The Bubble: Higher Education's Precarious Hold on Consumer Confidence

Peter Wood:

Is American higher education caught in the 21st century equivalent of the Dutch tulip mania? On February 3, 1636, the contract price of tulip bulbs traded in Haarlem collapsed. The prices for the fancier multi-colored varieties had been driven up to crazy heights by futures speculators. The reckoning that followed has, of course, become everyone's favorite metaphor for subsequent "bubbles"--those aberrations of the market in which people vastly overvalue a good because they believe its price will only continue to soar. We have had in recent memory a tech bubble and a real estate bubble, both on a scale to make seventeenth century Dutch tulips blush for shame.

Could American higher education be in the same fix? In the last few years an increasing number of observers speaking from distinct perspectives have converged on this idea. The outlines are simple. The price of attaining a college degree has skyrocketed while the rewards of attaining a college degree have slumped. Sooner or later, people will notice that they are being asked to spend a great deal of money for a meager result. If enough people notice this and consequently decide not to spend at comparable levels and to seek lower priced alternatives--daisies instead of tulips--the bubble will burst.

Defenders of the current system point to reasons why this won't happen. My own view is that we are indeed facing a bubble, but before turning to that prognosis, it helps to start with the counter-arguments. There are many in higher ed who see no bubble and who read the tulip leaves differently.

Posted by Jim Zellmer at September 15, 2010 5:32 AM
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