A Subprime Education Crisis
I’m worried that our huge educational institutions will fail in the coming years. Maybe not as spectacularly as the banks during the subprime mortgage crisis in 2008, but slowly and surely as a new and more sustainable education model emerges and changes how we value higher education.
There might always be a niche for this type of institution, but I find it hard to believe that nothing will change over the next few decades. It’s definitely possible to learn without huge sprawling campuses and expensive professors. Students in the United States are leaving school with record high debt, and are oftentimes still unable to find a job in their desired industry.
I’d like to think through what might be going wrong, and some possible roads forward. This post is basically just me daydreaming about the future — I have no idea if any of this will come true, and there’s definitely a chance I’m wrong about the current higher education system. I’d love to hear your opinion in the comments!
Follow the Subprime Loans
When I wrote my first notes for this post, I thought the label subprime education crisis was a smart concept. After doing some more research I, of course, realized that I’m late to the party. There is an hour long episode of Frontline called A Subprime Education that takes a look at the unethical practices of some for-profit colleges, and this article in The Huffington Post that looks at some of the broader statistics. Here’s a quote from the Huff Post article:
For borrowers whose bills first came due in 2012, 57 percent of them owed more on their federal student loans by 2014, the study shows. By contrast, less than 40 percent of borrowers who entered repayment from 1996 to 2006 experienced an increase in their balances two years after leaving school.
The paper doesn’t explain why borrowers’ loan balances are growing at a time when they’re supposed to be decreasing. Possible reasons include the increased use of federal plans that allow borrowers to make payments based on their earnings, the heavy use of forbearance plans in which borrowers’ required payments are delayed, and rising defaults as students increasingly flocked to questionable for-profit colleges in the wake of the Great Recession but were unable to secure jobs that would enable them to repay their loans.
Whatever it is that’s causing the problems in the loan market, I would argue that it’s way too easy to get a student loan right now. Loans are handed out as if it’s a guarantee that a degree will lead to a high (enough) paying job. Maybe the solution isn’t to make it easier for people to get a loan. Maybe the solution is a complete overhaul of higher education that makes it possible to gain the skills needed for a job in a way that costs less and requires less time to complete.
Coding Bootcamps
I imagine the future will require all of us to be capable of pivoting more quickly in our professional lives. A change in automation might instantly leave thousands of people out of work. How can we give someone a valuable skill in a short amount of time for a small investment? This is better for everyone involved — the worker gets a new valuable skill to nurture and help them earn, and we as a society benefit from an additional skilled worker.
I think a great example of where things might go is coding bootcamps — they’re basically modern trade schools. With this type of program, you can learn the skills necessary to become a junior web developer in a few months, for significantly less money than a four year degree.
I’ll put a disclaimer in here that these programs are still new, and some are starting to fail as they figure out the best business model. Personally, I don’t really think this is a terrible sign — it’s going to take some time to figure out what works best. I still haven’t completed the program I’m enrolled in and found a job, so keep that in mind as well. I can’t fully stand behind the concept until it has resulted in me having a full-time job as a developer.
Part of the reason I decided to enroll in Thinkful is because I’m excited about the future of online schools. Web development definitely lends itself to this type of program, but I can’t wait to see how the same model is applied to other fields. I learn so much in the three hours a week I spend with my mentor.
Here’s an interesting quote from this article related to breaking down a college degree into one on one sessions with a professor:
The average tenure hopeful adjunct makes $40 an hour. If you were to employ her as a private tutor at the cost of $60 an hour, and had four hours with her a week, and did that for 14 weeks (that's the length of an average college course folks) that is about $3,400.
Were you to employ three such professor-tutors, that would be about $10,200, or a bit over $20,000 a year. In four years you would have racked up $80,000 in costs. But this is still $30,000 less than the total for the 'cost conscious' universities. It is a quarter of what you would pay for Trinity.
Remember: this $80,000 is for private tutoring, where individual attention would give you far and away a better and more thorough education than the 300-kids-in-a-lecture-hall style of classes that dominate undergraduate education today.
But it can get even cheaper. Let's say you take the general principle of group classes from the university. Say you can find four other people to take all of these other classes with you. Just four. Well that equals out to $680 per class, or $16,000 a person for four years of classes.
To be fair, add in $1,000-$2,000 for textbooks and a subscription to JSTOR, for a total of about 17,000 to 18,000 for four years.
