuition only getting steeper as the years go by. As the prospects of employment decline, and with their school loans already in their second deferment (or even worse…collecting), people are beginning to seriously question why they ever went to college in the first place. A college degree was supposed to be a means to an end. It was supposed to lead to a higher paying career or, at least, a dream job. Instead, many college graduates find themselves waiting the same tables and answering the same telephones as their non-degree seeking counterparts. All many of us have to show for our years spent in college are decades, perhaps a lifetime, worth of debt management, stemming from our acceptance of school loans.  A lot of us, and by ‘us’ I mean even us college dropouts, have found ourselves at one moment or another asking, “Was it worth it?”.


Obviously there are certain trades that you’re not even allowed to participate in without a college degree. Those career paths notwithstanding, what justifies the price tag on the other, less lucrative, industry-required degrees? Higher education is definitely something worth striving for, but what is it actually worth, monetarily speaking? When does it become a rip-off? Unfortunately for most, the answer to that question will only be realized in hindsight.


I recently watched a documentary entitled College Conspiracy (watch below). It was the first time I’d seen the entire notion of attending college being challenged on economic grounds. The film-makers argue that the economic policies surrounding college education have contributed to its uselessness. They say that not only have Universities over-saturated the job market with college graduates, thus making a college degree less of a defining achievement, but that the entire practice of attending college is, above all else, overpriced, essentially shackling college grads with mortgages before they’ve even applied for their first jobs.


The film challenges the advertisement of higher earnings awaiting college graduates, most notably the oft-parroted “one million dollars more over the span of one’s lifetime” statistic (as if all degrees were created equal), while exposing the use of some tricky employment data often used by schools to lure students down certain career paths. The film depicts a dire future for American Universities, as well as their graduates, in a crisis they’ve termed the “College Bubble”.


A “bubble” is an economic term referring to instances when trade in products occurs at inflated values, in this case artificially inflated. When a bubble bursts, the value of the product plummets and somebody is left holding a product that cannot be exchanged for an equal or higher value than which they acquired it themselves. The value of the product then begins to decline towards its equilibrium price, or the price it would have been in the absence of external influences. With the Housing Bubble, homeowners were stuck with mortgages that exceeded the resale value of their homes. With the College Bubble, students are left holding degrees that are a dime a dozen with a lifetime of debt staring them square in the face. The colleges, themselves, are faced with plummeting enrollments that could conceivably force them to close up shop completely.


Some might be quick to blame the borrowers (students) for taking out hefty loans to pursue degrees that had little chance of leading to a profitable career, such as Art History or English Literature, which they deem the educational equivalent of living beyond one’s means. However, the truth is if those students weren’t erroneously persuaded into believing that a college degree was valuable in itself, and instead decided to fore-go higher education altogether, the Universities wouldn’t even have enough students enrolled to keep their doors open for the pre-med and science majors who chose their career fields more wisely. Universities charge the same tuition regardless of the potential profitability of the expertise being expounded. A University’s lifeblood is student enrollment, and an overall decrease in enrollees would be detrimental to the education of all college students, practical and idealistic alike. In other words, an affordable college experience, regardless of the degree being pursued, is long past due, and the entire system could suffer considerably in the absence of some expedient and drastic reform.


Another interesting concern the documentary addresses are the government guaranteed loans, offered to high school graduates regardless of work history, grades, declared major, or any real indicator of whether the borrower will ever be able to repay the loan.  Lining incoming students’ pockets with so much capital, they argue, allows colleges to overcharge for their services thus exploiting the new, artificially created threshold of affordability. After all, anybody can ‘afford’ to go to college with guaranteed money apportioned to do exactly that. Government subsidized education has reduced, if not eliminated, competitive pricing, leading to tuitions that are inflated, while the ‘expertise’ and endorsement (degree) provided are becoming increasingly less valuable.

Even for those who do find work in their chosen careers, or merely from the result of having a college degree, the question still remains: was it worth the investment? Accumulating tens of thousands of dollars’ worth of debt, which will only garner interest over time, in exchange for a degree from a University, that can’t even guarantee you exceptionalism within your chosen field, seems more like a gamble than an investment nowadays. The film argues that the net cost of higher education is even higher than advertised due to the lost income and work experience one could potentially have earned in the workforce had they never attended college at all. Ironically, the imperative to repay the student loans might actually force the borrower into an undesirable employment situation, thus hindering the career ambitions originally intended to be sought after.


The documentary is a little sweeping in its declarations and a bit less impactful due to accusations made against the film-makers, accusing them of using their film to try and “pump and dump” certain stocks. However, the underlying concern, college degrees generally being overpriced and decreasingly advantageous in the job market, is a notion many people can get behind. Perhaps it’s time we all become armchair economists, and approach our educational careers with a bit more frugality. I have a few ideas:
  • We can pursue undergraduate studies at an in-state intuition to avoid out-of-state price hikes, or at least earn residency in another state before attending a University there.
  • Earn as many transferable credits in community colleges before transferring to a state college.
  • Test out of as many college courses as you can.
  • Earn as much college credit as possible while still in high school.
  • Or maybe, not one to cling desperately to the fairytale that is college education, we should just fore-go college education altogether and enter the job market. If our job options are no less competitive, at least we aren’t acquiring debt in the process.

Economist Irwin Schiff has proposed some interesting alternatives to college education. He recommends just applying for the same degree-requiring jobs but requesting a lower salary in exchange for on the job training. He feels one could gain an advantage over college graduates unwilling to do the same because of their obligation to repay their student loans. Who knows? His guess is as good as mine, well it’s actually probably better, but voluntary indebtedness with dwindling career assurances just doesn’t seem like the default way to go in the current economic climate.


Principal at Talklaunch LTD
I am a reader of bedtime stories, Brazilian jiu jitsu player, sportsman, volunteer, and friend. Hosting the Denver Business Podcast has revealed that I'm not alone in the pursuit of profit and purpose. Current obsessions include nootropics, fingerstyle blues, and simulation hypothesis. I book speaking engagements on occasion, but I prefer listening engagements. If you are interested in being featured as a guest on our show please email
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