Higher Education Is The Next Big Bubble

As of 2010, there are 20.3 million higher education students in the United States alone. They’re sitting in classrooms taking notes, they’re huddled in libraries reading their textbooks and they’re lined up at Starbucks to make it through a late-night study session.

They’re waiting for graduation day so they can take what they learned to go start their own businesses or work their way up the corporate ladder. They’re waiting for graduation day so they can buy a house with a white picket fence, buy a new car and start living the life they’ve been studying for. But they’ve been studying in all the wrong places.

Higher Education Is 559% More Expensive

According to the National Center for Education Statistics, the cost of higher education has increased 559% since 1985. From 1982 to 2007, the average family income only increased 147%. Let’s put that in perspective. The cost of higher education increases by 7.4% annually. Healthcare (5.8%) and housing (even at the height of the bubble) don’t increase that rapidly.

“But everyone is doing it!” We watch as all of our friends accumulate student debt and post hazy party pictures on Facebook. Why shouldn’t we be as comfortable with taking on debt? Everyone’s doing it.

Students Owe Trillions!

Unfortunately, we’re conditioned to believe that no matter what the cost of university or college, it’ll pay off in the end. We’ll get that high paying job or start a successful business and repay the debt in no time. It’s simply a necessary expense for a successful career, right? Maybe that’s why student loan debt has surpassed the trillion dollar mark in the U.S. alone (that’s more than the total credit card debt).

What’s worse is that it takes the average student 14 years to repay their loans. Even if you graduate in exactly four years, you’ll be paying for your student loans until you’re 36. That is… if you don’t miss a single payment.

“You wasted $150,000 on an education you coulda got for a buck fifty in late charges at the public library.” ~Will Hunting

What does all of this mean? A bubble is inflating, one that experts predict will be worse than the housing bubble. Those who can’t afford to contribute thousands to the trillion dollar student deficit are starting their own businesses instead. As costs rise, people are questioning the value of school. Is it the right place to get an education? Not likely.

Education Hacking: The Rise of the Unacademic

In fact, plenty of today’s most famous and successful entrepreneurs are succeeding without a degree. We all know that Bill Gates (Microsoft), Mark Zuckerberg (Facebook), Lawrence Ellison (Oracle Corporation), Michael Dell (Dell), Marc Rich (Glencore) and Ty Warner (Ty Inc.) are infamous billionaire college dropouts.

They’re the ones who weren’t content to sit in classrooms learning about theories that would be out of date by the time they graduated. They’re the ones who didn’t stick with college just because everyone was doing it. They’re the entrepreneurs. And they’re not alone – not by a long shot (am I right, Mr. Clooney?).

In fact, 54% of Americans who went to college are dropouts. But why? Because they’re following in the footsteps of entrepreneurs like Dale Stephens, founder of UnCollege. He is committed to encouraging young adults to “hack their education”, a term entrepreneurs are all too familiar with.

Dale uses UnCollege to encourage the next generation to teach themselves the specific skills and knowledge they need to succeed in their dream careers. No more studying for the sake of a grade (or worse, for the sake of a piece of paper). No more restricting learning to a classroom.

“Okay, okay. So I didn’t quite make it to graduation day at the University of Waterloo studying Engineering and Mechatronics.” ~Ted Livingston, CEO of Kik.

Entrepreneurs Don’t Need Degrees!

1. Real world experience is more valuable than theories from the figurative “ivory tower”.
2. Colleges and universities are slow to change and adapt, but entrepreneurs need to be agile.
3. You can’t learn passion, especially from a professor.
4. No one wants to start a company with 14 years of student debt in their back pocket.
5. Entrepreneurs embrace creativity and higher education is too black and white.
6. Failing is essential in entrepreneurship, but colleges and universities frown upon it.
7. There’s no perfect formula to study and there’s no alternative to JFDI.

Does higher education still have a place? Of course it does. Unless you’re Mike Ross from Suits, you need a law degree to be a lawyer. And if you’re my doctor, I sincerely hope you have a medical license. But do you need a degree to be an entrepreneur? No. To work at a startup? No. To work for a big agency? No (but they might try to tell you otherwise).

Still not convinced? Watch this video by Suli Breaks

YouTube Preview Image

Don’t just wait around for the bubble to burst. Make sure you’re studying where it counts.

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Comments.

  • irish_ramuk

    Here is the problem. Not everyone is an entrepreneur. We also need people who work for others. Otherwise, everyone is doing new stuff and not providing the stuff thats already there. Thats why college education is important – its for the 99.9% of people who are not going to be entrepreneurs (at least in their 20s and 30s) and need a job….

    • http://twitter.com/danmartell Dan Martell

      I agree not everyone is going to be an entrepreneur – but I also believe that people are paying for something that won’t materialize (just like they did with homes).

