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Blogging: The Solution to the Education Bubble?

The Education Bubble

An education bubble? Huh?

Oh yeah. If you have recently gone to college, are about to go to college, or have kids/family that are going through college you probably know what the prices are like at the moment…ridiculous.

Education Bubble

A picture is worth a million words in this case. Concerned about a housing bubble? Look at tution. (Source: Mark J. Perry)

There is no doubt about it, we are currently experiencing the inflation of an education bubble. What does that mean? For the answer let’s look to the definition of a housing bubble providing by Investopedia:

A run-up in housing prices fueled by demand, speculation and the belief that recent history is an infallible forecast of the future. Housing bubbles usually start with an increase in demand (a shift to the right in the demand curve), in the face of limited supply which takes a relatively long period of time to replenish and increase. Speculators enter the market, believing that profits can be made through short-term buying and selling. This further drives demand. At some point, demand decreases (a shift to the left in the demand curve), or stagnates at the same time supply increases, resulting in a sharp drop in prices – and the bubble bursts.

The Bubble Ingredients

Education costs are increasing, by some estimates, at 4 times the inflation rate. This is a big deal considering that education is already one of the biggest investments you will ever make in your life. The problem is only exacerbated by government grants. But government grants are supposed to help people afford an education, right? Yes, but the more grants the government puts out the higher the price of education. Coincidence? I don’t think so. Run-up in prices? Check.

From the second you are born the thought of furthering your education as a precursor to being successful is driven into your head. Everyone from your parents, grandparents to governors, and even presidents tell you that higher education is the only way.

But the problem is that there are over 300 million people in this country. You can not have a one-size-fits-all solution. Dare I say that higher education may not be the right choice for everyone? The demand is artificially inflated by forcing people to think that they need to go to college even if they wouldn’t have thought so otherwise. High demand? Check.

This creates a competitive atmosphere for getting into schools. And the more prestigious a school, the higher the competition to get in, the higher a price they can charge. Limited Supply? Check.

Education BubbleAll Over-Inflated Bubbles Burst

What happens to a balloon when you fill it with too much air? It bursts right in your face.

Eventually the already exorbitant prices will get a little too exorbitant. And I don’t think we’re too far from that occurring. Like any other investment, one would expect a positive return. But what happens when the cost of education exceeds the return?

People will stop investing. People will decide to stop going to school. The bubble will burst.

The Signaling Problem

The education bubble is a bit different than other bubbles because the education system is the standard for signaling expertise. The easiest way to get a job in this country is to show a degree from an accredited college/university. This shows that you are educated, smarter than the competition, that you are the right person for the job.

When a housing bubble bursts people stop buying houses. They are forced to sell what they can’t afford or just give it up in foreclosure and rent (or in recent history the government will use tax money to pay your housing bills with other people’s money).

But what happens when the education bubble bursts? How do you signal your expertise? How do you signal that you have knowledge? How do you get a job?

The Education Alternative

Self-education is more possible than ever. The amount of free-flowing information sharing has turned the internet into what universities were meant to be: an open forum for education and discussion. While most universities tend to push a certain view on a subject, you can get opposing views with one click of a button on the internet. And you can debate without fear of angering a professor and hurting your grade (don’t believe me? Let’s start a debate in the comment section below :)).

So how do you show your potential employer that you are the right person for the job?

The Signaling Solution

Enter Blogging.

Imagine you want to hire a marketing manager and you have two candidates. One candidate graduated at the top of his class from a prestigious school with a marketing degree. The second candidate never went to school. But the second candidate runs an authority marketing blog that gets thousands of loyal visitors per month. You read the blog and it’s clear that this candidate knows what he/she is talking about.

Who do you hire? Someone that knows how to pass tests and get good grades or someone who has exhibited their knowledge and expertise and already has experience building an online presence and audience?

Experience and the exhibition of knowledge trumps exhibition of GPA every time.

Knowledge is power. And as G.I. Joe would say “knowing is half the battle.” The other half? Go show it off!

