With college now being a “right” and the government dishing out loans to cover all the costs, we see the college degree become irrelevant in a new America. We are going see a commercial real estate collapse of the college establishment nationwide. Does the cost of college really out weight the benefit? The answer to that question is NO, one thousand times over. Here is why:
Those in college at this moment are utterly throwing precious time and taking very serious risks incurring massive debt. Your degree will not be worth the paper it is printed on in the very near future, prepare to accept any job you have the opportunity for. Most will be working the equivalent as a gas station attendant. Forecasts follow:
A few items must be examined to bring this forecast into view; therefore I simply look no further than current events. Here are just a few.
* Average tuition at four-year public colleges in the U.S. climbed 6.5 percent, or $429, to $7,020 this fall as schools apologetically passed on much of their own financial problems, according to an annual report from the College Board, released Tuesday. At private colleges, tuition rose 4.4 percent, or $1,096, to $26,273. (Huffington Post Oct 2009)
*Since 2004 tuition and fees have risen by up to 20% (Time Magazine)
*Because of a budget in peril, UCLA inflated college costs by 32% in November of 2009 (AP)
* College tuition has increased by more than three times the rate of inflation for the last 20 years, despite U.S. wages flat-lining since 2000. (Forbes Magazine)
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I simply can say once again that current trends form future events. We are once again witnessing the failure of Government involvement in the market place. Despite the best intentions, Government intervention distorts free market principles and creates zero incentive for businesses to lower costs or modify services.
I would like to return to the example of UCLA, who recently inflated tuition by 32%. The relationship between the increases in Government subsidy to the increase in College cost has been positively correlated since Gov initial intervention.
When colleges choose to inflate their prices, so too will the government raise reimbursement to offset the cost per student.
The straw man argument typical consists of “Well, if Government didn’t provide loans, no one would be able to afford college”. Again, we simply fall back to the free market model to demonstrate the fallacy in that claim. For if the government were to exit the student aid market, enrollment would fall through the floor. Students who were unable to attend college in the first place, without Government aid, would not enroll forcing pressure on the Universities to bring down costs to meet demand.
Another straw man argument typically consists of “Well, so what? I am paying X amount out of pocket now, so even if the Gov were to exit the market I would still be paying the same x amount”. That also, is a fallacy and statistically untrue.
• The tuition prices have risen even faster than recent and significant increases in federal grants and education tax breaks, the College Board calculates. That means the net out-of-pocket costs of a year at college rose several hundred dollars in 2009, while families struggled through a recession. (US News and World Report)
The free market would also increase the quality of education. With unlimited room for fiscal expansion, Universities have no incentive to pump capital into increasing educational standards. This could include: Teacher Pension Elimination, Reward by result, Textbook and equipment standards increase. Many Universities selfishly will use extra revenue to beauty up the campus or bloat teacher salaries (without the force of incentive).
Now, let’s just get to the meat.
Fiscal Forecasts Before the Burst
*Many students today must undertake massive debt in order to pay for the cost of their college education. We will continue to see an increase in the amount of debt a student must incur, as colleges continue to inflate their costs and the Government expands its role in the loans market.
*The average student enrolling in college starting in the year 2012, will accumulate debt so massive that he or she will not be able to afford in a lifetime! Yes, that is correct.
*Despite the increase in the cost of attending college, enrollment will continue to skyrocket in the short-term and then fall of a cliff by 2015.
*Every college in the nation will continue to inflate prices at a significant rate in the coming years as personal revenue falls. Because fewer will be able to afford costs, pressure will be put on the Government to step in to fill the void, which they will CERTAINLY do without any hesitation.
*We are going to see the collapse of private universities nationwide along with commercial real estate. The only private Universities with a bullish future are the Ivy Leagues for the elite only.
*Private Universities rely much more heavily on private funding than do their public counterpart. As wage disparity increases, real income falls, the standard of living and purchasing power decreases… So too will the investment revenue. Unable to compete with a Public (Government) University that prints money, private Universities will be forced to raise costs to unsustainable price levels. Many private Universities will close doors forever nationwide!
One must also not ignore the social implications the college bubble will have in our society. The government has once again broken the firewalls of the Constitution to make attending college a “right”. One must question the weight a college degree will have in a future job market. Will the college degree hold the stature a high school degree once held? We must also return to the fundamental question, “Does the cost of college really out weight the benefit?”
Social Forecasts
*By the year 2015, college graduates will be competing for what today are considered “Blue Collar Jobs”. (Plumbing, Construction, Public Service, Factory etc)
*By the year 2012, unemployment will be near Great Depression levels (22-25%). All things equal, a college student will compete for the same job against 50 other applicants. (50 to 1 employment ratio).
*By 2015, Community College enrollment will INCREASE by at least 800%
*By 2015, Public University enrollment will decrease by at least 200%
*By 2015, Private University Enrollment will decrease by at least 350%
*By 2015, the market will be over saturated with prospects holding liberal arts degrees. A college degree will equal the caliber of today’s high school degree.
When all FORCES are realized (A Summary) The bubble will Burst
The long term fiscal health of the United States receives a grade of an F-^1,000,000 (to the one-millionth power). We are in beginning stages of our greatest depression. Soon unemployment rates will top Great Depression level highs of 25% . Jobs currently lost are never returning. We are at the perspicuous of a currency crisis that will happen sometime in the very near future; this will change the structural status of the United States for the long-term. (Please read my last column on an in-depth analysis on this specific issue). During the next decade we are going to see the University and the institution of College virtually extinct. A few will remain in the long-run, but most will not attend other than the very wealthy elite.
Instead of a liberal arts curriculum, young people nation wide will learn marketable skills such as farming/agriculture, animal raising, craft (Basket Weaving, Sewing), steelwork, construction. Amongst other things. This will be called the Second Industrial Revolution, as America’s future economy will depend heavily on export with the chief export being agricultural goods.
We are going to see a new establishment of trade schools nationwide. These “schools” will specialize in the marketable skill areas mentioned above. Those who choose to diversify their skill portfolio will have the greatest employment opportunity as we see a shift from the (PhD, MS, MBA, BA, etc) to (Intensive Pastoral Farming, Shifting Cultivation, Dairy Farming, Plantation or Tree Farming, Woodcraft and interior construction, etc)
Personal Health management will also be a big trend in the coming years as the medical establishment erodes and drastic rationing takes foot. We are going to see the return of home doctor visits and a significant increase in hospice type care. The nursing field will increase dramatically as the market will demand such an increase. Nutritional, natural herbalist and other fields of the sort will also take a strong foothold as the level of access to the advanced pharmacology we enjoy today, ceases to exist.
That is my forecast
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