My girl, Megan McArdle is blogging again, now at the Daily Beast. It's fitting that I discovered this today, as I first started reading her blog in 2001, when she was volunteering at Ground Zero.
Today, in a Newsweek article she's looking at whether college is a good investment, and it's not the slam dunk that it used to be:
Experts tend to agree that for the average student, college is still worth it today, but they also agree that the rapid increase in price is eating up more and more of the potential return. For borderline students, tuition hikes can push those returns into negative territory.She articulates various reasons for the declining returns on education, including increased competition, spiraling costs, and the use of a degree as a "signal" of qualification, rather than indicia of actually valuable skills. She hammers this home with me, by looking at English majors with no skills who use law school as the springboard to a career. Today there are 45,000 graduates competing for 30,000 positions, which means that the high-paying, interesting jobs that JDs expect after three years are by no means guaranteed. As a clueless, average student from a pretty good law school, who wanted to relocate, I had a tough time finding a job in 1990, and then felt a lot of financial strain from the now piddling $30,000 of debt I'd incurred; I'm not sure that things would work out similarly for me today. Moreover, I was able to retire my loan debt by way of refinancing our DC mortgage (and then reselling the house) during the height of the housing bubble.
As I mentioned before in my post about Marginal Revolution University, I am hopeful that there will be some changes to the model before the OG is ready to matriculate, but that's just a scant five years away, not a lot of time for a thoroughgoing restructuring of hidebound academia.
So computers are replacing people, who are spending more on girding themselves to race against the machine, convinced that a gazillion dollars for a circle of lifetime friends and a short, cloistered respite from reality is a good "investment." That sounds eerily reminiscent of another bubble:
Just as homeowners took out equity loans to buy themselves spa bathrooms and chef’s kitchens and told themselves that they were really building value with every borrowed dollar, today’s college students can buy themselves a four-year vacation in an increasingly well-upholstered resort, and everyone congratulates them for investing in themselves.We want to give our kids every chance to succeed, but I think we also have to be wary of buying in to the idea that what worked before is the way to go this time. I'm glad people with data are talking about it.