Education Signaling

Your Two Cents:

Do you think there is an education bubble? If so, do you think it is close to bursting? Do you think blogging can be a good alternative for signaling your expertise? Can self-education online be a good alternative to traditional university education (I’m focusing on education here, not extra-curricular activities ;)). Am I just crazy?

38 Responses to Blogging: The Solution to the Education Bubble?

  1. Hey Eugene, really great post, and as someone who just got an MBA from a top school, I have to agree that yes, there is a bubble in education. I think the bubble has got a good 5-10 years in it before it bursts, but yeah, the burst is coming sooner or later.

    It’s hard to say whether blogging will be a good alternative to signaling your expertise – I think it will depend on the blog and blogger. The thing is that when you look for “MBA” (or whatever degree), you’re not just looking for a signal of expertise, you’re also looking for one that you can decode in about a second. Reading blogs takes time, and a lot of people won’t take that kind of time.

    Not that I’m saying they shouldn’t; I really don’t think the degree itself signals all that much expertise anyway. But the problem isn’t just the signalling of expertise, but doing it quickly, too – and blogging may not be the best medium for that…

    As for self-education, yes, definitely, I think there is a lot more to be learned that way than through the traditional routes of universities and degrees – as long as your self-education is broad, and you are committed to doing it for an extended period of time (reading comics on the toilet doesn’t make you self-educated!). :)

    • Eugene says:

      Hmm, I didn’t think about the speed factor in terms of signaling. Having a few letters by your name is a lot quicker than having to browse through a blog or what not. I have a Master’s in accounting, and I don’t want to say that it was useless, but I don’t think the degree has a fair return on investment. I think that a lot of degrees ROIs are diminishing. I think that the education system as it is now is too standardized and narrow. And quite frankly, I’ve gotten more value sitting on the toilet with a comic book than some of the classes I’ve had to take :).

  2. I don’t know if there’s an education bubble or not. Honestly, I don’t know enough about the issue to be able to speak with conviction one way or another. But I will say that I thought my entire education was pretty much worthless, and I hated most of it.

    I’d love to think that blogging could replace a college education. I know that I personally have learned more through blogging than I did at college. But employers still want to see that stupid piece of paper or those few letters after your name, regardless of how many followers online you might have.

    Lame.

    But here’s a question for you. I don’t know if you have kids or not, but if/when you do, will you send them to college? Or will you encourage them to start a blog?

    • Eugene says:

      I don’t have kids (not ready for that kind of responsibility quite yet :)). I don’t’ think that blogging in and of itself can replace college education. I think it can take its part in replacing the way we signal our knowledge and expertise.

      I’m not sure what I will do when I do have kids. If things don’t change (and I don’t see how they can keep going the way they are) by the time I have to send my kids to college I’m not sure how many people will be able to afford to do it. The return on the investment just doesn’t make sense. Especially when you take a loan out from the government which you can’t default on. Even if you file for bankruptcy you can’t get out of your school loans.

      So I can’t answer with certainty what I would when I finally do have kids and have to decide what to tell them. I don’t think that blogging is the end-all-be-all solution, just an alternative.

      • Paul Wolfe says:

        Tristan and Eugene

        The issue as I see it with university level education – certainly over here in the UK – is that it leaves the majority of students massively in debt. (We’re talking 40K sterling as an average).

        Here’s what I plan to do – I bought my eldest son a domain name for his 7th birthday and he won’t get pocket money as such. As he gets older he’ll have to ‘earn’ pocket money by doing ‘blog related’ tasks.

        So he’ll learn to put simple videos together (he can already do that – thank you Steve Jobs for iMovie!), he’ll learn to syndicate content by doing it for my bass site, when he’s 13 or 14 I’ll start teaching him how to write for the web (he already wrote his first blog post – bless!).

        What I’m hoping is that by the time he comes to college age – if he wants to go he’ll already be earning enough to actually pay for himself. And will have an online business that he can keep running whilst he’s at university!

        That way, he’ll always have marketable skills and if he decides he doesn’t wanna work a 9 to 5 – he won’t have to.

