NIA On Why America's College Bubble Is Next To Burst

Tyler Durden's picture

For those of you hunting for bubbles, and wondering why the Federal government is the biggest source of credit in each and every G.19 release, here is a hint of what's coming next from an NIA press release:

America's College Bubble Next to Burst

The National Inflation Association (NIA) is pleased to officially announce that it will soon be releasing its hour long documentary 'College Conspiracy', which will expose the U.S. college education system as the largest scam in U.S. history. NIA has been producing 'College Conspiracy' for the past six months and plans to release the movie on May 15th. NIA members will be given the first opportunity to watch this must see documentary, which we hope will change the college education industry for the better.

NIA expects 'College Conspiracy' to take college education by storm and expose the facts and truth about tuition inflation to prospective college students. Almost everybody applying to college has heard the oft-repeated statistic that Americans with college degrees earn $1 million more in lifetime income than high school graduates without a degree. This is one of those statistics that gets repeated so many times that just about everybody accepts it as fact, but nobody actually does the research to confirm whether or not it is true. 'College Conspiracy' will prove once and for all if indeed this so-called statistic is true or just a myth.

If 70.1% of high school graduates enroll in a college or university, how does a college degree give you an advantage over the rest of the population? Back in the early 1960s, Americans didn't need to go to college. We were a creditor nation with a strong manufacturing base. With an unemployment rate of only 5%, jobs were available to almost everybody. Less than 50% of American high school graduates enrolled into college. For those who did attend college and graduate with a degree, it was actually something special that made you stand out from the rest of the field, because not everybody had one.

American college tuition inflation has been out of control for the past decade. During the financial crisis of late-2008/early-2009, almost all goods and services in America at least temporarily declined in price. The only service in America that continued to rise in price throughout the financial crisis, besides health care, was college education. Despite real unemployment in America reaching 22%, students were brainwashed into believing that if they were lucky enough to be blessed with the privilege to get half a million dollars into debt to obtain a college degree, they will be on a path to riches and have a guaranteed successful career; whereas those who don't attend college are destined to be failures in life.

The current college education bubble is one of the largest bubbles in U.S. history. The college bubble has been fueled by the U.S. government's willingness to give out cheap and easy student loans to anybody who applied for them, regardless of if they will ever have the ability to pay the loans back. Student loan debt in America is now larger than credit card debt, but unlike credit card debt, student loan debt can't be discharged in bankruptcy.

During the 1970s, college students were able to afford their own college tuition without getting into any debt, simply by working a part-time job year round or by working a full-time job during the summer. Not only that, but most college students were also able to afford their own car and a small apartment. However, since 1970, Americans have experienced a 50% decline in their standard of living due to the Federal Reserve's dangerous and destructive monetary policies. You never heard of parents setting up college savings accounts for their children 40 years ago, but thanks to the Federal Reserve, this has become the norm.

The biggest competitive threat to Wal-Mart today in terms of market cap ($192 billion) is not Target ($35 billion) like you might think, but is actually Amazon.com ($89 billion). Wal-Mart is able to offer the lowest prices out of all brick and mortar retailers, because of the size and scope of the company, which allows them to be profitable even at extremely low gross margins. However, while Wal-Mart's stock price is only up 16% from where it was exactly 5 years ago, Amazon.com's stock price is up 470% during this same time period.

Amazon.com's stock price has risen by a 29 times higher percentage than Wal-Mart due to the fact that they sell their products over the Internet with substantially less overhead costs. NIA believes that the future of college education is over the Internet and that Americans in the future will be able to receive a better quality education from the best professors from all around the world at only a fraction of the cost of a traditional brick and mortar college education.

For the vast majority of college courses, there is absolutely nothing that students can learn in a huge multi-million dollar lecture hall with hundreds of other students that they can't learn at home listening to that same professor on a computer. The only reason online colleges haven't taken off yet in America and still have less than a 1% market share of U.S. higher education is because America has a college-industrial complex that cares only about profits and not educating students. The people who control the system simply don't want the system to change, because they are making way too much money by turning American students into indentured servants.