      In todays world – more and more people are hiring based on – what you’ve accomplished, not where you graduated from.

      I never look at education – I look at history and projects. The social web allows you to build reputation not by degrees, but accomplishments.

      Things are changing .. the smart ones are already there – it’s the laggards that are going to get burned.

      • John Duhring

        Education is tied to labor needs: Post Civil War, we built colleges in mining and manufacturing to provide labor to serve the latest technologies. Post WWII, new technologies enabled the spread of books in all fields, which opened a universe of options via the GI Bill and other incentives.

        Now, we have direct access to knowledge via search and to the universe via the camera and other sensors.

        Students can be problem solvers and builders without schooling, but schools need to invite students to bring what they learn to the class as well. What’s needed is a way for them to document their work and share their portfolios, enabling collaboration, mentorship and, yes, employment.

    • http://twitter.com/mfishbein Mike Fishbein

      There are better and more cost-effective ways to learn and prove your qualification, and for employers to evaluate qualifications than higher education. Current economics are not sustainable.

      Unless you go to an ivy league school, your degree is essentially a dunce cap in disguise that will do nothing but close doors and take you out of stacks of resumes.

  • Ben

    I agree with the overall statement, but this is not true:

    “But why? Because they’re following in the footsteps of entrepreneurs like Dale Stephens, founder of UnCollege.”

    Most dropouts are not choosing to drop out.

    • http://twitter.com/danmartell Dan Martell

      Ben, appreciate the comment and I also agree with you .. most dropouts aren’t the type of folks I mention above.

      I just felt like we needed to understand what’s going on re: $$$ and ROI for education.

  • http://www.rosssimmonds.com/ Ross Simmonds

    Great post Dan.

    While I agree with some of the comments, I think the key point here is that paying thousands of dollars for an education isn’t what determines whether or not you’re going to be successful. There are so many University graduates who walk across the stage with the idea that, since they’ve graduated a job should land right into their lap. They get discouraged when they don’t get responses from the black hole (aka Job Banks) and wonder why the world has treated them so poorly.

    In reality, the key trait and passion that is found in each of those entrepreneurs you mentioned is curiosity and the commitment to self education/development. Higher-Ed is on the break of disruption and it’s not only because of the doubt people have surrounding the process but also in the economics around it. This past week I received an email from Coursera confirming that a course I registered for on Game Theory was set to happen next month. I wasn’t alone, there are more than 100K people registered for this course from around the world. We’ll be taught by some of the brightest in their field and it will cost us nothing but our time.

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  • http://twitter.com/mkjones Michael Kimb Jones

    I agree entirely with this – I learned almost every important lesson after I left college and I’m now (10 years later) working on an initiative that offers modern learning practices via events and online (workshops, seminars, conferences etc).

    BUT, college was the happiest time of my life and I would never give it back. I was a fool back then with zero direction. So immature and unknowing. College helped me focus on what mattered unlike high school which was just a nightmare roulette wheel of lessons and topics I had no interest in.

    I see people that were my age when I started college start business, make money, employ people, do great things. It makes me stare in awe.

  • Pingback: Higher Education Is The Next Big Bubble | TRENDS IN HIGHER EDUCATION | Scoop.it

  • http://blog.user10.com/ Brian Sun

    Dan, your post got me brainstorming of where students who were considering going back to grad school could put their time, energy, and finances instead:

    Go to conferences and meet like-minded people.

    Teach yourself “specific skills and knowledge you need to succeed in your dream career” — Cal Newport writes great stuff on this topic like in this post http://calnewport.com/blog/2010/01/23/beyond-passion-the-science-of-loving-what-you-do/ — a good complement to your “plan your life, not your vacation” post.

    Read a ton of good books — http://personalmba.com is a good start or just hit up the library, Good Will Hunting style.

    Take successful entrepreneurs out to lunch and ask them how they did it — http://www.getrichslowly.org/blog/2008/10/12/the-best-20-youll-ever-spend/

    Get clarity on Clarity by talking to experts in projects you’re doing or industries you’re considering.

    Start your own company and JFDI.

    What else do you think would be helpful to add to this list?

    • http://twitter.com/danmartell Dan Martell

      The only other suggestion would be to “Start”. Start something, anything .. essentially DO something. It’s great to get feedback and learn, but it’s always better to do so when there’s something immediate to apply it towards.

      The funnest thing about being an entrepreneur is Just In Time learning. If you don’t have a problem to solve, it makes the learning less effective.

      Hope that helps.

      • http://blog.user10.com/ Brian Sun

        I love the concept of Just In Time learning, that definitely helps. Thanks for your insight, Dan!

  • http://www.facebook.com/andre.doiron2 Andre Doiron

    Fuck Dan… Your writing skills are pretty much untouchable…