There’s been a great deal of commentary lately on the technology industry, and whether its biggest players and hottest companies – Facebook, Zynga, and Groupon – are overvalued. It’s a fairly easy topic to look at, given the mediocre revenues produced by most of today’s tech giants and their low levels of potential growth.
But despite the appeal of this bubble, whether it’s true or not, dangerous or exaggerated, is a fact that most of today’s top reporters are ignoring – there’s a much bigger bubble going on, and it’s a far bigger one than the technology industry is experiencing.
The bubble, in my eyes, is not a financial one, nor is it a bubble caused by over-investment and a lack of analysis. It’s a bubble in perception, and it’s projected the world of higher education, post-school education in particular, to a semi-divine position where it’s neither questioned nor looked at with the right amount of critical thought.
This year, more students than ever will graduate from college, university, or other higher learning institutions. They’ll walk away with advanced degrees, armed with the knowledge that they won’t ever have issues finding engaging, high-paying jobs. They’ll walk away with knowledge of how the world operates, how they can help their employers, and how to be a well-rounded person.
They’ll also walk into a world where almost eighty-five percent of their peers are moving back into their parents’ homes, saddled with record levels of debt and few job opportunities. They’ll graduate in a world where their jobs are quickly being moved into other countries, fueled by the lower wages that can be paid for workers almost – or often equally – as skilled as they are.
Most of the time, this type of commentary results in some sort of call to political action – something that denounces profit-driven colleges and is sympathetic to the financial plights of students. It’s very understandable – many colleges, particularly private colleges in the United States, are profit-driven, and a great deal of students are blissfully unaware of their financial reality until after they graduate.
But it’s not exclusively a problem of colleges and ignorance – it’s a mindset problem. For years, the value of a college education has rarely, if ever, been questioned, not just by incoming students, but by their parents – the same people that graduated from college, university, or a trade school many years ago.
Just twenty years ago, a college education guaranteed a stable job. If you graduated in English, you could walk into a writing or journalistic position with few issues. There was a print media industry, one which rewarded graduates for their investment in higher education. If you studied computer science, you’d leave to become a programmer, walking into a well-paid position relatively quickly.
Today, both of those jobs are being outsourced at rapid speeds. The journalistic positions are now the domain of bloggers, many of whom work for free. Computer programmers are becoming rare, particularly in high-income countries, as their work is rapidly outsourced internationally to people that match their skill levels but demand a fraction of their salaries.
All in all, many of the professions that were once enabled by a college education are becoming less lucrative than they once were, and some are being destroyed altogether. An investment in education, or at least formal education, used to be an asset for people searching for these jobs – now it’s turned into a costly, stressful, and potentially dangerous liability.
When a small business owner looks at how well their company is performing, the first thing they look at is their balance sheet. How much is their business spending each month to acquire clients, customers, or press? How much is that investment earning them? How much growth potential do their ideas have, and how far can their current business model reach into the future?
If you analyze a college education, particularly for people aiming to graduate in the liberal arts or the technology fields, both of which are being outsourced rapidly, the balance sheet is pretty poor. The expenses are gigantic – significantly more than they were for previous generations – and the benefits are, well, not quite what they used to be.
I know this first hand. I spent a year studying in Australia studying to become an accountant – a profession that I thought would have carry-over skills for running my own business. But it didn’t. It was an expensive course in the value of self education. All I learned was that the information offered is easily available elsewhere, and without a hefty price tag attached to it.
Today, there’s more potential than ever for people to learn without the need for four years at a costly university, and more potential than ever for them to use their new skills to earn money. While there is a massive shortage of jobs for graduates, smart people that educate themselves – not just on their favorite subjects but on how to be valuable to employers – are getting hired left and right.
Finally, there’s the opportunity that’s always present in recessions, yet rarely looked at – foregoing a traditional higher education to start your own business. It doesn’t need to be big – it can be tiny, as a matter of fact – but it’s often the better option. When you work for yourself, you have freedom that’s far beyond what any job could ever offer you.
