The Coming Meltdown in College Education & Why The Economy Won’t Get Better Any Time Soon

This is what I see when i think about higher education in this country today:

Remember the housing meltdown ? Tough to forget isn’t it. The formula for the housing boom and bust was simple. A lot of easy money being lent to buyers who couldn’t afford the money they were borrowing. That money was then spent on homes with the expectation that the price of the home would go up and it could easily be flipped or refinanced at a profit.  Who cares if you couldn’t afford the loan. As long as prices kept on going up, everyone was happy. And prices kept on going up. And as long as pricing kept on going up real estate agents kept on selling homes and finding money for buyers.

Until the easy money stopped.  When easy money stopped, buyers couldn’t sell. They couldn’t refinance.  First sales slowed, then prices started falling and then the housing bubble burst. Housing prices crashed. We know the rest of the story. We are still mired in the consequences.

Can someone please explain to me how what is happening in higher education is any different ?

Its far too easy to borrow money for college.  Did you know that there is more outstanding debt for student loans than there is for Auto Loans or Credit Card loans ? Thats right. The 37mm holders of student loans have more debt than the 175mm or so credit card owners in this country and more than the all of the debt on cars in this country. While the average student loan debt is about 23k. The median is close to $12,500. And growing. Past 1 TRILLION DOLLARS.

We freak out about the Trillions of dollars in debt our country faces. What about the TRILLION DOLLARs plus in debt college kids are facing ?

The point of the numbers is that getting a student loan is easy. Too easy.

You know who knows that the money is easy better than anyone ? The schools that are taking that student loan money in tuition. Which is exactly why they have no problems raising costs for tuition each and every year.

Why wouldn’t they act in the same manner as real estate agents acted during the housing bubble? Raise prices and easy money will be there to pay your price. Good business, right ? Until its not.

The President has introduced programs that try to reward schools that don’t raise tuition and costs. They won’t work.  Right now there is a never ending supply of buyers. Students who can’t get jobs or who think that by going to college they enhance their chances to get a job. Its the collegiate equivalent of flipping houses. You borrow as much money as you can for the best school you can get into and afford and then you “flip” that education for the great job you are going to get when you graduate.

Except those great jobs aren’t always there. I don’t think any college kid took on tens of thousands of dollars in debt with the expectation they would get a job working for minimum wage against tips.

At some point potential students will realize that they can’t flip their student loans for a job in 4 years. In fact they will realize that college may be the option for fun and entertainment, but not for education. Prices for traditional higher education will skyrocket so high over the next several years that potential students will start to make their way to non accredited institutions.

While colleges and universities are building new buildings for the english , social sciences and business schools, new high end, un-accredited  , BRANDED schools are popping up that will offer better educations for far, far less and create better job opportunities.

As an employer I want the best prepared and qualified employees. I could care less if the source of their education was accredited by a bunch of old men and women who think they know what is best for the world. I want people who can do the job. I want the best and brightest. Not a piece of paper.

The competition from new forms of education is starting to appear. Particularly in the tech world. Online and physical classrooms are popping up everywhere. They respond to needs in the market. THey work with local businesses to tailor the education to corporate needs. In essence assuring those who excel that they will get a job. All for far far less money than traditional schools.

The number of people being prepared for the work world in these educational environments is exploding.

You would think traditional university educators would take notice. Beyond allowing some of their classes to be offered online, they haven’t. They won’t. Its the ultimate Innovators Dilemma. They don’t believe they should change and they won’t. Until its too late. Just as CEOs push for that one more penny per share in EPS, University Presidents care about nothing but getting their endowments and revenues up. If it means saddling an entire generation with obscene amounts of school debt, they could care less. This is how they get their long term contracts and raises.

It’s just a matter o time until we see the same meltdown in traditional college education. Like the real estate industry, prices will rise until the market revolts. Then it will be too late. STudents will stop taking out the loans traditional Universities expect them to. And when they do tuition will come down. And when prices come down Universities will have to cut costs beyond what they are able to. They will have so many legacy costs, from tenured professors to construction projects to research they will be saddled with legacy costs and debt in much the same way the newspaper industry was. Which will all lead to a de-levering and a de-stabilization of the University system as we know it.

And it can’t happen fast enough.

IMHO, the biggest problem the economy has is the enormous student debt new college grads and those leaving college find themselves with. In the past leaving college meant getting a job and getting a used car and/or an apartment with some friends. Yes there was student debt, but it wasn’t any where near your car payment. You could still afford the car and the apartment. Now its the exact opposite. Today, the minute you graduate college you face the challenge of debt against a college education whose value is immediately “underwater”

As a result spending habits have changed dramatically. Now when you leave school you move back home. You take public transportation or borrow your parents car. The only thing new you buy is the cheap work outfit you need. Savings ? Forgettaboutit. It’s not happening. Your entire focus is on hitting your monthly nut for school debt , credit card and maybe a car or apartment. The crush of college debt has taken an entire generation of graduates, current and future out of the economy. Which is exactly why the economy hasn’t grown and won’t grow beyond microscopic growth rates we have seen so far.

So until we get the meltdown in college education, don’t expect much improvement in the economy. Who gets elected won’t make a dang bit of difference.

Update: Let me add some clarification here based on some of the comments. I include the Online For Profit Mills that live off of the government delivering student loans as part of traditional education. Phoenix, Strayer, etc, they are not the new generation of Branded Education I am referring to. They are a big part of creating the bubble. i should have gone into more depth here. I will save it for another post.

As far as the purpose of college, I am a huge believer that you go to college to learn how to learn. However, if that gaol is subverted because traditional universities, public and private, charge so much to make that happen, I believe that system will collapse and there will be better alternatives created.

Online video classrooms with lively discussions dont need a traditional campus to teach kids how to learn. Discussion groups built around Khan Academy like classes dont require a traditional campus to teach kids how to learn. I’ve seen better discussions and interactions on twitter than in some of the traditional classrooms I have visited. The opportunities for online interactive video classrooms is going to grow quickly and will be far more cost effective than traditional universities.

Leave the for profit online schools that create more employment for debt collectors than their students out of the equation and we still have an enormous bubble in Higher Education that is having a horrible impact not just on the economic life of their students, but on the economy as a whole as well

The Higher Education Industry is very analogous to the Newspaper industry. By the time they realize they need to change their business model it will be too late. Higher Education’s legacy infrastructure, employee costs /structures and debt costs will keep them from being able to re calibrate to a new generation of competitors.

396 thoughts on “The Coming Meltdown in College Education & Why The Economy Won’t Get Better Any Time Soon

  1. Pingback: Noted NBA Owner Blasts College Loans | The College Bubble

  2. Well done article. There are so many aspects I’d like to respond to . ..

    1. The Student Loan take over by government (nationalization) was a bailout of sorts already. What will be the impact when the government starts raising the interest rates?
    2. Few students realize when they get the large loans that it can never go away . . . not even through bankruptcy.
    3. There are still industry that limit your promotion without a college degree. My husband (at 46) is having to finish his engineering degree or not be promoted anymore. This is one of the supporting reasons for the college for profit organizations like Phoenix. However, my husband could teach many of the classes he must now take.
    4. No everyone is meant for a college education. Unfortunately with the decrease in the manufacturing industry in the US, there are less and less jobs to begin straight out of high school. There is little encouragement to go into their own business straight out of high school either (my dad this successfully!)
    5. While online learning is awesome, especially in the technology sector, there is much to be said for the experience of a classroom. Sadly, many online classes simply mean you are teaching yourself (as my son experienced in his Linear Algebra class last spring). The team work and interpersonal skills learned in a university environment are necessary skills in the workforce that many student lack coming out of high school.
    6. Finally, part of the drive to a college education is the complete dumbing down of our public high school education. With a 60% dropout rate for high school seniors today and community college flooded with remedial students, is it any wonder, folks need a college education to begin to learn. They sure aren’t learning it our public high schools.

    My oldest is entering college this fall. We are striving to help him and encourage him to get his degree without student loans. He is giving up a lot of his time working now, but it will be worth it to him not have loans when he finishes college. It is a shame more college bound students aren’t aware of the pit falls they set themselves up for by borrowing so much for a piece of paper.

    Comment by Theresa Kennihan Wagar -

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  4. This is a helluva post. I wish you’d share your insights more often.

    Comment by Dan Horton (@danhortondaily) -

  5. Well done, Mark, but I’m not so sure about the non-accredited school/cert school system. I have mixed feelings here. It’s just so easy to abuse.

    It would be nice to see more opportunities for apprenticeship-style training, and not just in the technical fields. My original training was in journalism and I would have been much better served if I’d had more time to focus my energies on working for real papers & developing my HTML skills for online work. There are just some fields in which talent, experience, dedication & craft are more important than a piece of paper.

    That said, I’m glad my doctor completed his residency at Jefferson. 😉

    Comment by Graham Strouse -

  6. Great article! The problem is that people seem to think that the more their education costs the more successful and smart they are. So NOT true! What matters is the results that you’re bringing in your life, not the cost of your education. I live in Europe and the situation is the same here, students are head over heels in debts and yet maintain the illusion that it’s all worth it, even though they can’t get hired with their education. I recently met a guy in UK who was so proud to be have a student debt that he’ll be paying back for years, because he felt that his education made him better than anyone else – even though he didn’t even know where he could be hired with his degrees. He was doing every sidework he could to support his family and at the same time kept telling himself the story that “One day all of this education will pay off”. Just sad…

    Comment by Marjam Vaher -

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  12. There are alternatives. There are not-for-profit online regionally accredited universities. Western Governors University offers a flat rate of under 3k per semester (each semester is six months long) and that rate is for both undergrad and grad.

    Comment by Shannon Ann -

    • Shannon Ann, Propublica is running a story about a young man who died on his way back from a job interview. His father is now being pursued for his massive student loan debt. So beware out there, the powers that be don’t care if your son or daughter tragically dies, they want their money, and if a parent has co-signed on a loan, they want their payments now.

      Comment by alexlogic -

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  14. I created a company that utilizes Federal and State legislation to forgive student loan debt. The problem is solvable. You just have to know where to look for the solution.

    Comment by Student Loan Relief (@slrelief) -

  15. This is a tremendously interesting post. I am not knowledgeable enough on the subject to be able to tell how accurate the scenario depicted is. But I have long thought that American higher education was ridiculously expensive. I do think the personal debt situation is unsustainable and that, sooner or later, the bubble will burst.

    Comment by Rose Kahendi (@RKahendi) -

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  19. Brilliant post. Hit it right on the head.

    I went to a local community college for two years, even though I was accepted to UCLA, Texas A&M and the University of Minnesota. Why? Because the first two years of education are just general classes, and you can get that anywhere.

    So I worked hard, got a lot of great internships and came out of those two years debt free.

    THEN I went to that “pie in the sky” four-year college and barreled in to my major. Plus, I was ahead of everyone due to the internships I had, that “real world” experience that put me in front of everyone when applying for more internships.

    When it came time to graduate, my resume spoke more than the piece of paper with the college stamp on it, which put me in a great position to get a job right away.

    If things don’t change, I see this being the route taken in the future. Community College ->Internships ->Four Year College -> Internships -> Job.

    Plus, I really am interested in this initiative from Harvard and Stanford:

    Comment by Sean Bestor -

    • Sean’s approach to getting an education is very rational: A- do your 101, 201 stuff at an inexpensive 2 year school, B- go to a 4 year school for the most important courses and the piece of paper, C- do intern work because employers want to know that a kid can actually function outside of his parents hovercraft.

      If the govt didn’t provide so much dumb money, A LOT more people would follow the same track as you.

      Comment by Paul Hill -

  20. Pingback: The U.S. Economy By The Numbers: 70 Facts That Barack Obama Does Not Want You To See | Nwo Report

  21. Pingback: Mark Cuban Explains The Looming Meltdown in College Education |

  22. Pingback: Why Steve Jobs was wrong about the future of education | Tom Uebel

  23. great article, but the root problem is the job market for college grads. Its the perception of graduating and getting a higher paying job that keeps people going to college. The reality is a person with a college degree gets the same pay as a person with no degree. If college grads got paid a certain percentage more than people without degrees than maybe former students in debut can pay down student loans. If there is no difference in pay than whats the point of even getting a college degree?

