The Education Bubble

When will the US higher-education bubble burst? I wish there is a way to short-sell the education bubble. Is there a way to short the colleges? Or maybe a way to short Sallie Mae?

The students have more than $1 trillion in debt. Several well-known institutions have bad balance sheets - Harvard, Princeton, Stanford. Their financial woes are compounded by inflation, pensions and bad bets in the financial market. They are likely to go bankrupt, and maybe get bailed out. Even their absurdly high tuition fees are not going to help.

And talking about tuition fees, even sub-standard colleges charge absurd tuition fees. How is this possible? 

One of the main reasons is Govt-guaranteed student loans. When the politicians started politicising education a few decades ago, with their 'no-child-left-behind' mantra, that's when education costs really went up. It used to be that people can work summer or part-time jobs and pay for their tuition fees. But today, this is impossible.  Absent these student loans, tuition fees would have been very low. Colleges will be forced to slash costs and compete with each other based on costs. But because of these government-backed loans, colleges simply jack up tuition fees year after year.

In Singapore, we see similar things happening. I was rather appalled when I go back to NUS from time to time to see the kind of renovations that they've put up to make it all look nice and dandy. All these while, the tuition fees have been increasing. I'm lucky that I wasn't employed into NUS' fundraising department a few years back. I think one of the interviewer was visibly annoyed when I attacked the banking system, and that could have cost me the interview.

With today's technology, education should be very cheap. It is now so much more easier to learn compared to just a few decades ago. Information is so freely available on the internet. But guess what, governments force us to attend their public schools, paid for by taxpayer money, and force their one-size-fits-all education program down our throats.

From my experience as a private tutor, I see more and more students getting desperate. More and more students complaining to me that the lessons in school are sub-standard and don't interest them.

When I look around at university programs, we're made to take courses that don't matter to our studies. A lot of undergraduates try to take courses that require minimal effort. A lot of undergraduates do enough just to get by. We are kind of forced to pay so much money for it, but the services are bad. All those money goes into fancy buildings and projects. Under a free-market education system, this kind of problem will not be so widespread! Without government monopoly rules, colleges will spring up everywhere and compete for students. There will be colleges specialising in different fields. Students will be studying what they really love, and take courses that really matter to them.