Investments get to be bubbles partly because investors widely believe there is no alternative on which to spend their money. Dotcoms were seen as the only real growth play, so shareholders hung in there even after it had become clear that the pricing was uncomfortably high. Housing possessed a supposed unique level of riskless-ness as did the loans used to finance it. Many investors have figured out that U.S. treasuries are deep into bubble territory, but, they ask ‘What other haven asset is there?’
It’s the same with the college tuition bubble. Look at the comment section of any of the articles I’ve written about this topic during the past three years and you’ll see something like this: “Yes, most diplomas are from second rate schools in second rate disciplines and they are nearly worthless. And tuitions are sky high. But what alternative do we have? How do you get an education without it? More importantly, how do you get a job?”
It’s a legitimate question, one that I’ve been wrestling with for quite some time. You see, I’ve been writing about the college bubble hypothesis for three years, but I’ve been living it for ten.
My oldest son, Christopher, was not college material. You probably have the wrong idea: it’s not that Chris isn’t smart. Chris is brilliant. But brilliance is not enough to make you college material. Something else is needed: at least an average level of compliance. Pliable personalities find it much easier to sit through the lectures, take the exams, write the papers, amass the pre-formulated proportions of certain credit hours in certain prescribed order, and fill out an enormous volume of paperwork for the privilege of entry into all of the above.
Some people find all of that to be easy; in fact, many like being told what to do. It gives them a sense of security. Other people find it all difficult, but do it anyway. The latter often seek release from the sense of institutional claustrophobia by embracing a life style of sexual and chemical anarchy in those enclaves of rebellion known as fraternities.
Chris just couldn’t do it. He couldn’t contort his mind into the arbitrary exercise known as SAT Prep. It was not that he didn’t want to learn. On the contrary, he was a voracious reader. It’s not that he didn’t want to work. On the contrary, he had not only worked for various family businesses from radio production to economic analysis and publishing since he was about 9 years old, but had also started a few micro-businesses of his own; web sites which he was able to sell at a nice little profit.