Back in the 1980s when Americans graduated high school, they would get hundreds of thousands of dollars into debt to buy a house. Today, millions of Americans have mortgage-sized debts, but still live with their parents. All they have is a piece of paper called a college degree, that is rapidly declining in value even faster than tuitions are skyrocketing in price.

'College Conspiracy' was made possible by the personal stories that were submitted to us by thousands of NIA members. NIA's staff spent the past six months traveling across the country, interviewing our country's top expert guests in nine different states. Please tell all of you family members and friends to become members of NIA for free immediately so that they along with you can be among the first to see 'College Conspiracy'.

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TexDenim's picture

So true. Half the warm bodies in college right now are much too dumb to be there. Who among us believes that everybody was meant to get 16 years of education before starting life? What a crock! What happened to plumbers and carpenters and ditch diggers? They're busy getting Russian Lit degrees so they can do their jobs? I don't think so.

natty light's picture

"Looks like I might not have enough money to go to college."

"Well, the world needs ditch-diggers, too!"

66Sexy's picture

Pity that education is worthlesss today. With respect to an economic solution: it provides NONE.

And to actually be in debt for a bachelors degree in history or psychology, or a MBA? Waste.

Id fight Gandhi's picture

MBAs are a waste. It's by far cheaper though much harder to get your CFA and actually have some useful knowledge.

WeekendAtBernankes's picture

Hadn't heard of the CFA.  Thanks for the heads-up.

dark pools of soros's picture

CFA??   Goldman only hires guys working the shell game on the boardwalk

Anonymouse's picture

A coupld of years ago, some guys at Morgan Stanley said they are consciously de-emphasizing MBAs and preferring to promote analysts from within.  This was all pre-GFC though, so not sure if that still is true

Id fight Gandhi's picture

Some MBA programs are working in material so you can go through the chartered financial analyst program.

In an MBA you can usually coast thru an get a degree. CFA you need a 4 year degree, 4 years of qualified work experience.

There's 3 exams you take can only take 1 once a year and success for passing is less than 40%.

The problem is much of the work you're doing is on your own. The exams and study guides are useful to gain some knowledge even if you're not going to get the CFA.

Best part is it can be all done for a couple grand and you know way more than any MBA.

Anonymouse's picture

I have MBA (Chicago) and CFA.  CFA was like year 1 of B-School.  Year 2 went beyond that.  But it is cheaper and more practical.  But for job changers (like I was), MBA got my foot in the door so I could get the work experience required for CFA.

Libertarian777's picture

interesting that you say this, since my experience (still busy with my CFA studies), is CFA is, as its title states, a 'financial analyst' course.

I find it hard to believe the first year of B-school would equate to the entire CFA curriculum. I haven't done an MBA yet (only have a postgraduate in Accounting/Finance), but the various syallabi I've looked at discuss things like international management, trade, etc. and not as much quantitative analysis as CFA, so not sure how one can compare the two.

Anonymouse's picture

Well, I went to Chicago which is a quant school.  Also, you design your own curriculum (subject to some topical requirements) so I made mine heavily finance oriented.  So in fairness, mine may not be the typical case

Sausagemaker's picture

I have an MBA and it has served me well.

I once had an economics professor who said that an education is the most expensive thing that people are willing to pay for but not actually get. He said you would never go into a Honda dealer, give them $25 grand, and leave without your car, but many students will pay for an education that they don't get.

That lecture changed how I looked at education. I graduated top in my class and have been reasonably successful. However, I can tell you there were many people that graduated with me who didn't learn a damn thing.  

Beancounter's picture

Totally agree - a CFA is far more scarce and demanding than any MBA program.

downwiththebanks's picture

Close all business schools:  they're nothing but factories spewing bad math and dumb propaganda for dead ideas that never worked in the first place.

