The U.S. Education Bubble is Currently Bursting- Paypal co'founder

Peter Thiel, PayPal co-founder, hedge fund manager and venture capitalist is saying that the U.S. college education system is in the midst of a collapsing bubble.

Like the housing bubble, the education bubble is about security and insurance against the future. Both whisper a seductive promise into the ears of worried Americans: Do this and you will be safe. The excesses of both were always excused by a core national belief that no matter what happens in the world, these were the best investments you could make. Housing prices would always go up, and you will always make more money if you are college educated.

I believe this is very true, because it is the situation I am in. I am graduating this year and have many other friends that have graduated, and graduating and will graduate that have not found jobs. Maybe some good internships but for the most part we are "expirienced out" of the job market by baby-boomers and many others returing to the work force and delaying retirement. Thoughts?

ARTICLE 4/11/11

Default Rates are Rising

Related ATS Thread

There's a bubble because the financial giants packaged student loans into derivative packets the same way they did the home loans. Now that people can't find work, these loans will begin to default. The problem is that they have been leveraged to an extent that there will be a breaking point, just like there was with the housing crash. Financial institutions will crumble.

Of course it is. Education was marketed just like homes were and still are.

It was/is outrageously over priced, easily funded through weak/bad loans and pushed on everybody and their brother as the thing to do.

I've been harping on the Big-U scam for at least a decade now.

I guess the only good thing is that they can't repo it from you. But good luck finding the job you were expecting.

Wont be long before the 20K/year school is a laughing stock like the morons down the block trying to get 250K for a house that's been sitting on the market for 2 years.

Overpriced fantasy garbage floating on a sea of imaginary money. That's just about describes everything in this majestic western world.

I graduated from every school I ever attended with honors, including a major university in 2005. I too experienced the same difficulties finding work due to a lack of experience, even though I worked my way through college to pay for it. At this moment I have been out of work for over a year and due to me only having 2-3 years experience in any one given field, I'm again being marginalized in my search for work. The only advice I can give to anyone is this: It is ALL ABOUT who you know, not what you know or your GPA. Recently, I have begun pursuing professional licenses in order to possibly mitigate the effect of my so called "lack of experience". I would recommend others do the same.

The financial markets are a sham, I learned this my Freshman year of college. Loans are just one way (the most well known) that the sham is perpetually forced upon the people of the world. In the end, the loans themselves violate some basic principals of economy, finance, common sense, capitalism, whatever you want to call it. The loan repaymnet is essentially a perceived value one agrees to pay back on an already perceived value of something that has no real value. It will crash, all of the financial markets will when the powers that be can no longer perpetuate the sham by selling perceived value for real value (work, time, expertise). I have a young child and everyone is always asking me if I'm saving for his college tuition, to which I reply, "why, he likely won't be any better a student than myself and it hasn't helped me find a job." Think for yourself, question authority.

Originally posted by Skerrako

I believe this is very true, because it is the situation I am in. I am graduating this year and have many other friends that have graduated, and graduating and will graduate that have not found jobs. Maybe some good internships but for the most part we are "expirienced out" of the job market by baby-boomers and many others returing to the work force and delaying retirement. Thoughts?

Wow, as a tail-end Baby Boomer, this surprises me. I have seen the people who have been hired for many of the jobs I have applied to - and they're all 20- and 30-something. Us 50+ year old ladies have it rough.

So either there are no jobs really, or each of us is blaming the other group for competition in the market.

reply to post by budaruskie


Yes, if I knew what I know now then I would of done something else. Im actually hoping the Canadian job market is a bit better.

Any guesses on what will come first, housing bubble 2.0 or this education bubble?

Possibly simultainious and the whole system goes

It may pop, but unlike housing loans or credit card loans, student loans do not go away with bankruptcy so I don't know that the effect will be as severe.

What the hell did people expect would happen! You cant honestly expect a degree whose maximum earning potential is around $50K (social sciences, communication, history, literature, etcetera) to be able to provide a graduate with the ability to pay $100K of student loans?

reply to post by searching4truth

It may pop, but unlike housing loans or credit card loans, student loans do not go away with bankruptcy so I don't know that the effect will be as severe.