    Comment by Rahsaan -

  24. Hi Mark. How do I get on Shark Tank? I wrote 9 musical stage-plays. I want to astonish investors with their beauty and quality and we all make hundreds of millions. I need $118K
    for lead-sheets, musicians, engineer, vocals, studio time to produce clean, basic cd’s of 198 songs. I have a top star committed as Narrator and Mister Bawdy for my 30-song/dance 1865 Black and Irish play about coming to New Orleans and then NYC. All investors will share in 9 shows and enjoy at least a 500% ROI plus a lifetime residual, on each performance of all 9 showes, even though they are only investing in the above. All agreements on standard industry contracts. RKO has reviewed my “All MIne to Give” twice.
    (film) A large European group is reviewing my adaptation of THE COUNT OF MONTE CRISTO. Time is essential. That’s why I make this offer. Robert Greeley

    Comment by Robert Greeley -

  25. Is this going to be our uneducated future???? sigh

    Comment by la63senora -

  26. Thank you for this poorly written, grammatically flawed article. Not to mention the amount of misinformation and incorrect data you have provided. Based on the comments, it appears this is a forum for the cesspool of uneducated want to be entrepreneurs to kiss your butt. While there are some valid points in your article, most of it is pure rubbish. This does validate your book slogan though. I now believe that if you can do it anyone can!

    Comment by John Benitez -

    • Hey John, none the less, there is over 2 trillion dollars in consumer credit card and student loan debt, plus possibly another 1 trillion in court ordered “write off” debt.

      That’s 3 trillion dollars of consumer debt, plus the LOSS of 7 trillion dollars in home equity since 2006. But as long as state pension funds are never touched, let’s keep the status quo going, right?

      Comment by alexlogic -

  27. I have been preaching this for a number of years. Higher ed is the “Emperor’s New Clothes.” The universities are cramming in as many freshmen as they can with no regard for housing or class availability. Middle class people are spending their retirement money to send their kids off to work 15 hour weeks learning Art History from a highly paid professor who works even less. It is an expensive summer camp. The substance of easily half of most liberal arts or even business degree programs could be learned for free on Khan Academy or buy purchasing a DVD set for $49.95 with the best lecturers in the world teaching the subjects. I predict that WalMart, or Microsoft, or some other companies will start contracting with private schools to teach people 10-12 hours a day for 18 months in real work subjects like logistics, merchandising or programming, and provide them with work internships as part of the process so they actually are ready to fill a job when they are done. Football games, tailgating, and greek life are great, but they are really just the distractions to keep parents and students’ attention away from this awful value proposition. I would love to reinvent higher education. Somebody will do it soon. Mr. Cuban is right.

    Comment by Bud Cummins (@BudCummins) -

  28. Pingback: The future of higher education « Accountinator

  29. I appreciate you thoughts on this. As a Realtor educator, I think it’s also important to consider how the post crash is affecting one aspect of real estate to purport how the post education crash may also mirror itnas well. This is the basis of my post on my blog:

    In a nut shell, as Realtors are looking to offset over-governed legacy costs, new business models are arising that offset the costs. But they don’t depose it.

    For example, recently I left a traditional office (John L. Scott) to become a recruiter for a new company eXp realty. I won’t pitch it here, but it loses the brick and mortar, includes 5 full time IT guys to educate and solve tech and web marketing concerns, provides a system that allows 100% commissions by combining a low cap and revenue share on sales of teams. It also has a 3-d virtual office where now 100s of agents can and do meet virtually in over 25 states. While this is all great, it doesn’t do anything to wage war against the legacy bureaucratic over-governed system inherent in real estate sales. The question is will education come up with a similarly solution that allows the legacy administration to rule horrifyingly and force new rogue “unaccredited” models to arise. And how long will it take for the new models to depose the old, even thou they are better, more effective, the stranglehold of the legacy methods may rule for generations beyond their helpfulness.

    So my question to you (or your blog management minions) should you read this, how do you see corporations (more traditional than you) overlook the invisible legitimacy of the university paper. Will branded unaccredited education services survive on a needs basis only or will they be supported by the traditional businesses at some point and at what point?

    Thanks for taking the time to share your thoughts.

    Brett Allen – @eprobrett
    NAR e-PRO Instructor & WA Realtors course developer & educator
    Realtor & Recruiter, eXp Realty
    www . eprobrett . com

    Comment by Brett Allen -

  30. Our future with out education is rapidly approaching and probably looks something like this:

    Comment by la63senora -

  31. For a long time I’ve been of the belief that the educational model of head-jamming tons of irrelevant info into the brains of the common university student is flawed to start with. It does not create intrinsic value that can be easily sold to an employer. You underline this quite boldly when you stated that you want someone “who can do the job” not just some piece of paper. For this reason I have dedicated my entire business life to building and promoting a new type of virtual “machine” that can quickly flesh out the authentic attributes that anyone today should have a grasp of. It’s not positive attitude either, we’ve tried that for 80 or more years now, but that which forces the root core of one’s persistence and determination to come into view. It’s not the head that should always lead it’s more and more about becoming gut-based in our personal decision-making. Thanks for sharing your thoughts on this pending serious economic upheaval. From now on I’ll be talking to more business owners in context to this very problem.

    Comment by David Parsons -

  32. You are right on about the University of Phoenix, Kaplan College, etc… I’ve actually been downloading MBA lectures from Stanford on my iphone for the past several weeks, and besides learning much about changing behavior with technology, the power of the right team vs. the right idea in entrepreneurship, creative distribution and delivery’s impact on customer/consumer feedback, product development and innovation and the potential of the mobile web and easier access of information on the breaking of authoritative norms and innovation; it’s made me re-think traditional higher education.

    For example, the aforementioned concepts are immediately making me more innovative in my profession and it was all free. Also, I’ve recently downloaded two books via my blackberry playbook, Competitive Advantage by Michael Porter and Blue Ocean Strategy. To a certain degree, what I’ve learned from these cheap sources of information has had more of an impact on my thinking than my top notch $40,000 Master’s level degree. I think you’re exactly right that for the most part higher education teaches you how to learn, and I would add how to think about real world problems. What you learn is much less improtant, with the exception of more technical/business realted fields where you get a baseline in mathematics or programming that’s necessary to start a career in those areas and build off of. But, is it really necessary to score in the 90th percentile on the GMAT and have a 3.5 GPA in order to have full access to Stanford’s MBA program? For Stanford, you have to give them some credit for placing the amount of information that they have online, but it’s really only their guest speakers that they give you access to. It still seems to be competition as usual, and don’t expect the #1 MBA program to start offering their $100,000 program for free.

    The paradigm needs to be changed. Although possible, it’s not likely to be a major institution that drives the real change. We have to make it happen. Concepts that have made Google, Apple, IDEO or Facebook a huge success must change the structure and accessibility of higher education and make it more valuable and accessible for society. It’s really the only way the unemployment rate will decrease, GDP will grow and we will reduce our debt and return our country to profitability.

    The biggest road block is probably the government. If government continues to provide student loans, no matter what the price, because they feel that education is “important”, then don’t hold your breath for the bubble. Although the government definitely prolonged the bubble in housing, eventually banks and financial institutions had enoough control, stakeholders and limited resources to stop the cycle. With education, will the government ever stop the cycle with an unlimited resource through taxation and no real stakeholders that will hold them accountable for fiscal responsibility? I’m not sure, but it’s hard for me to imagine that they will. The government feels that education is a right and important and, although I agree, the real issue is the price of it. I hope they’ll recognize that. Obama has talked about cheaper education and easier access, but is he willing to make the tough decisions and not grant loans in order to force change?

    Comment by Joshua Westbrook (@HRAthletics) -

  33. Not need to worry. There’ll be plenty of work gathering firewood and berries for those who are left. 🙁

    Comment by xmatman -

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  36. most of this is probably kids wanting to go to school out of state to another state school and paying out of state rates. kids will always be dumb.

    i wasn’t born here and other kids of immigrants would go to community college, get straight A’s and then apply to one of the top schools in the NYC area. diploma would say NYU or Cornell but they would have a lot less in loans.

    i’m always reading stories on the internet about how someone’s kids graduate HS and they start looking at out of state schools because it’s a good fit or some other nonsense

    Comment by alent1234 -

  37. I agree that universities and public research institutions are limiting their ability to generate sustainable growth and value due to their legacy infrastructures. This lock-in or limiting has plagued the higher education system much in the same way as we’ve seen in healthcare industry. No one can decide on a problem, so how can we decide on a solution. These limiting infrastructures impeded the ability to maintain competitiveness on a global scale and deny opportunities future service innovation.

    The answer to the growing education debt issue lies within those most effected. Instead of waiting on governmental bodies, or universities to take charge of the situation, students themselves should leverage their collective experience. Most policy writing and proposed solutions are designed from the top-down. The issue isn’t about money, it’s about our lack of financial capability. Two words, participatory design. There are a million and one people writing about how bad this situation is, how many are actually making an effort to effect change?

    Comment by Jason Bacher (@JasonBacher) -

  38. The government needs to disclose the breakdown of who received the One Trillion Dollars. How much money went to: Community Colleges, Non-Profit Universities (public & private) and profit universities (Devry, Univ. of Phoenix, Everest, The Art Institute and many more).

    Comment by guyg2005 -

  39. This is one of the most purely calculating arguments I’ve seen you make. It seems you have selective memory when it comes to your own life at Indiana and its springboard into the whole value prop. I’ll also add from a personal standpoint that I would have never approved the hire of a certain account executive at a prestigious Texas Ad Agency if she did not have a relevant degree.

    Now I see my daughter struggling to be a music teacher in her last year of school which there is no online alternative that I can envision and her friends are lamenting your post here as more reason to be pessimistic about the future.

    School is not just a diploma factory. It is a passing of age. It is where kids learn to take on responsibility and be accountable for results. It’s not so much about the ROI as it is about broadening one’s worldviews and learning how to learn.

    Have the costs overinflated? Sure, like my hybrid did when gas hit $4.00 a gallon. I was semi-smart though when I bought 4 years of guaranteed tuition a decade ago which locked in the tuition to half the cost it is today. So to me it’s more about restructuring the financial model than it is to throw the baby out with the bathwater. Some traditions are worth saving because of their intrinsic value – not just their extrinsic bottom-line.

    Comment by Steven Blonder -

  40. First to grammar police, NOBODY LIKES YOU!
    Excellent piece! As a Realtor though, Mark mentions the real estate melt down and somewhat blames real estate agents to which I take a bit of offense. I didn’t get in until 2006, so I didn’t exactly benefit the in the manner many may have. He mentions Khan Academy. They have a series of four videos that completely explain the Housing Meltdown. If you watch these, you will even better understand the comparisons that Mark has drawn to real estate. Watch all four! Here is the first:

    Comment by Jay Treadwell -

  41. Wow! This echoes my guest post on Credit Karma’s blog exactly. We need to think of student loans like investments. Would you invest 100k into a poli sci major at some crappy private university? I sure as hell wouldn’t..

    In addition, many universities paid lobbyists big money to pass bills that make it extremely tough to discharge student loans in bankruptcy. Kids are being pushed to go to college and then they’ll get a great job! This is no longer true.. In fact, many kids are deferring their debt by going to grad school! WTF?! You couldn’t get a job with a bachelor’s in history, now you’re going to get your master’s in history. haha

    Anyways, Mark have you thought about starting a scholarship type fund that encourages entrepreneurs to pursue their ideas/companies before or instead of going to college?

    Comment by PF Pro (@PFPro1) -

  42. Thank you Mark Cuban! I found this post so true to life that I recommended it to my readers. College Debt = Bad Debt

    Comment by AskGodAnything -

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  45. I don’t have time to read all the comments, but I have been wondering what would happen to the higher ed model if student loans were dischargeable in bankruptcy. Currently they are not, so the banks are willing to allow large loans to students who must pay no matter what (unless they die and even then maybe their parents have co-signed). If the banks did not have this security, would they curtail their loans and force the schools to “depreciate” their current dollar value? The only upside right now is that the loans are at such a low rate. I think perhaps I paid more for my education than the students of today given my rate of ~8.25% as a 1994 grad.

    Comment by asknora -

  46. I agree with several posters that student loans are predatory almost by default. But the same could be said of federal aid – it entices people to get degrees that they cannot use to make careers. Look at the huge number of people getting degrees in marginal disciplines – evidently there’s some predatory marketing going on in higher ed, too.

    Comment by Timothy Michael -

  47. Mark Cuban’s article showcases brilliant, deep thinking. There is a way already coming to replace traditional credentialling: global cloud-based companies with the reach to replace bricks and mortar schools:

    Comment by davehuer -

  48. Pingback: Education: What Have You Done for Me Lately? | The Greatest Networker in the World

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  50. You’re right there is a problem, but I don’t agree with your characterization of the causes. Problem 1 is that the financial aid office at universities is physically located on the campus. See fox/henhouse analogy. Problem 2 is that PUBLIC universities, due to overly ambitious policy goals and state legislatures, can effectively charge whatever they like for their services. Public Higher Ed has grown faster than inflation over the past 30 years. That price needs to float.
    Problem 3 is the goal of teaching versus research at public universities. As the costs have grown, so has the research, in proportion. But research is a public good. However, you sign up for the teaching. Problem is, you don’t get a choice.

    I highly recommend a paper written by Vance Fried of Okla State University. The Economist picked it up, and it’s made the public administrators nervous while the private U’s are licking their chops. He’s nailed the costs of a four-year degree down to the amount that could be charged if the costs of research were paid by their actual beneficiaries, rather than the students.