Many of the professions we once went to college for are no longer locked away from those who’ve never graduated. Many of the smartest people, the ones hiring college students, never stepped foot in a university themselves. Many of the best opportunities, the ones that offer higher salaries and a great deal more personal freedom, are open just as much to non-graduates as they are to graduates.
The key, I think, for people debating whether or not to spend the tens of thousands, occasionally even hundreds of thousands of dollars for a higher education, is to look at the balance sheet, just like a business owner would. Is your education going to provide a real benefit to you in searching for opportunities and beating out the competition for them?
In some cases, the answer will be yes. But in most, it will be a resounding ‘no.’ The overwhelming majority of opportunities are available to people that can work hard, work smart, and find shortcuts that allow them to bypass the hordes of other job searchers. These people are business owners and forward-thinking workers, not twenty-something year olds with a piece of paper.
Driving this point home even further is the leading opinion in many business circles, particularly in internet business circles, that college can be a hindrance to success. Peter Thiel, the billionaire first investor behind Facebook and founder of PayPal, clearly believes this. He’s even gone so far as to give ambitious college kids a financial incentive to drop out to the tune of $100,000 over two years.
Then there’s the opportunity that’s available to all of us. If you’re reading this blog, you’re obviously aware of the myriad opportunities available to make money online. From affiliate programs to start-ups, the internet has presented thousands of opportunities for would-be college students to skip the monotony of classroom learning and move straight into the positions they’d get after college.
In fact, it’s given them the opportunity to move higher up the ladder than they would with a degree, often right away. There’s a tax that comes with a degree, and it’s not just the immense cost that one can push on you. It’s the applicant tax. Having a college degree signals that you’re competent, but it also signals that you were willing to put off work just to improve your chances of getting jobs.
In some businesses, that’s a killer. It’s certainly a killer if you want to move into management or high-level business right off the bat. Which says more about someone’s drive and ambition – that they went to university and spent three years diligently paddling academic water, or that they’re uninterested in wasting time and are instead ready to get to work right now and right there.
The argument against this, of course, is that by skipping university you enter the job market without the skills that make you a valuable contributor. It’s understandable at face value, but when you look into it, you realize it’s nonsense. The amount of time spent on direct learning in college is minimal, and it’s easily made up outside of your time spent at work with resources like Khan Academy.
It also depends on the assumption that work will take up all your time. Is there any entry-level job that eats up seventy, even eighty hours a week? Of course not. The type of ambitious person that’s willing to bypass college to achieve their goals isn’t a ‘lifer,’ aiming to spend their entire career in a basic position. They’re smart and ambitious, and they know how to create their own time to learn.
When you hear about scary levels of unemployment, graduates unable to find jobs, or huge debts from higher education, don’t blame the employers for a lack of jobs. They’re just responding to an even bigger problem – the lack of suitable employees. Instead, think about the true value of your educational options. Is a degree really going give you a bright, successful, and interesting future?
In my opinion, the answer is ‘no’ more often than it’s ‘yes.’ While there are some professions that are undeniably linked to success at college, not all of them are, and the vast majority aren’t. Just like the bubbles in technology and housing popped much more quickly than they grew, the bubble in higher education is going to burst, leaving even more graduates with more debt than opportunities.
But as economists are fond of saying, when a bubble bursts it isn’t the end of a strong market, but the correction of an overvalued one. Right now, higher education is grossly overvalued, primarily because of the generation gap between employers and employees. That gap is getting smaller every day, and it’s only a matter of time before both sides of the spectrum see education for what it is.
There’s also an opportunity in this for those that would rather skip college and pursue their dreams right after high school. Instead of focusing on the superficial indicators of knowledge and ability – the degrees, the qualifications, the certificates – focus on the measurable ones. Generate revenue for a real company, create a product and market it, or acquire real skills that graduates are never taught.
These are the skills that get you the high-paying management positions, and the experiences that are essential for taking control of your own business, should you choose to go in that direction. They’re rare, and for good reason. They’re lucrative, especially if you’ve got them. And they’re the skills that you should be pursuing, not the ‘textbook intelligence’ that’s taught en masse in college.