Freddie's picture

CFA? So they can tell us how important modern portfolio theory is and how to read balance sheets?  I realize that the CFA program is very good and not easy.  However - do they discuss how it is all manipulated and how to develop a portolio when you have a corporate facist Mussolini state under a usurper?   How did you add alpha under Mugabe II?

Or how does a portfolio manager deal with fat fingers, HFT, insider trading, bear gangs and other manipulation.

Every 5 years or so, out of the blue, I would get a call from a money manager. He mainly managed his own dough. He had come to the same conclusion that I did.  General Electric is a ponzi fraud and is bankrupt.   I am not sure if he was a CFA but he could run circles around most of them.  About 18 months ago the Kenyan backstopped their worthless commercial paper before they were about to be fed to the CDS sharks.

I have seen reports from CFAs,who with a straight face,said GE was a solid company.  The point is most CFAs are whores and liars like everyone else now.  The value of a CFA has also been watered down.

Loads of Democrat idiots here blame Bernake and the not-so-secret banking cartel/Fed while they never mention their golfer, serial liar and most likely CIA cut out.

 

PolishHammer's picture

1000 bucks you miss that putt!

Old Poor Richard's picture

Gambling is illegal at Bushwood, sir.

chubbar's picture

+100 for the Caddyshack reference.

WeekendAtBernankes's picture

Great insight Tex.  Tyler's "college-industrial complex" is an apt description -- although the "college-government complex" may be more accurate.  They aren't encouraging kids to go to trade-schools.  Trade-schools are for losers and idiots, or so the myth goes.  This myth will likely self-correct as the result of a combination of boomers retiring from the manufacturing sector and young adults with  useless Liberal Arts degrees.

There seems to be a correlation between the establishment of this bubble, the decline in trade-school educations, the decline in quality public K-12 education, monstrous and ever-increasing education budgets with no or negative returns in value, and the establishment of the Federal Dept. of Education in 1979.

Like military spending, the notion of education spending as a sacred cow is a dangerous and unsustainable precedent to set.  The hagiographication of educators and especially the government and union (education) bureaucrats has not helped the situation in the slightest.  The myth that public servants are immune to greed is a dangerous one indeed.  As the bubbles continue to burst and the economy continues to decline, more and more Americans will be forced to awaken to the reality of our situation.

oddjob's picture

As a ticketed plumber, I laugh at the losers that waste money on a useless education that will end up leaving them in the poverty before they even get a job.

 

topcallingtroll's picture

All the kids who dont go to the university want to be a mechanic.

I keep telling all of my kid clients to consider plumbing. It can be much more lucrative.

oddjob's picture

A career as an Electrician or Pipefitter is equally as lucrative.

tickhound's picture

"Soon I'll be on fries; then the grill. And pretty soon, I'll make assistant manager, and that's when the big bucks start rolling in."

j/k... But had to do it.

Actually agree, there's nothing impractical about well paying "practical skills"

vs "fancy financial product creation" or jobs servicing it or some off-shoot symptom.

Looking forward to government backed loans for "technical college"... in its continued efforts to "help" 

..could be a trade in there somewhere

Slartebartfast's picture

I work for this industry and have been looking for objective evidence of this bubble bursting for years - with no success.  Every year the college loan industry makes it easier and easier, and the boomers are so completely brainwashed into believing they MUST provide a college education for their kids at ANY cost, that more kids show up every year no matter how bad the resulting education and how high the price.  It continues to amaze me.  

litoralkey's picture

Here is your first sign that the college-industrial complex is retrenching: 

 

http://news.yahoo.com/s/afp/20110506/ts_alt_afp/usmedianewspaperscompanyearningsinternetwpost_20110506143733?bouchon=511,dc

Washington Post profit down 67 percent

(excerpt) The Post Co. said education division revenue fell 10 percent to $640.6 million on lower student enrollment at its Kaplan schools.