        That is the approach I’m gonna take with my kids – give them the skills. Let them earn some of their own money….then they’ve got the freedom to do what they want with it.

        Now vis a vis whether you should go to college or start a blog – I answered some of that below. But I think that the fundamental mindset is what differentiates the two – and the person who gets seriously involved online with blogs, info products, affiliate marketing etc, ISN’T going to be happy doing the corporate grind.

        Waddya think?

        • Eugene says:

          I think that is a genius plan. Show them the ropes and let them decide what they want to do with their life. Great solution!

  3. Jk Allen says:

    An education bubble? Sure! But when it burst, I don’t think it will change the layout or requirements of education when it comes to certain jobs…this is why:

    Certain fields require certain education. A business degree is very universal. But what about engineering, law, medical, etc. So, I think the educational burst will simply be a changing in costs, and maybe length of study or something on that level.

    In response to the candidates – I must say that just because someone can talk about marketing and can build an audience who wants to hear them out, doesn’t mean that they have the chops to really hold up as a marketing manager. And, just because someone got a 4.0 doesn’t mean they have what it takes to be a marketing manager. I think it comes down to who can display their ability to be a marketing manager. I think most people can talk the talk – but where the great divide is formed is when it comes to walking the walk.

    Great post here Eugene. I really enjoyed getting a fresh topic…one that I haven’t seen covered at all in this fashion.

    Have a good week man!

    • Eugene says:

      I was thinking about this as I was writing it. For some careers traditional education is an absolute necessity…like the medical field. You have to hit the books, learn how the body works, do your rounds in hospitals, etc. The problem I see happening with careers in fields like those is that less and less people will enter those fields for fear of the insane debt they will have to take on.

      The costs will eventually have to change. They can’t keep going like they are. The problem is they will not just spontaneously change. Schools will have to experience a huge drop in demand and college entrants to get the message. Otherwise, they don’t have an incentive to lower prices and stop building 17 gyms and professor’s lounges that rival the playboy mansion.

      • Jk Allen says:

        I’m with you. There’s not way around it. The price for education has gone up in a crazy way. It’s tripped since I graduated 7 years ago at the university that I attended. That’s sad.

  4. Ray Johnson says:

    This is a great post about school and if there is a bubble or not. I believe there is a bubble and will soon burst. What is going to be interesting is what will happen to all the schools after the burst. Will they go by the way side which will drastically diminish the returns of those that belong to those schools.

    I believe blogging is key to displaying your expertise going forward especially if you can and fail forward quickly, but I agree with JK its not a one size fits all substitute.

    • Eugene says:

      That’s a point I didn’t even think about. I’m not sure if some schools will go under, and it will definitely not be very advantageous for the former students of those schools. But something will inevitably happen. I’m hoping that schools don’t just fall by the wayside but get the message when it is sent and try to run their operations more efficiently. And return focus on education rather than focus on making vacation-life living conditions for students and fund research that doesn’t help anyone (yes I know there is a lot of beneficial research, but there is also a lot of money spent on research that shouldn’t be taken seriously).

      And sure, it is definitely not a one size fits all solution. I don’t believe that a one size fits all solution exists for any problem. I was just throwing out the idea of blogging as a signaling mechanism (because I blog :)). But I think if (when) a bubble like this bursts people are going to have to get a lot more creative with how they show their worth.

  5. Thiels belief that higher education is the next economic bubble into which weve moved the air expelled from Web 1.0 and housing..Economic bubbles are interesting phenomena. To him education now fits that definition tuition is too high fees make it even higher debt loads are unreasonable and there is mounting evidence that the payoff isnt all its cracked up to be. Education as a form of insurance against the future may be overvalued especially higher education Thiel believes..Yet even as education is becoming less affordable and more elitist hinting at its overvalued status we are being asked by everyone from President Obama on down the line to believe more intensely in its salutary benefits and overall value equation..Thiel has identified bubbles before in a manner thats a little spooky.