True, but the financial instututions that back them have already collapsed! (Fannie). Are they going to print the money to pay for this too? Because if people start defaulting on student loans it goes directly into our country's debt

Govt can add a few more years to high school to keep the kids busy . That might help the US catch up to the rest of the world in education. They could also provide added incentives and price breaks for kids to go to college (and actually learn, not party).

I have this gut feeling that if this "education bubble" bursts that that'll be the last straw breaks the camel's back. I could totally see students taking to the streets and union leaders jumping on this opportunity to march right behind them along with their entire workforce.

Interesting times ahead of us indeed.

reply to post by Amaterasu

So either there are no jobs really, or each of us is blaming the other group for competition in the market.

I actually figured someone would say this and have a prepared response. I did not place blame on the baby boomers I merely said it is one of the factor why there are less jobs in fields that many of us GenX'ers are qualified for as well. Sure I COULD get a job truck driving, but when I've spent 20k on Seech Pathology I would like a job in a certain pay range or Ill be in debt forever.

"In Soviet Russia everyone had a job, but you had to stand in line 3 hours to get bread."
-Peter Schiff

Yes - let us go back to indentured servitude, teaching the poor to out-source their children at three to become blacksmiths.

I hate ALL of the anti-education crowd. Passionately. With every fiber of my being.

Those people are out to destroy the basis of the culture and World I want and want my children to live in. And I swear on everything holy and unholy that if I suspect for a minute that they are getting traction, you can knock on my door because I promise I'll be one of the people gunning for them.

our kids now that have 4 year degrees can't find jobs...there is no education gap, there are simply no jobs for them, companies are not hiring them. companies are hiring chinese and indian college graduates, that will work for 25k a year. it's all about the money...nothing else matters to corporations, nothing but the money.

take back your government and you might have a future.
don't take back your government and you will lose your life

reply to post by Aeons

I hate ALL of the anti-education crowd. Passionately. With every fiber of my being.

You're a downer. I don't think any here is anti-education, just anti how much education costs. Important to note that the educational system and how it is financed are two very different entities.

There are other ways.

Just found this article from today:

Student Defaults Rising

Originally posted by SirMike
You cant honestly expect a degree whose maximum earning potential is around $50K (social sciences, communication, history, literature, etcetera) to be able to provide a graduate with the ability to pay $100K of student loans?

DING DING DING! Winner, we have a winner!

This is exactly what happened to college education and is exactly what is going to ultimately pop the bubble. When you spend 4 years to get a degree in literature, hospitallity, sports medicine, art, or virtually any of the non-teaching, non-science fields you can expect to hit a saturated pool of graduates all fighting for the same, oh let's say 2% of American jobs that actually relate to these degrees.

There should be a disclaimer on those ads that cite "College graduates make 20% more than non college graduates" that clearly says the following:
"This is an AVERAGE. It lumps the hundreds of percentage points more that a doctor, lawyer, banker, or high level engineer makes vs a laborer in with the couple of percentage points more a graduate with a BA in belly lint sculpture makes vs the same. Thus, the average is swayed big time. Compare actual individual degrees with the average wages of non college graduates and then a much more accurate assessment can be made. That assessment will pretty much verify to you that spending thousands of dollars on classes in the arts is a huge waste of money."
Of course, the folks who are wise enough to already have this figured out are likely to be the students who are seeking those really well paying degrees anyway. Viscious cycle, I guess.

Well yeah, nowadays you got to have a college education and experience to get a decent job. Too many college grads lol/// That's what happens when they push unnecessary education programs.

Speaking of PayPal, the IRS has taking it over. There will be provision going into effect in 2012, PayPal will be required to report your sales information to the IRS. They will be sending 1099 forms for you!!!

Good luck at working at home through Paypal...

reply to post by burdman30ott6


Once upon a time when you could get a college degree for under $20K it made sense to make this investment as it distinguished you from the general population at large but considering how many people have degrees now a days its no longer the distinguishing mark it once was.

I think too many high schoolers are sold a bill of good that they HAVE to get a college degree to make it. Truth is, you don’t need a degree, you need a SKILL. Too many young adults graduate with lots of impressive CREDENTIALS and absolutely no marketable skills. Sure, they worked their butts off studying, but at the end of the day they would have been better off financially had they spent 18 months in a technical college learning to be an auto mechanic, pipe fitter or tuck driver.