    The problem for the average student is that the public universities serve as 800 lb gorillas in the market, effectively deterring and limiting choice. You’re paying for them as taxpayers on the front end, you don’t have as many options to decide whether you pay for them on the back end..

    Comment by Karl Stromberg -

  51. oh hai peter theil…

    Comment by Jason (@rednoble) -

  52. While I did not read all the comments, has anyone mentioned the fact that Federally funded student loans are not forgivable or at the very least very difficult to discharge if you have to declare bankruptcy?

    Comment by Jay Schiesl (@jschiesl) -

    • Jay, Yes people have mentioned that. It’s not free government money and it must be paid back. The fact that the Fed guarantees them and that you can’t walk away would seem to make these loans more secure than a mortgage. So why can I get a mortgage for 3.8% but might have to pay 6.8% for an educational loan?

      Comment by imarunner2012 -

  53. Pingback: Professors of the world unite. You have more to lose than just your jobs. « More or Less Bunk

  54. Hi Mark,

    I wanted to thank you for helping bring to mainstream attention the huge issue that is American college student debt. As a recent college graduate (Duke ’08) I have friends with over $70k in student debt that most of them just won’t be able to pay off.

    I’ve actually started an online nonprofit called StudentDonate at to help with this issue. Its basically a Kickstarter for college students with debt but the “projects” people donate to are paying down an individual students debt load. I just wanted to let you know that some of Generation Y aren’t standing idly by and watching this happen but are trying to help address the issue by crowdsourcing and technical ingenuity.

    Thanks again!


    Comment by tzeentch99 -

  55. While I agree with your assessment of our education system in general, I disagree wholeheartedly that the for profit sector is creating a better education system than the not for profit schools. In most cases these for profit schools are hiring sales people as financial aid advisors in an attempt to get as many people as possible to take out loans. Remember that for profit post secondary schools account for 10% of the student population yet their students account for almost 50% of the student loan defaults that are growing like a weed. The problem is one of money. We’ve treated education like a triage….an orphan child that must be taken care of. We need to spend more money on education (wisely of course which is not easy either) period. I agree with all your other points….we are dying as a world competitor because we can’t educate our future…

    Comment by Kirk Kim (@KsquaredLA) -

  56. If the game isn’t working, play a new one. It’s up to “me” to learn and show the next generation how to get an education without going into slavery.

    Comment by Bryan Hart (@BryanHartSpeaks) -

  57. This is why college loans should be given based on the course of study of the borrower. Risk is reduced for lenders because they only give money to people studying majors that will likely result in 100% on time repayment (like engineering and medicine). And students, if they want to go to college and can’t pay for it on their own, will be funneled into fields that the market needs or they learn a trade instead.

    Comment by Eric Gilmour (@efg34) -

  58. Hey look, it’s my life explained! My wife and I pay $1600/month on our student loans and won’t pay them off for over 20 years. When you add health care costs ($700/month), those two alone eat up almost 90% of my post-tax income, and I have a “real” job doing computer modeling for green building. We live off my wife’s salary to cover everything else. I would LOVE to contribute to the economy with vacations, concerts, a new car, buying a house, etc. but there is nothing left over.

    The point should be made how student loans are predatory lending. Almost no 18 year old understands how a loan really works. I figured I’d borrow $30k, get a job out of school that pays $40k, and how could that not be paid off in 3 years? If this bubble was really about educating Americans and training them for jobs, then all you would have to pay back is the principle (adjusted for inflation), not milking people for interest for decades.

    Comment by Eric Calhoun (@emc2birds1stone) -

  59. Couldn’t disagree much more. You just have to be smarter about how you live. I graduated three years ago with roughly $25,000 in debt and took a job at $23,000 yearly salary.

    But I racked up savings, not debt. I never moved home, I moved 2000 miles from home. I bought my own car. I got my own apartment. I bought new clothes when I needed them. I take several wonderful vacations every year. I have no credit card debt and have well over five grand in my savings account, plus more in a mutual fund. My only debt is my loan, which I am nearly a year ahead on repaying.

    If you have a job, you can get ahead. Simple as that.

    Comment by nighthawk2005 -

  60. Of course there are problems in higher education, but this blog contains most of the generalizations that increase the scare without solving the problem. If you want to compare the situation in higher education with something, real estate (even the stock market) is a better metaphor than newspapers (says this former reporter now in higher education). There is real and enduring value in higher education, just as there is in real estate, despite the painful fluctuations of the moment. Most people who graduate from college earn more than most of those who don’t. It is also true, though confusing and perhaps unfair, that by far most students, whatever they pay, do not pay full costs, even with loans. The gap is filled by taxpayers, private donors and parents, and even that isn’t enough to keep a campus up and running. The whining abut “How much I have to pay (but really don’t)” is especially loud and obnoxious in California, where I live, And some of those students, by the way, do fully intend to graduate with a degree and go right to minimum-wage jobs until they make it big as an artist, musician, actor or whatever. One trillion dollars is a lot of dough, but if the cost of a BA works out for most borrowers to the price of a new Ford Focus, which will do them more good over their lifetime?

    Real recommendations:

    * A new focus on technical/vocational education and apprenticeships. It’s true that not everyone who goes to college needs to be there, and these field include many jobs that pay well, are necessary to society and take brains and skills. Blame here often goes to school systems that make it a goal to prepare all their students for a four-year degree. That may sound good for the snob factor, but it’s nether realistic nor fair.

    * Colleges and universities should tell students and families exactly how much they are borrowing and, if they continue at this rate, how much that will cost them. These institutions should also take a hard look at costs and be responsible stewards of what they have. (My bias is showing, but more already do this than get credit for.)

    * Students need to realize perhaps they shouldn’t attend the coolest, most prestigious school that will accept them if that school is also the most expensive. The second tier of the US News rankings is not the seventh circle of Hell.

    * Party somewhere else and pay your own tab. Sure, college should be more than students locking themselves in the library until commencement. But I have no sympathy for those who go in with the expectation they can live it up for four years with few or no consequences. Those folks just make it harder for the real students.

    * Re-evaluate programs such as MFAs in drama, creative writing and other areas where the cost is high and the chance of making a living low. What is the track record of students who study in these programs and then enter these always overstocked fields vs. those who go in with a BA, or less?

    * Look into financial aid for adult students. The focus in the media remains on the 18-22 year-olds, but the growth in college attendance is among those over 25. These are people who started college but quit and now are trying to balance family and job responsibilities with completing a BA or getting a master’s. These students tend to be focused, realistic and generally a joy to have around. They don’t live in dorms or go to ball games, but they are the face of higher education for nonprofits as well as for-profits. There are few state grants or federal grants for them, however, and they often can only finance their education through loans or savings. Some companies have reimbursement plans, and I say good for them.

    Comment by Wayne Steffen -

  61. While I do agree to most of the points in this article and as a graduate who does now currently live with my parents while trying to keep financially afloat…I have several comments…

    “While the average student loan debt is about 23k. The median is close to $12,500. And growing.”

    I wish my student loan debt was that low…as a student who didn’t get Scholarships or Grants for either my Bachelors (ORU) or Masters (NYU), let me tell you that my student loan dept is much HIGHER then that. Based on what I know about my friends and their situations, that figure sounds more like what kids have left after their parents paid for some or they had Scholarships and Grants. Not the figure students who only had loans have after graduating.

    “The point of the numbers is that getting a student loan is easy. Too easy.”

    It actually is not as easy as you think. My parents couldn’t afford to send any of my siblings to school and every year we prayed that we could get the necessary funds. Many student loans require Co-Signers and if your parents/grandparents etc. aren’t in a good financial place then you can be denied.

    “As an employer I want the best prepared and qualified employees. I could care less if the source of their education was accredited by a bunch of old men and women who think they know what is best for the world. I want people who can do the job. I want the best and brightest. Not a piece of paper.”

    Very FEW employers feel that way, let me tell you.

    I would also like to point out that we, the generation of high student loan debt would love to be able to pay off our debt. But unfortunately, when there are no jobs or jobs that only pay minimum wage it is not possible to get ahead. And like any other debt when you can only pay the minimum…it lingers FOREVER.

    Comment by Ruth Kennedy -

  62. Pingback: The Coming Meltdown in College Education by Mark Cuban

  63. I’m an avid believer in education as a fundamental human right – something that everyone should have access to no matter their circumstances. I’ve been a strong proponent of the Student Loan Forgiveness Act and have been involved with the Occupy Student Debt Campaign.

    I attended NYU and graduated with over $100,000 in student loan debt in December 2010 with a degree in Film/TV. Like many other debt-burdened grads, I was a victim of predatory lending and did not fully understand the gravity of my financial decisions. However, I’m one of the lucky ones. I graduated a semester early (saving me $20,000), earned a few scholarships, and have been employed in the entertainment industry since the day I finished college. I’m managing my $1,000/month loan payments on my entry-level salary, but not a day goes by that I don’t ask myself, “Was this worth it?”

    Though many would argue differently, the answer for me will always be yes. I could have gone to a state school for free, and a lot of people think I’m crazy for burdening myself with 6 figures of debt instead. Not only does NYU have the best film program in the country, but I wasn’t ready to give up on my dream simply because my parents were unable to fund my higher education. The way I saw it was that I proved my worthiness to attend NYU by being accepted into NYU. If my university and my government weren’t going to help me attain the education that I deserved, then my only option was to start signing a whole lot of promissory notes.

    Don’t get me wrong, I’m not one of those presumptuous twenty-somethings that thinks the world owes them something. I understand that my debt was my choice, which is why I pay my bills on time every month. I’m just thrilled to hear people addressing the student debt crisis as it should be addressed – as a crisis! We’re not just talking about a few students suffering from this burden, we’re talking about a generation. This is not manageable debt. It’s crippling and often insurmountable.

    Comment by Emellie O'Brien -

    • Paying for a degree that you actually need is one thing, but many employers ask for qualifications that are not necessary, merely to thin out the applications, so this skews the number of graduates in employment, making degrees seem more necessary than they are.

      Comment by Barb Drummond -

  64. Cuban is dead on target here. The student loan crisis is a function of unsophisticated buyers (students) having ridiculously easy access to capital. What these kids are doing with this money is forestalling reality because they have no sense of what the labor markets want, nor do they have any understanding of how much of their future they’re borrowing.

    We provide labor economics and wage data to most of the university career centers in the U. S. Take a quick look at our College Majors’ Calculator and you’ll see how bad the job opportunities are for people with degrees in: humanities, liberal arts, etc.

    Eliminate the easy money and force kids to do a business plan (that would be an education in itself) before they throw 4 years and buckets of money away.

    Comment by Paul Hill -

  65. This makes a lot of sense. I thought the economy was headed for a recovery until you mentioned that student loan debt is greater that auto loans or credit card loans. YIKES. that is huge. Plus – there is basically an endless supply of buyers out there. Everyone needs or wants an education or to further their own education.

    Comment by personalitytestonline -

  66. In your real estate analysis you didn’t mention that the bubble that occurred was planned by the federal reserve.
    Political solution short of getting rid of the fed? Issue 60 year mortgages at 30 year rates.Will cut payments in half.Will make fannie and freddie’s assets perform.will end foreclosures.
    50 year mortgages used to be issued but with higher rates.Japan and switzerland issue 100 year mortgages.

    Comment by Chris Johnston -

  67. Unemployment (people who want a job, not the stupid, idiotic definition the government uses) is a measure of overpopulation. Just as a business manager looks for payback on their investment, so should the government calculate the IRR on a government loan for a college student in a particular field. Basic, simple finance. Having a citizen with a degree in Hotel Restaurant Management is wort how much compared to a citizen with a degree in Engineering? I cannot provide the answer, but the loan system must consider this if they are to exercise financial hygiene as much as they expect from there citizens.

    Comment by Adam Scott -

    • So you are advocating a “quota” system for loans/education where if I select “major X” I have access to more loans (because of the potential earn back when I move into my profession) than if I select “major Y” which does not reap rewards at the same pace?

      First, this system calls into question the fundamental value of education–leading people from darkness into light–and also shakes the foundation of our demoncracy which, as the framers planned it, educated people would make better decisions because of “enlightened self-interest.”

      The real issue involving finance today is this lack of “enlightened self-interest.” We have devolved (I use this word very intentionally) to the point where ideas trump enlightened self-interest. I will give you an example: look at budget cuts in North Carolina that are decimating educaton. Why–because legislators believe their “ideas” and are thinking short term. We should be selecting the “enlightened self-interest” approach because both short term and long term, we are recouping the investment in investing in young people. Consider:
      –8,000 Baby Boomers are turning 65 years of age every day of every year for the next 10 years (attributed to AARP Bulletin, January 2011), If we add the Gen Xers and the Millenials together–they do not equal the number of Baby Boomers who are aging. Wouldn’t it be “enlightened self-interest” to invest in those young people?
      –We are already seeing the aging of the largest demographic in the history of this country and we don’t have nearly enough doctors, nurses, CNA’s, lab techs, surg techs, phlebotomists, and so forth to care for them. Wouldn’t it be reasonable to invest in young people who are interested in these fields?
      –We are competing globally for jobs, yet our young people are struggling with academic skills. Wouldn’t it seem in our own best interests to invest in potential global competitors?

