Thoughtful comments from high tech über-entrepreneur Peter Thiel:
"Education is a bubble in a classic sense. 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 — you had to own a house in 2005, and you had to be in an equity-market index fund in 1999.
Probably the only candidate left for a bubble — at least in the developed world (maybe emerging markets are a bubble) — is education. It’s basically extremely overpriced. People are not getting their money’s worth, objectively, when you do the math. And at the same time it is something that is incredibly intensively believed; there’s this sort of psycho-social component to people taking on these enormous debts when they go to college simply because that’s what everybody’s doing.
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."
To read the complete interview with Peter Thiel, please see: National Review Online
Informative article, totally what I was looking for.
Posted by: sherribrown | 02 October 2013 at 09:17
The robbing of the young - in pensions, in healthcare, in higher eduction - is the great class war to come. How long do Great Generation and Boomers think they can bankrupt their children and grandchildren before these wake up and exact revenge?
Posted by: oh | 26 September 2013 at 11:50