    • Eugene says:

      If he has a history of predicting bubbles and says education is a bubble then I’m with him :)

      I find it odd that everyone has to convince you that furthering your education is a necessity. When everyone jumps on the boat it sinks, makes me question whether there’s a different boat I should be getting on to.

  6. Annie Andre says:

    Hey Eugene,
    This is such an interesting topic. on one hand i agree with yo, but on the other hand i still want and plan to send my kids to college.
    Go figure.

    I have a degree in Economics and i look at my degree as a form of insurance. Yes it’s expensive, yet it’s probably over priced. But i’m glad i went. It was my Just in case insurance.
    When i first went to college, i had no idea what i wanted to do. College gave me a wide array of subjects to dabble in. Had i known what i wanted to do, maybe i would have worked my way up the ladder instead of going to college.

    As far as starting a blog to showcase your talents. It’s the equivalent to me as doing an internship while in college. or not. Or doing some side hustle. I started an e-commerce store and had an Ebay business to give myself the skills needed to get out of finance and to showcase my new skills. it worked and as a result i catapulted my career into a new direction.

    So i think blogging can be beneficial but i don’t think it’s for everyone. Case and point, i keep trying to tell my husband he has to start a blog for his software QA consulting business but he just has no interest. now realize if his heart is not in it, it would be a soul sucking venture for him to start a blog. He does other things on the side to show his talents like freelancing and answering questions on forums.

    I know this doesn’t really answer your questions but it seems like it may be a very subjective subject. One that’s as individual as each of us..

    • Eugene says:

      It is definitely not for everyone. I just threw it out there as a possible alternative for the standard system.

      I would definitely want to send my kids to college (when I have them to begin with) but I expect the system to change by then. I can’t see it going in the same direction as it is now because most people will not be able to afford sending their kids to college if this continues. So it’ll have to be something I’ll have to evaluate when the time comes.

      If college isn’t an option, no fret, like Frank Zappa said “If you want to get laid, go to college. If you want an education, go to the library.”

  7. You’re absolutely crazy! No way! haha.. jk!

    I definitely believe hit on a lot of key points here, Eugene!

    To answer your questions, Yes, I do believe there is an education bubble BUT (here is the kicker) the price of a college education has been rising since the mind 1960s.

    As long as people and society keeps putting such a huge emphasis on “formal education” and as long as people believe that a college education still provides the biggest ROI on the investment, people will continue to follow the herds and colleges will continue to increase prices.

    I think that of the bubble does burst (which I do believe will be within the next 20 years) it wont be because people dont believe in the ROI of an education, it will be because we (U.S) will have entered a deeper on-set recession (perhaps even a depression), hyper-inflation will set in and people will simply not be able to afford going to college.

    I think that what’s coming down the pike is pretty serious and most people simply are not educated enough to see it.

    The people who will suffer the most will be the ones who do nothing about it to change their lives starting today!

    Anyway.. went off on a tangent!

    In today’s competitive market and social media movement, every organization MUST be involved to succeed. I won’t go into the advantages of incorporating SM into your business, but I would definitely hire someone who can prove to me that they have been able to produce sustainable results over someone who has simply studied the theory of social media.

    You;re right on with your perspective here Eugene! Now, let’s see how long it will take people to change their perspective about a formal education versus self-education!

    • Eugene says:

      ROI on investment, in terms of college education, is beginning to sound pretty ridiculous to me. Coming out of college with now job and already tens of thousands (if not hundreds of thousands) of dollars in debt doesn’t seem like a good investment to me.

      I’m not claiming that blogging is a one-size-fits-all solution to the problem, but I am trying to think outside the box to create a solution to a problem that clearly exists. I just think that this is one alternative, and a legitimate one at that.

      And I think that people will eventually begin to see what is happening. Eventually it will get bad enough where people will have no choice but to see it (unless something changes soon).

  8. Perfect timing,

    The education bubble….I just finished my masters from Duke this past december and I received my loan re-payment statement the other day and I just about died from looking at it. lol

    Education, in my eyes, is becoming a lable. Some people are brilliant but because they don’t the creditentials they don’t get the opportunity.