      These three are simply the tip of an iceberg that we are ignoring and we seem hell bent for a “Titanic disaster” because we are selling short our own future for the sake if ideologies,

      Comment by deanmark -

      • “quota” is a loaded term rife with ugly semantics enough to actually be changing the subject. I am advocating treating student loans as an investment. If you cannot measure your return on investment, you are mismanaging. If you unpack this, you may find it very much in line with your utilitarian philosophy of “Enlightened Self-Interest”.

        Further to your point on education, I would not equate a college certificate or degree with being educated. From my experience, once a person finishes the course, all of that information is forgotten. The methods of lecture and regurgitate probably are the poorest way to educate, and this has been acknowledged for a very long time. I’ll stop short there.

        People who cannot sustain employment enough to pay back their loans will default which means the taxpayer just paid for a degree in History or English, etc. I’m not subject bashing; these just are bad investments for a country participating in a global economy and should not be paid for by the taxpayer.

        How would you design a system that provides upward mobility but prevents student loan defaults?

        Comment by Adam Scott -

        • I have to own that I did study the History of English (as well as the History of French and Old French and Old English). I believe that there are take-aways beyond the course content: critical thinking, creative problem-solving, developing interpersonal skills, improving communication skills.

          I do agree with you notion that lecture delivery is not the most efficient and I also concur that “regurgitation” is not learning. That is why I receive numerous complaint about my faculty not teaching content when they ask students on tests to APPLY the content and not simply repeat it back.

          However. state budget cuts force us into large lectures simply because we cannot afford a more manageable way to educate those who show up on our doorstep.

          I do apologize for the loaded word “quota” and I should have searched for a better word.

          In terms of a better system: first, I own that I am 100% committed to the idea that every person in America must pursue something after high school. Not only does this “something” begin to lay down 21st century skills, it simply is in our democracy’s best interests to have an educated populace.

          And therein lies the rub: since Andrew Jackson–appealing to lowest common denominator has had improved the opportunities for political success. As long as people are motivated by non-issues (e.g. the recent amendment vote in North Carolina) or are worked up by potential threats (the Cold War, 9/11), then we are not going to get movement in Washington on any substantive issues (managing the deficit and re-igniting the 5 pillars of America’s strength that made us the leader of the globe’s nations).

          With this said: a system would be weighed best on what students did upon graduation and moving into the workforce. If the job was a service, I would retire part of the debt after so many years of employment. If the job was in business and industry were earning are greater than in the service economy, I would allow debt consolidation and pay back would be a percentage of the student’s earnings. It is far easier for a financial manager pulling in $100K to manage pay back on loans that a nurse or a teacher to pay back out of $35K. . . . .

          Comment by deanmark -

  68. Mark, your description of the problem is only the tip of the iceberg when it comes to the world’s economic ills. I fear we are headed for a economic calamity that could be a perfect repeat of the 1930’s–economic depression and increased political extremism ending in a general world war–all compressed into a few years. It would mean untold human suffering and result in something that could take two generations or more to completely recover from–with a human population a lot smaller than now. 🙁

    But yet, it is obvious that we can snap out of this malaise by doing two important things:

    1. The size and scope of government needs to be smaller and more efficient–there are too much overlapping bureaucracy, too big agencies, and too many unneeded/obsolete laws that need to be stricken off the law books.

    2. Income taxation needs to be simple and be designed as means to raise revenue, not be used for social engineering, invasion of privacy and discouraging savings and capital investment. This is why I am all in favor of going to a simple no-loophole 17% flat-rate income tax–something Steve Forbes proposed in 1996. With simpler tax laws that encourage more savings and capital investment, we could even start to reduce the size (and enormous expense!) of many social service agencies, since people can now set up simple “nest egg” accounts for retirement and/or medical bills essentially tax-free.

    I do think, however, that now with more and more people having broadband Internet access, one wonders do we even need much of the university structure in the first place? With specially-developed at-home learning systems, people could learn and earn a university degree at their own pace, not a pace set by the university by having to spend a fortune to live near a college campus and attend a class on-campus on the university’s set schedule. We could see school classes go back to teaching more practical skills, for example learning more complicated blue-collar skills like building construction, plumbing, metalworking, and installing/removing electrical systems.

    Comment by Raymond Chuang (@SactoMan81) -

    • I believe you are certainly on target with the idea of improving cash flow IN and managing cash flow OUT. I am not convinced the 17% flat rate is the answer, but I concur with the concept of being sure every American is paying into the system.

      And we cannot keep throwing sales tax (I am talking at the state level now) to generate revenues. Sales tax penalizes those who are struggling to keep their head above water, and I don’t see the benefits there.

      I have to concur also with Mr. Chuang’s assessment that there is a role for “hands on education”–things such as “building construction, plumbing, metalworking, and installing/removing electrical systems.” Since I work at a community college–if obviously support this notion. The trouble is that no one is going to hire on to a job and stay in that job for 35 years and then retire. Cognitive issues, physical issues, and social issues push and pull people through wide-ranging careers now and this reality is hard for some of us to realize. Keep in mind: The Bureau of Labor Statistics reported by age 38–Americans will have migrated through 14-16 different jobs today!

      The fundamental difference I have with Mr. Chuang’s comment is about the size of government. I do concede that a review of out-dated laws and regulation may be in order. But who is going to manage this review?

      Also, we have to realize that the “noblesse oblige” of big business and multinational corporations is either a 19th century myth or something that has died. Big business is motivated for one thing only: increasing profits for those at the top of the pyramid. Simply look at the huge compensations paid and the 2 billion dollar “faux pas” on the part of Chase for immediate examples.

      We must have regulations and government over-sight, else big business would simply reduce American culture–and perhaps global culture–to a simple equation of the few who “have it” and the rest who do not.

      Lastly, we need to acknowledge that “trickle down” economics simply is a “big lie” (or “voodoo economics” as George Bush, senior called it when campaigning against Ronald Reagan). “Trickle down” simply does not happen. The idea of huge tax breaks to “create jobs” is no longer in play. With advanced manufacturing, any “breaks” are going to improving computer and robotics infrastructure and NOT in hiring people.

      Comment by deanmark -

  69. Interesting blog post, but I wonder what Cuban thinks about his bud Barry Hussein Obama’s Adminstration which is mostly composed of Academia.

    They produce little but position papers and have no history of running or creating anything of value. Cuban makes an interesting comparison between the real estate bubble and the college debt bubble. In both instances, we have the Government as a catalyst forcing institutions to channel and funds INFLATING home prices and now it is college tuition. Obama’s plans are almost always for more money for government and education.

    Obama’s minions will only cause more inflation for us – and more tax dollars shoveled into the money laundering pit (more taxes to teachers, their unions and college institutions & more money kicked back from these groups to Obama’s Socialist Dems for personal political treasure chests). And this is called “Education for our kids”. It’s Generational Theft, just as Cuban blog implies. But does Cuban see this when he throws his support to Obama?

    Comment by John Fox -

  70. Pingback: How to Astroturf an Online Cause: the Story of “I Stand with Bill Powers”|PolitifreakPolitifreak

  71. Seriously, I have been telling my wife that this will happen for the last year. I think while the amounts are lower (per person) the concept is the same as the housing bubble. But there is another element, similar to healthcare, it is the third party payer concept. As long as there is someone else picking up the tab, no one minds paying the inflation. But soon, the bubble will burst, not from the students who owe the debt as that is in the past, but it will come when the government runs out of money and can no longer subsidize higher education through guaranteeing student loans, or more likely, the lending institutions no longer trusts the government’s guarantee.

    It will be harsh too, as the housing market crash was. Schools will not be able to pay the salaries promised, and there would have to be serious cutbacks all around. Then there will be a fundamental change in the university structure. At that point, I doubt the government could fund another bailout without printing money because no one will lend it to them. So those that cannot afford to change will close.

    It’s not a bad thing. I enjoyed my time at Arizona State, but other than how to do complex math, I did not learn leaving more than when I went in. My first jobs certainly did not require a degree, though said requirement was listed on the posting. My company in Europe though hires people directly into the company and puts them through an apprentice type program. I have colleagues in the same role as me but have never sat in a college class (from the UK), and they perform just fine.

    My role now, many years on, is a bit more complex, so I paid for my own MBA and study Chinese in the evenings. But living in Hong Kong now, and looking back, I would have been much better off studying Chinese in uni, rather than math. Which is my recommendation to the younger generation. If you go to university, learn something that you cannot teach yourself, and be open to where your career can take you!

    Comment by frankthefork -

  72. Pingback: Online Accredited Colleges

  73. excellent post Mark, couldn’t agree more.

    Comment by Parker Boyack (@parkerboyack) -

  74. Pingback: Paying for college « Source to Nuts – by Kenny Lindberg

  75. At Gutenberg College ( we are going against the trend because we see it much the same way that Cuban does. We offer a phenomenal “great books” accredited education at a tiny school with incredible tutor/student ratios…all at a great price. And since we don’t take federal money or federal loans, we do all the financial aid ourselves in a very personal and individual way and with an absolute commitment to make sure that our grads are not hamstrung with exorbitant loan balances when they finish up. A great education at a great price!

    Comment by Peter Wierenga -

  76. THANK YOU! THANK YOU! THANK YOU! for commenting on this subject. We have been preaching this at The entire college system is complex, but as with anything in life….PLAN and PREPARE *BEFORE* going to college! So many students go into college without the proper guidance and find themselves 4-6 years later with a useless degree, mounds of debt, back living with their parents and no real skills to land them a position in their field…or heck! ANY FIELD! Not to mention the ones that dropout *with* debt. We suggest start preparing no later than ninth grade. You’re probably thinking….”ninth grade? Yeah right! I didn’t have a clue what I wanted to do in ninth grade!” Well most people don’t, however with our program the student will start *thinking* about what interests them and by senior year they have a really good idea what path they will take. People say take the first couple of college years to get the general classes out of the way and by then you’ll “find yourself”. Really? Who “finds” themself in general ed classes yet now you’re going into year three without a declared major? More classes to take…more tuition to pay and loss of income to make. The other problem as many commentors have already touched upon is paying $80,000 for a degree that will get you a $40,000 salary. Come on people! Do the math! is a great resource to do salary research. Do the research! There are kids (and parents) that take more time preparing for prom than college!

    Again, it’s a complex system. Now that student debt has reached over 1 TRILLION dollars people are sitting up and figuring out it’s a criticial situation. More people like Mr. Cuban need to speak up and DO SOMETHING ABOUT IT!

    Remember, “I believe the children are our future. Teach them well and let them lead the way. Show them all the beauty they possess inside. Give them a sense of pride to make it easier. Let the children’s laughter remind us how we used to be.” Awww gotta love Whitney!

    Comment by Amy Pieper -

  77. I hate to be buried down near 300 comments, but I have to respond:
    First, colleges cannot control their costs as easily as suggested above. Partly, the costs of human resources and infrastructure is huge, even for a medium-sized state supported community college where I work. And there is little endowment to help with my school. So please note that schools are not “increasing costs” because of “easy money.” Also, don’t underestimate infrastucture costs. I single T-1 line cuts into our bottom line and we need access for students to be able to enage in their learning. Add on top of something like getting the college “wired” other costs like heating, cooling, and just basic maintenance and the costs continue to climb.

    Another piece of the puzzle is that many students could transfer from their first two years at a community college into their university of choice AND have money in their pockets. Partly the money comes from their savings by attending a community college for the same instuction they receive at a univiersity. Also, if a student has a credential (e.g. an associate’s in arts or an associate’s in science degree), they are far more likely to drive a good deal when the transfer to the university. I recently graduated a student whose dream is social work. She transferred from us to an independent college–and only needed to borrow $5K for this year and aniticpates no loans for next year. And this person went to a higher end, INDEPENDENT college–not a state supported school.

    Comment by deanmark -

  78. Great and important article.

    Good, yet widely obtainable, education is the “silver bullet” that helps not only increase the quality of life for the individual, but supports society at large in solving it’s problems.

    I, however, believe that the problems you raise, are actually symptoms of a much larger economic shift, happening right now.

    I write about it briefly in my post “What the hell is going on with the global financial and economic systems” found at my blog

    I would love to have your opinion on my view on what is causing all this weird turmoil in industries and systems across the globe.

