As the world economy continues to recover (slowly) from the subprime financial crisis and the housing market crash that hit in 2007/2008, many academics and economists have begun to predict what the next major bubble will be. Interestingly enough, some have come to believe that higher education has become an unsustainable bubble that is bound to burst any second. Their main argument is that that the price of attending college has risen dramatically in recent years while the returns to education has fallen drastically (the reason for this may be an increase in skilled workers or a decrease in demand for them). Nevertheless, people continue to pay these high prices because they have unfounded and unrealistic expectations that they will get the job of their dreams after college. Rather than basing their decisions on economic realities, it appears as though individuals choose go to college simply because they think that is what they are supposed to do: “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.” On the other hand, the author presents evidence that suggests attending college is still beneficial, partly because it is one of the few routes to higher salaries. While there may be a case of education inflation, college degrees are still correlated with higher income and employment opportunities. Even though current evidence suggests that there are still high returns to education, it may be possible that those returns may soon begin to decrease. Furthermore, higher college tuitions in the near future may mean that investment in education will be too costly for the average American. This in turn may increase income inequality.
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