    I think just to play it safe we should all bite the bullet on this education bubble in anticipation of reaping the benefits in the furture for the LONG RUN; regardless of that loan re-payment statement lol :-)

    • Eugene says:

      I know how you feel. When I finished my Master’s degree I looked at the debt I was in and was in shock. Not only because mine was so high but because I knew people that were much worse off than me.

      I think eventually the system will change, it has to. But if people play it safe and bite the bullet then the system has no reason to change. I think it’ll get to a point (if this continues) when playing it safe means not going college.

      • That’s a strong statement Eugene “when playing it save means NOT going to college”

        Because there was a time when NOT going to college was the “easy” way out. lol

        This should be interesting to see play out as time goes on.

  9. Eugene says:

    I definitely don’t think that education can be replaced, it is very important. But they system is not sustainable in its current form.

    I never thought about the military as an option, I guess it is. But again, that’s another system that is a bit overblown and getting “bubbly”

  10. Paul Wolfe says:

    Eugene

    Some interesting stuff here.

    Here’s some thoughts – as the price of college education goes up, there will surely be a movement that becomes mainstream to take a college education online. (I know it’s already started – but it’s early days at the moment). Obviously for some subjects e.g. surgery, or dentristry, there’s an element of hands on that’s needed.

    But for law – you could totally do a law class in a virtual environment. The technology exists to do it now. You could combine created lessons, with Forums and tele-conferencing/video conferencing and totally do it.

    As the price of attending a university increases – it’s going through the roof our side of the pond – this WILL be a cheaper alternative. I can see the Universities trying to club together and stop it – but at some stage it will become mainstream.

    Onto the college degree v blogging thing.

    I don’t think they are either or – I think they are two different mindsets. I think if you start blogging, and learn how to create products and services, and how to SELL those services – I think you’ll never want to work a 9 to 5 corporate environment job anyway.

    Look at people like Glen Allsop or Pat Flynn. Pat is making close to 30K a month, and Glenn I think was 10K a month. When you think that Glen is 21 or so, and he’s already lived in more countries than most of us have even been to – the allure of that lifestyle and income would probably prove much higher than a Cubicle World 9 to 5 kind of job. (And the benefits are potentially wayyyyy higher).

    Tristan left a question about kids and blogging v college – I’ll answer it up there….got some thoughts on that too.

    Good post.

    Paul

    • Eugene says:

      I’m not saying that blogging can take the place of education. Blogging in-and-of-itself can’t really teach you anything. You have to go out and learn, and then you can blog about it. I think that blogging can take the place of signaling expertise and knowledge, a way to replace the diploma or the fancy letters at the end of your name that tell people you went to college.

      Taking your example of a guy like Glen Allsop…would you rather hire a guy that finished school with a marketing degree, or hire Glen who has proven results.

      Again, like you said its not an either-or deal. I still think there is value in the standard form education, unfortunately the prices are becoming insane.

  11. I believe in continuing education after you’ve completed your dues in the learning system they call “college”. Blogging and the internet in general offers answers in the click of a button. Although I wouldn’t suggest my nieces and nephews to resort to the internet in place of school, it definitely provides information that you can’t learn from professors. Society stresses how important education is to a student, but they definitely don’t make it easy to afford tuition!
    -Jessica

    • Eugene says:

      That’s what raises a red flag for me. That society pushes college education as a one-size-fits-all solution. There is no such thing. And it isn’t right for everyone. Especially if you have to encounter debt that might take you decades to pay off.

  12. One of my biggest regrets was not learning blogging when I was in college. I should earned more money then than my college professor. I should have given my mom lots of money instead of her giving me money.

  13. Kyle says:

    I was told that I needed a degree or I would not be successful by my mother as a kid growing up so often that I became determined to prove I didn’t.

    Fast forward 5 years into adulthood (25) and I was making near 6 figures and still am 20 years later. I went from an associate to management in 7 years.