    Stephen Is

    Comment by stephenisalive -

  79. Pingback: Billionare Mark Cuban: College is Worthless, Newton Academy is the Future - Newton Academy Blog

  80. Well, I have to disagree with quite a few opinions… and sorry in advance for having a strong opinion. I do have a Master’s degree, and I own my own company. I got my degree AFTER growing my company and my income, and I did it because I wanted to, as a free American, who could pay for it.

    My undergrad allowed me to be qualified to be a police officer earlier in life, my passion since childhood, but not a real means to make the living I want to make for my family. My real education came in the years following my undergrad, BEFORE THE POLICE, when I worked hard labor on a beer truck 15 hours a day. That is where I learned the skills, abilities, work ethic, salesmanship, etc. that prepared me for a life in business where I now I have over 75 people working in my company.


    I believe having other people pay for someone to go to college is NON-AMERICAN!

    It is not a right to be educated, it is a privilege. I don’t believe it is a God-Given Right to get a FREE education, maybe you do, but I have not seen or heard any religious entity market that scripture.

    I was born to a truck driver father, and my mother passed from ALS when I was in college. We were poor, busted old apartment buildings most my life. I made college on a combination small athletic scholarship (which was not given to me because I was born to be an athlete, hardwork and dedication got that), running jackhammers 12 hours a day in the summer, and delivering pizza on weekends.

    If I had not spent the 6 years practicing football, there would be no scholarship. If I did not maintain a high GPA, no scholarship. If I did not labor for money, day and night, no money come the fall…And COLLEGE!

    It took 5 years to graduate, because one summer, when my mom got real sick, my dad had to relocate, and I couldn’t work for a whole month, so instead of taking 15 semester hours, I took 4, just to stay in school, and worked the whole semester to pay for the next year.

    If the government would have handed me a free lunch, who knows where I would be today. I would probably think like alot of people think… If someone becomes successful after going to school on government money… THEY WOULD HAVE BECOME SUCCESSFUL ANYWAY… They are SUCCESSFUL PEOPLE!!! It is not the government that made them successful!

    You want proof?

    Go look up the educational backgrounds of most of the wealthiest people in the world, and see how many NEEDED COLLEGE to have the chance to be wealthy.



    God Bless America for the Freedom to do whatever I want for me and children…

    But America is not a government… IT IS A CONCEPT, AN IDEA, A WAY TO LIVE that allows anyone who wants to win to have the opportunity to win. And for those that do not want to work, do not want to sacrifice, do not want to pay the price… AMERICA means NO FREE LUNCH and you better get on off to Europe where you can starve with the rest of the lazy do-nuthins that made them the countries they are today. (Not all of them, but since I got excited, that is how it sounded… there are hard workers all over the world, but America was built on it, and requires it).

    Lastly, there is a reason America came from the ashes, and in 200 years became something that China has not, even though they have been working on that land for THOUSANDS of years.
    The Middle East… thousands of years.
    India… thousands of years.

    The reason is… FREEDOM!

    Freedom to FAIL and Freedom to Succeed!

    Without failure, hardships, toil, sacrifice, time, commitment, pressure… One could never build the character one needs to change the world.

    What we did as a people, a society, a civilization, in just 200 years… has changed the world, ALL AROUND THE WORLD, for the better…FOREVER!


    Just an opinion,


    Comment by David Charnot -

  81. You have hit on the perfect analogy, comparing college degrees to houses. When money is cheap and easy to borrow, people borrow too much, and the sellers (of houses, of college degrees, etc) can ask ever higher prices. Until they can’t. One unpleasant fact: You can walk away from mortgage debt in a bankruptcy, but you can’t do the same for student loans. This could become a serious issue in the years ahead.

    Comment by LSAT Get Prepped (@LSATGetPrepped) -

  82. Great article. I’ve been teaching my kids to start their own business instead of going to college. While it might behoove some kids to go through a four year college, I would like to see more creativity and entrepreneurship encouraged in coming generations. Then we will see a paradigm shift as to what is truly beneficial.

    Comment by Michelle DeMarco -

  83. My two cents… as parents, my husband and I decided to pay the costs for our 2 daughters college expenses (and cover the difference between what scholarships didn’t cover – still huge!) The reason? So they would NOT be saddled with debt when they came out of college. The reason they went to college? To transition from childhood life to adult real-world life. Yes they received education and well-rounded points of view. To us, the value of experiencing college and becoming your own person, your own thinker… trumps the paper designation. That said, they received NO specific training in any area… and the best they could hope for in a depressed job market is to say they were great students, they graduated in 4 years and they learn and adapt quickly… so maybe present themselves as “trainable” material. I don’t know what the answer is, but I DO see the trend and value in more targeted areas of education and training online. It cuts the superfluous and gets right to the meat – landing a job you have specific training for.

    Comment by Eryn McCormick -

  84. And to compound the problem, far too many students who know they’ve now accrued a worthless but very expensive B.A. decide to dig further into debt by seeking higher education in the field that’s already proven fruitless.

    Comment by Jonny Vanderpool -

    • I’m sorry, but why would you ever expect that after 13 years of “education” that you’d then have to go and down another 4+ years more?

      If the public education system can’t get it right in 13 years, why would we ever think that paying the same (basically public) education system huge amounts of money for another 4 years is going to help?

      There is a definition of insanity, and I’m looking at it.

      A good education system teaches to a kid’s strengths instead of wasting time on their weaknesses and simply makes them functional and what they need in those weak areas to get by because a good education system understands the one of the most important laws of economics: Specialization is always more effective than generalization!

      A good education takes a holistic approach and doesn’t teach math (the language of physics) as a separate class, and instead teaches physics and math is coincidentally taught as the language of the study of physics. (thus eliminating the “what am I ever going to use this for?” question)

      A good education system would have 12 year olds out as apprentices in every field (there isn’t one where this isn’t possible) learning in the real world, while getting paid, contributing to their own well being and being productive in fields that the kids care about.

      A good education system FIRST teaches a kid how to learn what they don’t know, how to fill in the gaps and build upon what they learned in a knowledge pyramid instead of teaching wrote knowledge with no backing and no basis.

      The public education system is NONE of these things. The best thing you can do for your kids is take them out of the public education system as fast as you possibly can and work with others to get your kids a real education instead of the disaster of 13 years of memorization and conformity and then 4 more years of partying and time wasting.

      We spend more than a quarter of our lives, the most productive and able years at that, in school. This is a patently absurd waste of time and energy. It’s time to rethink the entire concept of education to understand that we should be living life, not wasting it in a classroom, especially given that you learn WAY more in the real world from real experts than you’ll ever learn in a classroom being talked at by people that couldn’t hack it in the real world to start with.

      Ron Paul says “End the FED!”. I say “End Public Education!”

      Comment by James Hancock -

      • whilst I understand your anger at the system, it is the only way to get a minimum level of education across the country, without which many people will be illiterate, so unable to understand contracts, or even street signs. Yes, if you can, home educate, and if not, supplement the minimum. Never forget how many people sacrificed for universal education, just as they fought long and hard for the right to vote. Just because it isn’t working well doesn’t mean it should be done away with. That would give grounds to have a lot of us put down, there’;s no end to this.

        Comment by Barb Drummond -

  85. Agree with many points. Some institutions in a society should be free of profit based market motives–things like the education system and the police force and the prison system. At the same time, they must be highly regulated. Otherwise universities, in this case,reach a point where the applied disciplines such as engineering departments start running based on simply profit based motives (how much grants do you bring?) or the disciplines whose effects can only be felt in the long run suffer badly such as the fundamental sciences and the liberal arts. When universities run like corporations and banks, they will obviously not care what happens to the consumers (students) in the long run so long as they are making profits off of them in the short run.

    Comment by bottledworder -

  86. I graduated from college last year and this analysis is spot on. Thankfully my degree (Finance) is still relatively marketable, but even so I was underwhelmed by most of the job opportunities available. My solution? I started my own company! We’re doing very well (accepted to an incubator and trying to put together a Series A by August) but unfortunately this isn’t a real option for most college grads and startup failure rates are pretty high on average.

    Between student loans, social security, housing, the national debt, pollution, and diminishing oil supply, I worry what the hell kind of world my generation is going to end up inheriting.

    Comment by Will -

  87. CDC comes out and says Higher Education Linked to Longer Life. Translation: You have to live longer to pay off all that debt!

    Comment by Eric McCarty (@ericmccarty) -

  88. 4 YEARS SMARTER than your fresh-cheeked classmates.

    Just a suggestion.

    Comment by 1historian -

  89. I can definitely see the correlation. For years, people have been taught that the only way to be considered a “success” is to be a homeowner. There are a number of people who still look down their noses at renters, despite the fact they can barely pay their mortgage. You see the same attitude re: a university education. This stuff about having a university degree equals affluence and “being Somebody” has been rammed down society’s throat for more than 30 years. People want to have what they think is “better” for their lives, that’s only natural. However, those who got the loans were sold a bill of goods! The lenders and schools admissions departments were/are so aggressive in playing on the insecurities of their customers. In many cases, they took people’s hopes and dreams and manipulated them into getting the loans. To me that is the biggest sin of the lot! Let me tell you if I had it to do over again, I don’t think I would’ve gone on to a four year university. I would just stayed with the AA because most of the jobs that I’ve had didn’t require a BA degree, let alone the two I earned. The ‘apppropriate’ jobs are not out there, and believe me I tried finding them, so after awhile it was either back to the pink collar ghetto or wind up on welfare. No, it’s not the end of the world, but if I seem a little bitter, I feel I’m justified…as are others who are finding half of their net paychecks being eaten up by those student loans with no hope of ever seeing a return on their inventment!

    Comment by sabrina -

  90. FYI- I graduated from High School and went to college many many years ago. I flunked out after 2 years, went into the Navy and when I got out I went back to college. I flunked out again. My bad, my problem.

    What I want to say is this – what I SHOULD have done out of High School was to go straight into the military. 4 years in the REAL world right out of High School would have been a MUCH smarter move for, me.

    And I suspect, for many others.

    Bennies – 4 years REAL WORLD experiences. You’ll probably go overseas. You’re part of an elite unit defending your country, and if you choose to leave after 4 years and go to college- you have 4 years of VA benefits, and you are

    Comment by 1historian -

  91. You mostly nailed it. So when are you going to start teaching and $upport the institutions you espouse? My best profs in college were real life professionals. Best B Law class was a labor lawyer, best acct class was a CPA… My worst profs were tenured doctorate profs. In fact I had the worst prof ever was in Acct the following semester after I had one of the best (the CPA).

    Do todays community colleges provide a good backbone for the new model? Especially the better ones like CCM here in NJ. Suppose we were to expand them to include a variety of higher demand BS degrees like MGT, ME, EE… Specifically DONT add in very low demand degrees like history, philosophy,…

    Comment by Scott Hartlieb -

    • As they say, those that can, do, those that can’t, teach. We need a combination of both – solid grounding in theory and practice.

      Comment by Barb Drummond -

  92. Great article with a lot of great points. To take it further, I think we will eventually come to a point in the next 20 years where some skilled labor occupations income will eclipse mid management positions.

    Reading many of the comments is depressing because it shows the failure of the liberal education system (where no child is left behind) in America. I hope the many replies with spelling and other errors realize that the liberal education that you paid all that money for has failed you in more ways than not being able to find employment currently.

    The many more comments above from faculty and other members of these Universities fail to see many things, especially the fact that the failure of the FED is directly responsible for the skyrocketing tuition by falsly inflating the market by handing out cheap money and making not only getting into college easy, but living a live style during that time beyond people’s means. Not only is the FED and the government responsible for this bubble, it is responsible for many of the recent bubbles that we are still trying to recover from.

    The repeal of Glass-Steagall was done in 1999 by the Clinton Administration along with the Exxon-Mobil Merger which combined two of J.D Rockefeller’s companies that were originally broken up by Anti-trust in the early 1900’s, not to mention the re-enactment of the Community Reinvestment Act which was the gateway of the housing crisis that the George W. Bush Administration didn’t halt when it should have. All of you liberal faculty that keep bringing up big corporation’s greed need to realize that it was your government that allowed these companies to get as big as they are in the first place instead of doing it’s job and promoting competition by breaking them up.

    I hope that all of you young people on this thread are starting to realize that big government is only causing inflation and is your PROBLEM and not the ANSWER to your futures. Americans need to wake up and start realizing the nuts and bolts of why our economy was the greatest in the world for so long and that is because it separated the haves from the have nots and promoting innovation with profits.

    The free market works!! Not a pseudo-socialistic economy that is full of hidden zero-sum games and false demand set up by government intervention that Mr. Cuban discussed above.

    God Bless what is left of America.

    Comment by Slate Veazey -

  93. If it takes you until you’re 18 years old to learn how to learn, we’re all doomed.

    It should be the very first thing that is taught in our schools (and is in a Montessori system).