Modern universities are insane.
Save the Universities
If students have cheaper proven alternatives, they’ll start to question the need to spend so much on a university degree. As less people are willing to spend the money, universities will have no choice but to lower prices or change their model to something that is less costly. Or, unfortunately, they can pursue aggressive and unethical marketing practices to recruit new students.
I don’t want universities to fail. There’s nothing quite like being surrounded by thousands of other people who are bettering themselves. They’re also centers for innovation and progress in society, which might actually be where the divide starts to form as new educational models arise. Universities can remain centers for research, community, and the pursuit of knowledge, and trade schools might take over as the future of higher education for the masses.
What do you think the next few decades of education will bring? Will schools remain largely unchanged? I’m excited to see what happens!
I can objectively say that about 95% of the skills i truly need in live have been obtained outside of high school and campus. Universities (most of them...the "not best ones") are severely outdated and are starting to feel like "medieval models" to me. I think that the more developed information age will be, the wider spread the knowledge that knowledge is important will have (rusty way how to put it but you surely got it:D). Thus said, I think that people will seek education sooner or later in their lives no matter the model of education system. If they will be clever they will find a way how to obtain knowledge without having to take a loan and if not they will pay dearly and will root against the current model even more (that means that less and less people will do that mistake in the future).
I am fairly positive that when I graduate, (roughly 3-4 years) the diploma will already be in hands of so many people that it will be near to worthless. That is why I study Blockchain as much as i can because i simply do not trust educational institutions in their regulated forms, because from my point of view they simply are outdated and my biggest motivation is to finish one of them to have bigger credibility on my rebuttal claims...I believe that i have to seek knowledge on my own and that it is less likely to be biased, because schools (almost all of them) and universities (a lot of them) are by nature teaching biased knowledge.
Yeah, I agree with everything you said. It's unfortunate that so many jobs (at least in the US) require a college degree, regardless of if the job will actually utilize the skills from that degree. It's such a huge investment of time and money for skills that you probably won't use at all. There's no way this is a sustainable model.
That's cool you're balancing out your traditional education with self-study of blockchain technologies. I can't wait to see how things develop in the coming years, because I think we'll see a huge change in how accessible knowledge is. It's much easier now to learn new things because of the internet, but I think in the coming years we'll see a pretty huge shift that will make it even easier (for example, courses and curriculums built on something like the STEEM blockchain, where course creators can earn money for educating people, but offer it for free to everyone who is interested).
Thanks for the comment! 🙂
Yea can’t judge the US in that manner from CZE, but I think that it is very much the same everywhere (the need of diploma). The market has only partly reacted to the changing trend. The employers want mainly experience WHILE still furiously demanding the diploma (partial change from “only diploma”). I think that people just need to find a place where they can prove their usefulness, because as I said, there will be so many people with diploma that suddenly all that will truly be required from the people is skill and experience from any given field of expertise (my assumption...but it seems logical to me). Of course jobs offered by stubborn employers have to be avoided:D.
The example with Steem you mentioned is perfect. This truly is a way how current decentralized systems could heavily compete against the traditional model, while encouraging the students to study more vehemently (cuz it is advantageous from short AND long term perspective at the same time). I support such projects on Steemit every time I see one popping up from time to time. Unfortunately up until now they popped up only scarcely.
Great information @jeffbernst.
Exactly, That is a big trouble for students to pay high amount of money to universities because everyone can't pay. Some students also depend on loans, but even if they got a good job. It's still hard for them to pay the loan back because at that time people enter into professional life and living a professional life is not as easy as we think.
The coding bootcamps helped a lot guys to get a job as a developer by taking a few months of classes. I've heard that some coding bootcamps have a connection with different companies. Every time anyone performs well in coding bootcamp, They also referred to different companies by that coding bootcamp.
That's a really good point about loan repayment being more difficult than most people expect. When you're in college, the starting salaries of entry-level jobs sound so high, but it's hard to really understand the expenses necessary for adult life that will require most of that salary.
Yeah, it seems like a lot of coding bootcamps have good connections with companies. I'm hoping it works out for me too! 🙂
Yeah, exactly, you're right. It's very hard to understand the expenses of an adult's life.
No worries Jeff, You'll be hired soon by any good company as a developer because you are working hard towards your goal and that's awesome.