Professor Elam

A good rule of thumb is that tuition rates will increase at about twice the general inflation rate. During any 17-year period from 1958 to 2001, the average annual tuition inflation rate was between 6% and 9%, ranging from 1.2 times general inflation to 2.1 times general inflation. On average, tuition tends to increase about 8% per year. An 8% college inflation rate means that the cost of college doubles every nine years. For a baby born today, this means that college costs will be more than three times current rates when the child matriculates in college.

http://www.finaid.org/savings/tuition-inflation.phtml

How many times has the government or worse, various up start private 'schools' promised to re train laid off workers, usually in reaction to an economic slowdown?  Answer, every time there is an economic slowdown. Reports indicate that diploma mills are now being sued, and with increasing frequency.  But, the idea that we will some how re train laid off construction workers to have green jobs  or manufacturing employees, hello Chrysler, to become information professionals lives on. 

As the table shows, colleges have routinely increased tuition far above the economic benefit over time of obtaining a college degree. Administrators endlessly trot out numbers that obtaining a college degree will increase one's lifetime earnings. Well as business and government has decided that running say a dormitory is a diploma required job, yes but this masks the lack of jobs for oh so many that choose feel good programs which do not necessarily lead careers in which there are employment shortages. I watched a distinguished college president lament over the decline in the quality of anthropology degrees recently. Who other than Margaret Mead ever made a living as an anthropologist?  It is an interesting field of study, I grant that, but not one in great demand. If one wants a degree in say anthropology fine, but if one wants a job and now, that is a rather different matter. Yet education industry has blurred that distinction. 

Prior to the GI bill, the sheer difficulty of stopping work for four years kept the number of college grads in synch with demand. Since the GI BIll, Pell Grants, Student Loans, colleges like home builders have responded to credit availability with lots of product, much of questionable outcome value in my opinion. 

Our point is that education is a bubble. There are still jobs for folks that can re build jet engines and others that pass technical certifications whether it be in plumbing or accounting. But the idea that one can pay thousands of dollars for a multi month class that will promote one to a career is a bubble going to burst.