    Identify what you don’t know.
    Identify what is below what you don’t know on the knowledge pyramid
    Identify what of that you don’t know.
    Rinse and repeat until you’re at a low enough level that you fully understand, and then move your way up learning the discrete concepts until you’re back to what you didn’t originally know.

    Abstract, apply, and test said new knowledge in the real world. If something doesn’t work or doesn’t make sense, then you missed something, and look for what you missed and repeat above.

    Education 101 but it’s NEVER TAUGHT. Not in public schools that ram everything into concretizations that are memorized and certainly not in college and university.

    The problem is that the entire system is broken from the ground up. We are teaching our kids the wrong way and for the wrong reasons.

    The purpose of education is to get a job that is productive, fulfilling and thus makes you happy. There is no other purpose to the education system. You may learn things that have no direct monetary purpose, but that’s not the job of the education system. The education system’s job is to teach you how to learn, assist you in learning what you need to know to be the very best you possibly can be in your chosen interest/career and then get out of the way as quickly as possible and allow you to do instead of sitting in a classroom.

    As a side effect of this process you learn how to learn ANYTHING so that you can take responsibility for your life and learn what you want to learn on your own time WHILE YOU’RE BEING PRODUCTIVE.

    But this will never happen in a government run system (and college education is government run because they’re the ones securing all of the loans just like the housing market). Because there is no direct profit motive that is under control of the true customers (the student and the businesses that hire them) and instead the profit motive for the schools is pleasing the government which has nothing to do with business, the system will be forever broken because it will by definition respond to the wrong master.

    And given that they have the government to empower them, the next step for colleges is to get the federal government to mandate and socialize it college thus ensuring a monopoly just like when the federal government did the same for the public school system, and ruined our kids in the first place.

    Time for a complete rethink of how our children get an education. My daughter won’t be in the brainwashing system known as public education specifically because it doesn’t teach anything other than how to not rock the boat and be part of the collective zombies meekly following the government’s will, without ever having an original thought for herself.

    Once parents really recognize what’s happening to their kids in the cult of public education, there will be more than just a revolt in college education. Mark my words.

    Comment by johngalt1717 -

    • In the Uk school exam passes have been going up year on year, and they are finally admitting that they have been getting easier as many claimed. by using multiple choice and dumbing down a lot of the questions, the system has become a joke. Kids are being taught to cram for exams, not to think or reason. There are now calls for classes to be introduced to teach kids how to think. Where do we start, and how do the teachers learn to teach how to thinK? I always thought that was just part of teaching any subject.

      Comment by Barb Drummond -

  94. Pingback: American College debt over $1 trillion «

  95. I am so glad I picked up Robert Kiyosaki´s Rich Dad, Poor Dad. This off course, changed my mindset along with other influences. One of them being Mark Cuban, boy am I glad I found out who this guy was. Now I am always looking for information on becoming an Entreprenuer and Investor.

    Why am I so glad? Well…Reading all this about “Superior” educaction and people having to depend on other people´s decition, whether to hire them or not. Makes me realize how fortunate I am of having changed my mindset completely around, now I would NEVER even consider “applying” for a job, and the fact that people actually put themselves on debt to have another person be their BOSS?!!?! WHAT!!! thats “Madness” hahah Kevin is cool too. I now see my self as the employer, to complete my visionS, yes I believe in creating multiple successful companies. I am not so great at arguments or persuasive writing in English, however I just want to say thank you, to guys like Mark Cuban who have inspired me to be above average.

    All these affected by student debt, are average fish flowing in the same direction. So Thanks! because I was actually surprised to see that getting a “job” is out of the question for me while I was reading this. Because the knowledge seed planted in my mind by these guys has me thinking I´m meant for greater things than competing to be somebody´s little helper to accomplish HIS dream…FUCK THAT, im after Mine+(S).

    Comment by Alex Ramirez -

  96. It’s true, there are more debt in student loans than any other loans mentioned above, but how is the economy going to improve without investing in the future? Without working the brain cells, I can’t say is really the way to go and for future progression? unless you want a society like pass/present China, average workers chilling curb side, smoking a dollar a pack cigarettes, earning $125/month, working in factories producing items for “Wal-Mart” and the likes? Queuing up the workforce is also important as the age of retirement is extended for a lot of people as the economy and inflation continue to fluctuate in these uncertain times (keeping younglings in school helps a lot of the current workforce employed and to continue to provide for their family) So, it all boils down to the economy, we never would of thought or debate “Higher Education” as a topic if the economy was thriving. I guess times has really changed and the idea of “Higher Learning” might be at fault and debatable now…Still, it’s some of the best times of our lives as a human being and for what it’s worth, maybe “Higher Learning” will keep people from procreating, recklessly!… I think it’s still worth something “Like”…my2cen

    Comment by Jason Chen -

  97. Amen my man.

    One thing you don’t mention (but I’m pretty confident you think too) is that the student loan situation stifles entrepreneurship big time too. I was lucky enough… (scratch that… I worked my ass off to get scholarships… so I’m changing this to “fortunate”) to get enough scholarships to pay for 95% of college and didn’t have a dime in student loans. Because I didn’t have hardly any fixed monthly bills post college I decided to not get a job… but work on creating my own company the first year.

    I scraped by that first year… things clicked business wise after that year… and reached into 7 figures within 3.

    But, if I did have to get student loans I wouldn’t have been able to have the “luxury” of not getting a job out of college.

    The college system is great for networking, having fun, learning to learn… but is one of the biggest shams right now.

    I love the idea of college… since it’s based on educating people (which is a must)… it’s just the way they go about educating people that is broken. Teaching from archaic models, with teachers who are lifelong education system products (there are exceptions), and with the entitled mindset that college as we know it is irreplacable and the “holy grail” of getting a job.

    You nailed it Mark… college as the “holy grail” of getting a job is going away… along with the stigma of not having a traditional college degree… when the easy money backed by the government isn’t there (which arguably could be there to help prop up unemployment #’s… the more people they can subsidize into college the more they don’t have to count as unemployed) the system will start to crumble.

    Always great stuff Mark. I turn 30 this year and am grateful as heck I had the opportunity to take a risk out of college to control my own future.

    – Trevor

    Comment by Trevor Mauch -

  98. Very insightful post, I hadn’t thought of it, but I think you are spot on here. Already other options like Skillshare are popping up. It will be cool to see the changes.

    Comment by Erinina -

  99. Pingback: Max Box « Iron City Fitness

  100. Well, looks like Mr. Cuban did not attend much college, there are so many grammatical errors in this.

    Comment by Gretchen Burley (@GretchenBurley) -

  101. Can’t forget about the older generations retirement accounts evaporating and forcing them to stay in their current job instead of making way for the recent, and more productive I might add, college graduate. This is only exacerbating the problem.

    While I agree that this is a problem, I think more studies should shown that highlight what UE levels are for specific college majors. With that data, every state’s DOE should be putting programs in place in EVERY high school that educates students are what their future outlook will look like depending on their career choice. This will help us breed more American STEM majors, health care professionals and actuaries. Students need to know, before their college graduation ceremony, that majoring in English at state university of neverheardofit will not set them up well for the future.

    After that, let’s start painting factory work in a better light before everything starts coming back home because it’s too spendy in China. From what I read, it actually requires a fair amount of technical skill to work in a factory with all the high tech machinery, and not quite the blood, sweat and tears that most Gen Y’ers have in their mind.

    Comment by dutchballa -

  102. Pingback: Insight into Education and the Economy by Mark Cuban | E2 (E squared)

  103. I couldn’t agree more! Excellent blog post!

    Comment by maraprose -

  104. If I could get out of my debt, I’d give me degree back in a heartbeat. My employer never even validated the validity of my $120,000 accounting degree. Also, I don’t know where these numbers are coming from, but in my experience I know students who have zero debt (bc their parents paid for their education up front) or ones like me that are carrying student loans up the a$$. Moral of the story have rich parents or have STDs. Ha.Ha. STDs, get it? 🙁

    Comment by Anna Stani -

  105. Mark; No matter how many students defect to another form of higher education the schools will hardly go begging because there are seemingly inexhaustible ranks of foreign students flush with cash happy to pay for an Amerivan degree. Visit any campus, especially ivy league, and you’ll find half of Asia and anyone else who’s cash rich these days. So much or the tuition blues. As a society we”re all about branding and the safety of known commodities and while I agree that a university degree doesn’t necessarily equate with superior intelligence or training try telling that to your average employer. You may credit life experience but most would rather have the name. I know cause I had to go and get a 2nd useless and unwanted law degree from a Top 5 law school (where my class was 75% international) before a firm would even look at me. Same with resumes. As an entertainment guy you know that the networks and broadcasters want the formula — prestigue school + prior employers of equal or greater stature. If not, then you’ve been a billionaire too long and are too far removed from reality. How many people have your networks hired lately from outside the box? Outside the box works great for entrepreneurs but the rest of the world far too often has to stay within the square whether they want to or not, if they want to work at least. That’s employer driven – and probably ulimately harming the economy more than student loans. The solution for out of control tuition and student loans is to follow the European model where higher education is free but not a divine right. Places in universities go to the best and brightest regardless of worth and are paid for by the state. Hence another reason so many of them come here – they can’t get into schools in their countries nor can they major in nightlife, reality tv production, the music business or any other fantasy career their heart desires. And one degree rarely ones it these days. To climb the corporate ladder an MBA or JD usually has to be tacked on whether you want it or not. The schools are only at the happy receiving end of a problem ultimately driven by employers – who demand the lineage to the school’s benefit. I challenge you to stop be one of your HR Depts and see if they’re any different (and not just for tech). If so, kudos for you, If not time to put you money where your mouth is ; )

    Comment by alijenn -

  106. I’ve been involved in higher education for close to three decades and I’ve written about the coming revolution in American Higher Education. Although I am a product of a true liberal arts education (meaning I learned fore learning’s sake and was never told anything about jobs and careers) and I see a value in philosophy, literature, art, etc. today’s students are pragmatic. As a college teacher I was very sympathetic to the student who wanted to know what was in it for him/her. These students see education as a puzzle and they believe their task is to collect the right pieces to assemble THEIR puzzle…not someone else’s. I am a firm believer in the educational philosophy that you learn what you need to learn and you learn what you want to learn. As a teacher I always tell my students that I hate the higher education grading system because it doesn’t really tell the truth. We should grade eggs and meat.

    And we should pay more attention to the needs of the consumer (student) and forget about an outdated educational system that actually stopped working 40 years ago. I say let the revolution begin!

    Comment by vinniebegley -

  107. Many folks have commented that students go to school to “get a job,” and imply that is the sole intention of degree seekers. What these commenters are missing is that students do not go to college to get a job, EMPLOYERS for a very long time now, have essentially required students go to college so they could be *eligible* to get a job … let’s not forget that.

    The demand from employers is what drives the need. At many firms today it is not possible to be hired without a degree, nor promoted to many positions within a firm if one is fortunate to already work at said firm, but not in possession of a degree. And this problem is getting even more serious as the numbers of graduates increase – it is a nightmare unfolding before our very eyes.

    Comment by Doc Kane -

    • You do NOT need a degree to get a really great starting job. That has never been true. It is a myth fabricated by the chattering class to perpetuate the chattering class. I never got a university degree and I’ve never had a problem finding work or making money. Neither Jobs or Gates had a college degree. Dean Kamen never got a degree. I doubt Sheldon Adelson, one of the ten richest men in the world at this moment, ever got a degree. He got his start this way:

      <<…the first business he purchased — Vend-A-Bar, a candy-bar vending company he bought at age 16, using $500 he had saved, a $3,000 loan from a credit union, and a seller-carryback note of $6,500.


      In fact, getting a degree is a huge negative for most work that’s compensated. It’s good training for bureaucrats who are paid out of money taken by force from the rest of us and do little but hassle us. Students don’t get that most of what they’ve been taught is not only useless, but counterproductive. They’ve been taught that corporations, to quote my nephew who went to the best schools, “are organizations that make money by ripping off people with no concern about how many people they harm.” Wow. No wonder he’s “working” in DC. I run into that attitude in recent graduates more often than not.

      Students don’t get that the only way you can earn money in the marketplace is by providing people with things they want at a cost they can afford. Period.

      I left school because I was being taught stuff that I knew was not true. When I left, my econ teacher told me I was the best student he’d ever had. I replied that I could no longer stomach the econometric BS he was teaching. I’d found Mises, Hayek, Bohm-Bauwerk and Austrian economics. He told me that it was quackery. Hmm.

      Finally, the kind of “knowledge” taught in schools is way over-valued. Even STEM subjects are taught badly. Most useful knowledge is learned when one pursues profit at personal risk. If you want to educate yourself, read the classics, e.g. science, math and the Stoics. Reflect on what the masters say relative to your own experience. Ror econ, study the Austrian School. No one is laughing at them now.