    I got there by working my ass off and reading everything I could get my hands on. And the Internet was and still is priceless and has played a critical role.

    I enrolled in Computer Science at a pretty good school and was board out of my mine. I took the continuing education course and received 30 credits for life and work experiences based on the Universities Board recommendation. That further blurred the need to continue pursing the degree.

    Through out my career, I have known several coworkers, not all but some, that had degrees and had little motivation or work ethic.

    I think there is clearly an education bubble forming as America pushes higher education as a must as the public (free) school systems continue to falter.

    I have a 12 year old and my wife and I are pushing him toward self employment and self education. We want him to attend college to get an education if he wants too, not to make money. He has grown up using a computer with Internet access and is much smarter for it than I was at his age. the power of information is undeniable.

    • Eugene says:

      That’s a great path to take with your child. I think that the experience of going to college is definitely great. And the education makes you a more well-rounded person (hopefully) but I don’t think it’s something that people should be fully relying on in terms of supporting themselves. The only thing that school taught me was how to get good grades while doing the bare minimum. And that doesn’t lead to great results post-school.

  14. The education level is so low lately that i’ve seen several companies that actually stopped asking for any kind of degrees. They only want to see what you know, not what’s written on a piece of paper. From my knowledge, Google and Facebook use this method for hiring, and that gives performance and working places to people that actually have the knowledge to complete the job.
    Paying for college is ok, don’t get me wrong. But that’s just as long as you pay for it willing to learn something there, and you’re not constantly thinking about the piece of paper you’ll get.

    • Eugene says:

      True, I know a lot of people that went to college and got degrees and don’t know their right hand from their left. If your’e willing to work and learn you will gain the knowledge whether you go to college or not. Unfortunately there isn’t a better way to signal knowledge quickly other than a diploma. I don’t think that can last very long though.

  15. I think its happening right now. Everything is increasing, soon enough more and more people would just decide to not go to school, that spells doom to our nation. Education should be the government’s priority and more budget should be put there, more people graduating means better chances to succeed.

    By the way higher education is not the only way to succeed, it is the best way to succeed. Some successful people never even went to college. :)

    • Eugene says:

      I’m not sure that it should be the government’s priority. The government is in charge for most education now, and it’s not working out. I think there needs to be more of an open market approach to it. Public schools are just terrible (for the most part, I got lucky enough to go to a good one) and need to be reformed.

  16. how to become police officer says:

    Education system day by day is becoming more and more costly.And that causes serious headache to the parents and the student.Blogging can be a solution of it?lets see.

    • Eugene says:

      I’m not sure that it will ever realistically become a full replacement, but it’s a novel idea. I think that on an individual-by-individual basis it can work…I don’t think it’ll ever become mainstream though.

  17. Mark Brophy says:

    Yes, blogging is the solution to the education bubble. It shows that you can write, a skill that most people lack, including those with college degrees. Writing isn’t enough, though, since you need other skills to get a job. If you learn to program, and publish some examples of code on your blog, people will be more likely to be impressed and pay for your services. If you’re an artist, show off your work portfolio.

    PayPal founder and early Facebook investor Peter Thiel challenged the higher education bubble with his 20 Under 20 Fellowship that encourages young people to create technology rather than go to college, and is likely to prove that smart young people who work hard become successful regardless of whether they attend college. College expenses have increased much faster than general inflation, and Thiel hopes to offer an alternative to government college subsidies and propaganda that terrifies young people into believing that they’re unfit to thrive in the real world.

    I wrote about it on my blog:
    http://brophyworld.com/higher-education-bubble/

    • Eugene says:

      Hi Mark, I heard about Peter Thiel’s fellowship. I think it’s absolutely brilliant and I support his efforts 100%. I think that stats are a little misleading when it comes to college. The stats show that individuals that go to college make more over their lifetimes than those that don’t. Well there’s lies, damn lies, and statistics. You need to look at the actual individual that go onto college. If they are smarter, or willing to work harder, than those that don’t – they would probably make more than the other segment whether they go to college or not.