 

newworldorder's picture

Its not just the parents fault. Most guidance counselors at most High Schools have become shills for the college bound industry. The game starts as early as freshman year in HS. Its one big funnel designed to dump 75%+ percent of HS graduates into college campuses. All endorsed by every politician who ever approved a single dollar for education. This after all is another in a long line of American success stories. Why ruin a good thing by looking too hard at it?

New_Meat's picture

Don't forget the game of the teachers, police, etc. (at least here in the people's Commonwealth) where e.g. an elementary school principal who has earned her "Doctorate" (and commands all to be addressed as "Dr. Smithers") has a) contributed to the ponzi while b) done rote work that results in c) an increased number of feathers in her nest.

wrt police viz: http://www.osfa.mass.edu/quinnbill/default.asp

fraud and default widely noted among the "for-profit" "Universities" [that research is left to the motivated student].

But Sallie has to be fed too, because "education" is an "INVESTMENT" that we can't defer.

- Ned

{I almost wish I hadn't read Lackoff's pink elephant book--I retch every time I hear "Investment".}

 

LaLiLuLeLo's picture

My year, the US HS graduating class in 2006 was the largest in history and the universities knew that the gravy train was at its peak. now they are simply trying to get more out of the dwindling reserves of brainwashed kids. Hopefully this report will end this sick SICK cycle.

Hulk's picture

Agreed TexDenim, 16 years of education before starting life is complete bullshit and THE most boring thing I have ever done...what a fucking waste of a young life...

legal eagle's picture

BUT, today with an effective 20 percent unemployment rate, only 4.5 percent for college grads and less than 1 percent fir folks with advanced degrees.

Huckleberry Finn's picture

I agree. I am currently in college, and I would say 50% of college students should not be in college. Yet, this is partly the high school education system fault too. They push and push students to go to college just so their numbers look good. I remember my high school days, they made it seem if you weren't going to college you were a failure in life. Neither of my parents went to college, and they are doing better than 95% of Americans.

JulianTrader's picture

Fraternity Conspiracy, BitcheZ!

:P

cosmictrainwreck's picture

yesh.... it's the "college experience" that ish so important in developing a "well-rounded" life. besides, how else ya gonna pay for maintenance on all those old brick buildings and salaries for the prof's & admin? talk about a mo-mo situation... 

WeekendAtBernankes's picture

lol ikr

The only reason half the L.A. degrees exist at all is to make the professors employable.  At my University I'm forced to take 3 credits in an "approved" gender-diversity curriculum.  Some would say this is due to political correctness.  I say it's due to a useless department that would collapse under the weight of its own sheer irrelevancy if we weren't forced to pay for their classes.

So yeah, "Economics of Race and Gender" it is, for me.  Whoopie.  Thank goodness I'm learning marketable skills.

 

dark pools of soros's picture

but what about college football and basketball and cheerleaders??  you all hate america!!

jeffgroove102's picture

You have probably heard it a buzzillion times, but that avatar and name is hilarious.

AurorusBorealus's picture

These "gender" wars are actually the crux of what goes on in the university.  Many of the women professors on university campuses teach no useable subject.   The only purpose of their "studies" in history, sociology, "gender" studies, anthropology, english, and so forth is to persuade everyone that women have been repressed for 6000 years of human history and therefore the university should hire more women (and pay women more).  In effect, most women professors get paid only to tell everyone that they should get paid. 

raya123's picture

NIA is a pump and dump scam.

Tuco Benedicto Pacifico Juan Maria Ramirez's picture

I can see your lack of edcycation hasn't hurt ya none sock puppet!

 

Tuco Benedicto Pacifico Juan Ramirez

WeekendAtBernankes's picture

Nice alias.  Tuco's the best.  Although having a cord tied to your revolver that could prevent the hammer from striking the cartridge at a critical moment may not be the savviest tactical decision.

LowProfile's picture

Unfortunately, your overweening douchebaggery thoroughly negates your asinine allegation.

OldTrooper's picture

Is that some kind of legal term?

Bendromeda Strain's picture

You may think the allegation is asinine, but it isn't baseless. But in case you are Lebed's mother, Happy Mother's Day.