      I’ll let Sheldon Adelson have the last word:

      If you want to hear the rest of his incredible story, it’s here:

      Comment by jwdeming -

  108. Awesome post. I am lucky enough to have my parents help with school, but most around me aren’t that lucky. They still seem to think that going to college=high paying job 100% guaranteed. But you are right, sometimes its best to get our own education.

    Comment by Danny Raede -

  109. Pingback: Mark Cuban - The Coming Meltdown in College Education

  110. I am glad you corrected your post about the for-profit colleges our president had to ban from the GSL program. Businesses like this prey on those in the “not-quite-ready-for-traditional-college / displaced worker market and saddle these individuals with debt and a worthless (or incomplete) education. This is a huge part of the problem you are writing about.

    As an employer, how DO you know who is most qualified to work for you? You have to employ some form of screening process to whittle down the list of qualified applicants. What criteria do you search for? How does the person who has “learned how to learn” stand out on an online application or resume? How do you qualify the abilities of someone with no real work experience?

    Let’s face it, some universities and colleges are more difficult to be accepted into and excel in than others. While it is true that many college students would be better served by attending trade school or serving as an apprentice rather than getting an obscure liberal arts degree – businesses aren’t going to interview for an engineer from a tech-only school, a management trainee from a vocational school, or corporate counsel from a night school. There is a hierarchy of institutions and to pretend that your company (or any other) doesn’t screen for that is disingenuous. After all, it is an employer’s market, so you would be less than prudent if you didn’t take advantage of all the potential talent that is available to you. That includes unpaid interns and foreign nationals with the H1b Visa, btw.

    I can’t say that I disagree with you entirely about the rate of inflation of secondary education – and that includes traditional universities, for-profits like Phoenix, and these new uncredited online “content” schools you speak of. Make no mistake – they are all in it for the money. The biggest challenge is for the student (or the parent, in my case) to evaluate these choices and place a value on the degree.

    If employers want a middle class capable of buying their products in the future, they need to have more faith in the US worker and stop outsourcing, off-shoring, contracting temps with no benefits, hiring H1b Visa holders, and overworking existing staff to increase quarterly profits for investors.

    It seems to me the student has made an investment in him or herself to provide a service to your company in exchange for a fair wage – shouldn’t employers like you hire them at their fair market value?

    Think of Henry Ford and his desire to pay his employees enough money so that they could afford to buy the product they produced for him…

    Comment by Brent Cohrs -

  111. I attended a prestigious, highly regarded liberal arts school in the Northwest and also got my MBA there. Loved my experience – in and out of the classroom. Have been an active alum. I was able to work my way through and between jobs, scholarships and modest borrowing came out only owing a few thousand and then it was NDSL guaranteed at 3%. Now I am still paying a student loan off for a daughter which basically paid for one year of the four she attended (paid most of that, too) but at a public university for tuition that is approximately one fifth the tuition at my alma mater. And I would love that my children and grandchildren might have the chance to have an experience like I did – but the reality is that the world always changes and it is no longer economically sensible to try to purchase the kind of experience I had.

    The point I take from your blog on this – there is a ‘bubble’ and it is threatening to burst soon. I must agree. Here is one other piece of anecdotal evidence that the burst might happen sooner rather than later: In California, based on recent and pending budget cuts at all levels of the public education system, there have been big cuts already and more draconian cuts pending…many of the California State University schools and even the more prestigious UC system schools like UC Berkeley and UCLA are seriously considering not admitting any new students next year or the year after as one way to deal with the budgetary challenges. If that happens, try to imagine the repercussions.

    Comment by Patrick Pine -

  112. Cuban is on target except for one thing – traditional universities have quite a bit of curriculum and complete degrees online and available to the masses. So the line between traditional not-for-profit and the online for-profits is blurring.The result is people attending college that have no business being there with little chance to succeed (reminds me of the housing bust and what caused it). I am a university professor and I’m here to tell you that college is completely oversold. We would be much better served with the European trade school model.

    Comment by Kelly Fish -

  113. Great post with astute observations backed by solid fact. I believe this issue is the glowing pink (now fuchsia, if not already blinking neon red) elephant in the dark room of our government coffers.

    I posted about this recently: “Are College Degrees the New Jobless Debt?”

    I’m glad to see others posting about this lit powder keg, as well. You make a vital point here, which our media should be shouting from the rafters as loudly as they shout about inane, irrelevant trivia which they perceive as more ratings-grabbing than information we NEED to know:

    “We freak out about the Trillions of dollars in debt our country faces. What about the TRILLION DOLLARs plus in debt college kids are facing?”

    Unfortunately for us, sound-bites about this coming financial implosion get swallowed by media saturation of what Hillary Rosen said about Ann Romney.

    Comment by Sylver Blaque -

  114. The norm today is to take out a student loan and buy big screen TV’s, laptops, and even engagement rings. The perception is that just because it says “student” loan it means it is going towards an education, not.

    Comment by Jarred Morgan -

  115. Pingback: Prepare For An Unprecedented Wave Of College Bankruptcies « The Financial Physician

  116. Very interesting insight Mark. Systemically, I think you’re right, reducing the availability of loans for students would probably help to create a ripple effect in the system that would stem the tide of the madness. On the other hand there are several very important things to consider:

    1. Not all degrees are equal – I have long been a fan of the notion that no student loans should be available for liberal arts degrees. Why? Because a liberal arts degree qualifies you for that job at McDonald’s, which you were qualified for anyway. It’s a great interest and curiosity but if you want to learn about history or political science, or sociology, or literature, etc. then do a Google search, engage in some online forums, try checking some books out of your local library. If on the other hand you want to be an engineer, a doctor, etc. well there’s an immediate financial value to that education and so student loans make sense at least to some extent.

    2. Education costs are dominated by institutional monopolies – unfortunately you’ve got unions, old boys clubs, etc. that don’t work well with market forces and continue to drive up the cost of education in an era where the cost of education should be decreasing. We all know this, we live in the information age, you used to pay hundreds of dollars for the complete book set of the Encyclopedia Britannica, then digital copies came along that reduced the price to $60, today Wikipedia offers a better Encyclopedia for free than any of those services ever did. Information based services should be dropping to near free in their price and make no mistake university is an information based service. A lecture only needs to be made once, it can be recorded, replicated, and distributed for pennies over the internet. When costs can follow this model prices should be reflective. Lessons, tests, sample questions and answers, all of these can be automated electronically, the number of teachers and professors can be drastically reduced, there’s no need for teachers to mark a good portion of the work anymore, no need for repeated lectures, then let’s add to this equation the ability for students to collaborate online, share ideas, teach one another, etc. Why isn’t this happening? I believe it is in large part due to the institutional nature of education, and yes, the availability of money probably helps perpetuate it. These forces need to be eliminated.

    3. The Education System isn’t tightly correlated to the marketplace – this is probably partially due to the fact that there’s a lack of good real time data about market demands for talent, I believe there’s significant merit in helping students make educational decisions based on current and growing market demand for certain skill sets since the value of their education will correlate very tightly with the supply and demand for that skill set. With this information not only can students make better educational decisions but schools can make better decisions regarding how to direct their curriculum.

    4. There is a lack of education about how to get a job – unfortunately you’ve got a bunch of people who have never hired anyone teaching students how to get hired, not a recipe for success. There’s an old paradigm, which is mostly false in today’s economy that you can go get an education, then send a resume, get an interview, and get a job. The problem is that doesn’t work well anymore, there are thousands of people graduating every year with the same education as you all sending their resume out to the same employers, the competition is fierce and students need to be taught about this context and the importance of differentiation. Along with that they need to be taught about the basic concept of creating value, a concept that is massively misunderstood within society and until people understand value, what it is and how to create it they are going to continue have problems.

    Comment by Michael Bruce Rosmer -

  117. Good post Mark, I wonder the effect of your employees (Mavericks) costs on the University when they were in school with the needs for scholarships, equipment, meals, and facilities. I doubt any of them were in school for a education.

    Comment by Reginald Short (@Audiguy3) -

  118. I graduated from College at a state university in Connecticut in 1977. I spent the first 2 years at a Community College- and the last 2 years at the 4 year school. Tuition was for the 4 year total- about $2,000.00. I did some Grad school but did not finish. The cost of college today in the US is scandalous. Nonetheless I find today after all these years my education was certainly worthwhile. However if I had to do it over again, I would have gotten more practical training. My ability to critically think over someone with a trade school education however still puts me above them in a world as increasingly complex as the one we are in today. Survival in this society takes skills, but all also thinking.

    Comment by Peter Mizla -

  119. Pingback: Education Meltdown « Mr. Rommie Blog

  120. Reblogged this on The Curious Cottage.

    Comment by Laura -

  121. I know its not the option for everyone, but people should really start considering doing an enlistment in the military vice going to school. You’ll get all the technically training you’ll ever need, and if you decide to go to college its paid for by the government. You get your education paid for while you are in the military, and if you don’t finish your college degree by the time you get out, then you’ll have your GI Bill, which is a very nice thing to have. I’m doing it now and when I get out of the Navy I’ll have 7 years of experenice in the field I want to work in outside the military. I’d say most employers would rather have that then a kid with no experience. And if you try and get a federal job when you get out you are placed a lot higher than anyone else on the hiring list. Like I said this option is not for everyone, but it’s definitley worth discussing with your family and friends and maybe someone who is in the military.

    Comment by Adam Isbell (@adamisbell) -

  122. As a former college professor and holder of 4 college degrees, I have actually been working on a book documenting EXACTLY what Cuban has said here. The ROI on education is incredibly negative and is decreasing at an exponential rate. There are many reasons, most of which can be quantified with undeniable figures, but the primary reason is that college stopped being about helping students learn and becoming productive members of society some time after college administrators started measuring research articles published rather than students impacted by their teachers. I have published many articles in high quality journals. Do you know how many lives they impacted? One. Mine. Because they allowed me to keep my job and 6-figure salary. I helped hundreds of kids get jobs and become viable employees for some of the biggest firms in the world. Do you know how much that was valued? Not at all! I actually got mocked by colleagues for helping kids with their resumes and prepping for job interviews. I also got mocked for working 80-90 hours a week on helping students and trying to make my classes more relevant. Those who can’t do, teach. And I guess those who don’t want to teach anymore for many of the reasons cited by Cuban, post replies to insightful blog articles while continuing to collect paychecks from a VERY broken system.

    Comment by halfhothalfmild -

  123. Reblogged this on Thinking Thin and commented:
    Wow, this is really amazing about the Education “Boom” compared to the housing “Crash” … glad I had amazing parents help with my college and $0 loans.

    Comment by kaypix -

  124. Pingback: $20k To $70m A Year

  125. Reblogged this on Ascended Thoughts and commented:
    I heard about this article from one of my favorite Radio personalities, Colin Cowherd. I don’t listen to Colin for just sports talk but also for some of the great points he makes about life outside of sports. He read some of this article on air today. Mr. Cuban makes some valid points and gives us something to think about as our nations kids are preparing for the next big step in continuing education.

    Comment by dchristopherspears -

  126. Reblogged this on Chuck Catron and commented:
    This is exactly why I don’t want my kids to take student loans. Life sucks when you start out 50k in the hole for a job that will not earn 50k for the next 5 years.

    Comment by ccatron -

  127. I completely agree with this article. I am 25 years old and I have more than 60k in student loan debt. Luckily, I have a career which will enable me to handle this debt within the next ten years, but it is a burden on my entire life. I currently make $800+ payments on my loans every month, and that number will increase over the next few years. Most of my peers in my age group cannot handle this, and their lives are ruined as a result.

    No idea what the true solution is, but this is a serious generational issue and I think people my age are getting ruined by it.

    Comment by Michael Ryan (@Jasconius) -

  128. Another enlightening post Mark!

    As a recent college graduate (one year removed from Ohio University), I have experienced first-hand the challenges a post-grad faces on a daily basis. Trying to pursue my career aspirations while feeling the pressure of student loans breathing down my neck.

    Upon graduation I accepted an unpaid internship with a professional sports team in hope of that transitioning into a full-time position. After 4 months, I was offered a full-time position as an Inside Sales (cold caller) making $9.00/hr, working 50+ hours a week (only paid for 40 of those hours), and the most appealing part; no benefits. So after 4 months without pay, I was now asked to work even harder for a dollar.

    It didn’t take much thought to decline the offer and pursue a career as an entrepreneur. With a full year of networking and busting my ass, physical evidence of my hard work was lacking. So much that I am simply left without little more than a story. A story that I decided to transform into a book. A book that has recently been published to educate and inspire past, present, and college graduates to question the true value of a college degree.

    “Young and Hungry; A College Degree is Expensive Cooking Spray” is the thoughts and experiences of a young entrepreneur trying to follow the footsteps of the most influential people in the world. Only difference, I wrote about my experiences during the struggle. Not after I reached that mountain top.

