Is There an Education Bubble?

University defenders say an education has value far beyond the difference it makes in your salary - but upper-middle-class Americans tend to overvalue the non-financial benefits of grad school too
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Peter Thiel says that there is an "asset bubble" in higher education. As I ponder the rebuttals from critics like Freddie, my instinct is that financial metaphors are obscuring more than they're clarifying. "Education cannot survive on what I am horrified to find is the generally assumed model, that it exists for the purpose of increasing earning potential," Freddie writes. "To see an education, college or otherwise, as merely a way to increase the amount of money you make is a terrible corruption."

As far as it goes, I agree.

But I don't see what this tells us about the American system of higher education, and whether it is overvalued. The key phrase in Freddie's post is "education, college or otherwise." Those of us making our way in the world have a choice after high school among further educating ourselves by learning a trade, or moving abroad, or spending nights and weekends reading great books in the local library, or working as a bartender in Berkeley while sneakily auditing classes in big lecture halls.

Or investing a lot of time and energy in education as a formal course of study that ends in a diploma from a degree granting institution. People should value and pursue education. But surely financial incentives are an appropriate factor as they decide which option is going to most enhance their flourishing. I tend to think going to some college (though not necessarily the most expensive one) is a good decision for most people - even if it ought to be a lot cheaper. But grad school is a lot less certain. Take a student who pursued this route: selective four year college, two years spent working for a non-profit that helps defend indigent clients in the criminal justice system, and admission to an elite law school. For her, there isn't a conflict between "law school to increase earning potential,"  "law school to enrich the life of the mind," and "law school to advance career prospects." All are regarded as reasons to attend, and she borrows $150,000 to do so.

Three-and-a-half years later, she regrets the decision, not because she saw law school as "merely" a way to make more money, but because despite enjoying the intellectual experience, she is deeply in debt, and most other opportunities she has in life are constrained by it. We've all seen the law students lamenting their fate as what they thought to be guaranteed corporate law jobs disappeared. But what led them and their analogues in other academic disciplines to this fate? It's partly that they miscalculated the future salary their degree would confer. But non-financial factors are as influential in causing many Americans to overvalue degree granting programs.

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Conor Friedersdorf is a staff writer at The Atlantic, where he focuses on politics and national affairs. He lives in Venice, California, and is the founding editor of The Best of Journalism, a newsletter devoted to exceptional nonfiction.

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