Is higher education a bubble soon to burst? 

The numbers aren't pretty in Arkansas.

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Consider parents of college-age children in their mid-40s. In 1985, around the time many of them were entering college, the average annual price of tuition, fees and room and board for public, four-year colleges was $2,665 in constant 2010 dollars, according to The College Board. In 2010, that number leapt to $7,605. The gap is similar, though somewhat proportionally less, for private schools: $12,379 in 1985 to $27,293 in 2010.

If adding consternation over that meteoric rise — four times the rate of inflation and almost twice the rate of medical care, according to a 2009 National Center for Public Policy and Higher Education report — to worries over depleted 401Ks and the potential for a double-dip recession wasn't enough for parents, now comes an even more troubling prospect: that college, the perennial means of advancement for a new generation, is essentially worthless.

The arguments come, not from the fringe, but from the likes of Forbes, New York magazine (which called the notion "one of the year's most fashionable ideas") and even The Chronicle of Higher Education. The gist might sound familiar: A foundational part of the American Dream since World War II, college grew ever-more accessible over the years thanks to tax incentives and government-backed loans. But over the last several decades, price rapidly outpaced value, and now in a stagnant economy, millions of Americans are upside-down on their education. Student loan debt now outpaces credit card debt, while graduates' earnings have actually fallen in the last decade. According to the Project on Student Debt, a non-profit funded by the Bill and Melinda Gates Foundation and other sources, Arkansans graduated from college owing, on average, $19,880 in 2009. What's a diploma worth if you can't find a job to pay for it?

All of which has led higher education skeptics to conclude that higher education is a bubble soon to burst. Peter Thiel is perhaps the most vocal harbinger of doom. His track record lends him credence: A Silicon Valley billionaire who co-founded PayPal and made the first angel investment into Facebook, he secured $100 million for PayPal just before the dot com crash, which he says he anticipated. And he made another well-timed bet for his hedge fund against the housing market in 2007.

"Education is a bubble in a classic sense," he explained in an interview with National Review in January. "To call something a bubble, it must be overpriced and there must be an intense belief in it. Housing was a classic bubble, as were tech stocks in the '90s, because they were both very overvalued, but there was an incredibly widespread belief that almost could not be questioned ...

"Probably the only candidate left for a bubble ... is education. It's basically extremely overpriced. People are not getting their money's worth, objectively, when you do the math ...

"It is, to my mind, in some ways worse than the housing bubble. There are a few things that make it worse. One is that when people make a mistake in taking on an education loan, they're legally much more difficult to get out of than housing loans. With housing, typically they're non-recourse — you can just walk out of the house. With education, they're recourse, and they typically survive bankruptcy. If you borrowed money and went to a college where the education didn't create any value, that is potentially a really big mistake."

But where does Arkansas fit into the debate? As a relatively poor and rural state, we've always questioned the value of higher education. For the first time, at least in recent history, a majority (51.7 percent) of recent public high school graduates enrolled in some sort of post-secondary education in 2010. Among those who attend college, significantly fewer graduate in Arkansas after six years than they do nationally (near 39 percent to near 57 percent, respectively, from 2001-2006, the most recent period comparable data is available).


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