    With a full chapter inspired by a past post by Mr. Cuban, I hope all of you take a look at

    Comment by Jarad Barr -

  129. Pingback: Mark Cuban From His Blog: ‘The Coming Meltdown in College Education & Why The Economy Won’t Get Better Any Time Soon’ | Chris Navin

  130. Pingback: Half of Gen-Y Underemployed? Another Round of Debt Crisis? | christopher cocca

  131. I think flipping a house is a lot less similar to getting a job than you make it out to be. As long as employers prefer to hire people with accredited diplomas students are going to go after those to compete for scarce jobs. There may be a lot of graduates who end up with a lot of debt and no job to show for it, but there aren’t many people their age with a good job and no degree. It is a risk, but opting out doesn’t offer a lot of options for most.

    Also, I’m extremely skeptical about employers switching their preference to unaccredited institutions. Maybe a few will unaccredited schools will be able to create a respected reputation, but I doubt most employers will take the time to figure out which ones are providing a true quality education vs the buy a diploma online places.

    I do agree that there’s bubble like behavior here, but I think the change is going to have to start on the employment end. Some like you may prefer unaccredited, but it’ll have to become an overwhelming majority to change the behavior of the national educational system. I think we’re a lot more likely to see a shift toward community colleges and other cheaper options before we see a shift away from accredited institutions entirely.

    Comment by beleg777 -

  132. An additional detrimental economic affect will be the inability of a substantial portion of this generation to make their first home purchase during the traditional age range of 26 to 36 years of age, if they are even able to make a first home purchase during their lifetime. I believe the long running housing slump will continue for a much longer time than the talking heads want you to believe because this generation will have to delay the purchase of their first home a number of years into the future.

    Comment by Doug Waite -

  133. Reblogged this on Stats in the Wild and commented:
    What a great quote: “As an employer I want the best prepared and qualified employees. I could care less if the source of their education was accredited by a bunch of old men and women who think they know what is best for the world. I want people who can do the job. I want the best and brightest. Not a piece of paper.” -Mark Cuban

    Comment by statsinthewild -

  134. I have been talking about this for a while:

    And being a Ph.D. who has not been able to get a real job since graduating in 2004 and who has loans, I am acutely aware of the problems with getting a job after graduating. My recession has existed for 8 years now, with no end in sight, since it seems nobody wants the services of an interdisciplinary scholar who publishes on spontaneous order theory.

    Comment by Troy Camplin -

  135. Absolutely right here Mark. I’ve been working on building different training programs that are online to help specific needs that people have. We want to create a new experience for learning and something that you can do at your convenience, while still getting some of the best information available.

    Comment by Chris Hughes (@whosChrisHughes) -

  136. my 2 cents from Europe, the basic problem is not ‘housing’ or ‘education’ but ‘banking ‘ – or to be more precise bad banking. The title should be Meltdown of the borrowing system. Otherwise good blog, thought- and discussion provoking.

    Comment by Dick Vestdijk -

  137. If the classroom doesn’t map seamlessly to the marketplace, the education is a big fail.

    Comment by Katerina Zacharia -

  138. I see some folks are blaming tenure (as always) for contributing to the problem. As someone who just spent a lot of time and energy getting tenure (for full disclosure), let me suggest that the positive side of tenure is the set of professional standards and expectations that tenured professors can insist upon from their schools, administrators and students. Without tenure, we would have no way to push back against the folks who constantly want lower standards in higher education (some admins, some parents, politicians, etc.). Without tenure, for example, we’d have no way to tell admin types that 50 students is probably too many in a graduate class, especially an online graduate class, if we’re actually going to keep a set of standards and provide useful feedback and evaluation. Without tenure, those of us who actually give a damn about standards and student outcomes (and there are still a good many out here) wouldn’t be able to make much headway, and our institutional reputations would see the difference. So… tenure, as with so many things, brings both good and bad. But without it there would be no academic freedom, and without some kinds of academic freedom there would be less value to an education.

    Comment by Timothy Michael -

  139. Our dollar bills are notes, Treasury debt to Fed, our entire system is built on debt, but its really a red herring…who is going to collect? no-one…no recourse…just like mortgages…they made easy credit for a while, then pulled the rug, to collect the real tangible assets…houses they did it with student loans to enslave college kids with debt you can’t BK…I went to a major university and saw tuition go up 1000% within several years…noticed imported granite from one of the Regents companies being used in Student Center…conflict of interest…remember Educations is a business…profit motivated…which is fine, but those that pull the strings are really getting too greedy…it will back-fire…

    Comment by Public Relations -

  140. Perhaps Harvard and MIT’s newest edX — tied in with other online educational resources — could help solve the problem?

    From MC> If they truly keep it open source and allow anyone from anywhere to build on it, it could have a big impact

    Comment by laurlandry -

  141. Wow. This is a very astute look at the situation and I’m fascinated by the issue. The New York Times did a piece the other day on this subject and it is horrifying what we are doing to our youth.

    Comment by hangryhippo -

  142. Pingback: The Coming Meltdown in College Education & Why The Economy … | How To Reduce Debt Quickly

  143. Great post, and some really valid points. Seems American capitalism is always creating bubbles – investors try to find the least regulated part of the market, and all the money flows there until it bursts at the seams.

    A lot of comments mention ‘working my way through college’, which is something I did for my undergrad as well. But one thing that’s over-looked is how much more difficult this is today, as real wages haven’t gone up, but costs of an education have sky-rocketed. One reason why student loan debt has ballooned is exactly the same reason why all other debt has increased in this country – people are trying to live the same lifestyle their parents enjoyed, without the benefit of low costs and increasing wages their parents had.

    A lot has been written about how Americans haven’t noticed their stagnant wages over the past 30 years due to the fact that credit has been easier and cheap imports from abroad have allowed us to continue buying things; going to college isn’t cheap, but the money is still easy. I agree that there should be a greater focus on trade schools that provide real skills instead of more ‘business’ majors.

    Comment by americansecularist -

  144. “As always, great post. One of my favorite subjects in higher education. I lived in Europe for thirteen years. Most kids in Europe don’t go to the University, only the absolute best and brightest. Then and only then does government pick up a lot of the tab”

    Exactly! Higher education has been turned into a SCAM in the name of egalitarianism in the United States and then we have Morons with College Degrees. I met a man who said he taught high school English who had written a book about the public school system. I bought the book. I found grammatical errors near the beginning and highlighted them thinking I would tell him so he could fix it. But then I found more and more and said forget it. He would look like an idiot if I showed him that many. But he had his degree to teach.

    But it is 43 years after the Moon landing. I don’t hear European economists talking about planned obsolescence in cars. I don’t look at the useless variations in that junk anymore. The Laws of Physics do not change style for BMW, Volkswagen or anybody else. Shouldn’t everyone learn that in high school?

    Comment by umbrarchist (@umbrarchist) -

  145. We need to re-embrace vocational training and apprenticeship, even for “cubicle jobs”. There is also about to be a very significant hard/skilled labor gap when those laborers retire over the next couple of decades, but no one wants those jobs unless they’re desperate. Too many hazards, and hard/skilled labor is not as “easy” or “cool” as sitting in front of a computer in air conditioning in designer clothes.

    A college education has become an implied entitlement, but an entitlement that carries with his almost insurmountable debt on the student. It’s necessary for the careers it was intended for — scientists, lawyers, doctors — but I fail to understand how flooding the job market with philosophy/art history double majors is better for our society. This isn’t to say we shouldn’t have a more well-rounded society, but going to college for the sake of going to college is bad, and it’s clearly not working.

    Comment by Pantse Macabre (@giromide) -

  146. Thanks for the post! Good read. My thought . . . whatever happened to working your way through college? The earn money, pay for college plan?

    I work in higher education and am amazed at the lack of focus on working to earn money to pay for college. Throughout each step of my college career, I worked at various jobs to pay my tuition so that upon graduation I would have no bills. And I was successful with my plan. It isn’t easy, but it is worthwhile.

    Your post is extremely relevant and on-track with what is happening. Thanks for sharing.

    Comment by Deborah Hutti -

  147. Postpone going to college for a few years. Join the military or get a grunt-work job and save up for some of your future tuition costs. Learn how to live on a budget. Avoid getting into credit card debt in your late teens/early twenties. This also gives you time to decide just what you really do want to study instead of wasting your time taking classes that end up not applying for the degree you finally go for. And if you are a veteran make sure you understand how your GI Bill benefits work. And when you get a student loan, use it for your tuition, books and fees as you are meant to, not to fancy up your ride or to party with. Older, non-traditional students tend to take schooling much more seriously, frequently finish their degrees in less time, and get better grade due to having (hopefully!) developed a work ethic. Yes, it costs a fortune for college, so you’d better do everything you can to get your money’s worth.

    Comment by Bernadette Crumb -

  148. It comes down to a sentence..”Those who control credit, control the country”. It is very scary and very true. Too big to fail was caused by the banks that controlled credit, overextended, hedged against and manipulated it, and went belly up only to get bailed out by the Fed. This is no different. Government backed student loans, with Universities who have no want nor need for a true fair market economy. The American dream is for those to get married, raise their kids, send them off to college and have them start he process all over again. Except our kids now have massive debt coming out of school, are paying the loans to the creditors and cant even save to buy that house because the jobs available barely cover the necessities.

    Universities are big business and they know it. They don’t pay property taxes and have a constant source of revenue, our kids who want the american dream. Since they really dont have to go out and sell too much, their revenue stream is so off the charts.
    As a Commercial Real Estate Estate Investor and Developer, I know where some of the deepest pockets of money are. Aside from Foreign Opportunity Funds, some of the largest pools of money are from the Harvard, Yale, Penn Endowment Funds. That is where investors go to raise capital. Fund Advisors are paid large sums of money to attain returns for these funds and they wield alot of clout in the financial world.

    The scary part about all of this is that the partisian hacks on both sides of the aisle are so blinded that they dont see this freight train of debt coming downing down the tracks. The combination of lack of jobs, lower wages, higher credit, increasing education, tax and energy costs are creating a perfect storm that can literally cripple this Nation.

    The answer, work hard, live modestly, work a few jobs if you have to..dont get deep into debt for something on the come.. Be pragmatic and negotiate your butt off because if you can save a few dollars, its better in your pocket than someone elses, especially that of a creditor..

    Comment by Carlo Caparruva -

  149. Reblogged this on moumitarmonerkotha.

    Comment by moumitamou -

  150. We are really facing meltdown. The only way out is being smart when it comes to money. That would mean being able to make the most of every dollar you have now in order to make you survive in the coming economic tribulation. It is either get rich or be wiped out. This is the reason why I am personally campaigning for entrepreneurship online where the most money now is made. I inviting newbies to join me in my journey towards netrepreneurship at It is my site where I offer information about my time tested methods of setting up an online business that earns me an income on autopilot while I learn more on how to survive and break free in this tough economy.

    Comment by Ricky Nyll Park -

  151. Pingback: Flippin’ Degrees for Profit | Barbarism

  152. What about students travelling to other countries where education is cheaper and good as well?
    Like people travelling to India for medical tourism..

    Comment by AsheX -

  153. Simple way to reduce debt by 25%, make college three years instead of four. Seems to work fine in Europe.

    Comment by Sean Seton-Rogers (@setonrog) -

  154. That’s nice it is a good post here you post here a nice topic and i think it is so useful for the entire student who want to come here for study and it is also good for European students there is need to take such kind of steps for higher education.

    Comment by Neel1989 (@neel1989k) -

  155. Pingback: GNC #765 Show Notes | GNC Show Notes

  156. Pingback: Mark Cuban: Higher Ed Meltdown « Rumin810Blog

  157. Sometimes I also think that online classroom is a better idea of teaching young people of today. However, I’m just afraid that these young won’t have an active life any longer for they will always face their personal computer and they won’t go out from their houses anymore. I just hope they can balance life. Learn without sacrificing health.

    Comment by jamharl -

  158. Great discussion, but I definitely feel like some of you all are missing the point. You got good grades in high school or all A’s in college – what does that mean? Nothing if you didn’t learn how to think for yourself. Want to be successful? Learning should be a continuous process. I want to be successful so I study successful people. Go read The Millionaire Mind – it’s just one example.

    Love the article, inspiring, and I agree with most points. People are always quick to wait on the government to fix things. You can be damn sure I’m not waiting that long.

    Comment by 777bandman -

  159. Pingback: College Meltdown Imminent » Eric Guzik : Orange County Real Estate and Loans

  160. Pingback: a new day… » Formal Education

  161. Excellent post. As a higher ed professional of 20 years, I agree that the business model has to and will change soon. I didn’t read the comments, so I don’t know if these points have been made: First, traditional higher ed costs keep going up for a number of reasons. Ancillary costs like dorms and meal plans are way up for traditional colleges, if the school doesn’t own the dorm, it’s very easy for the landlord to raise the rent. The increase in transportation costs due to fuel costs gets transferred to the student when it comes to meal plans. Another reason traditional college costs are increasing is because state subsidies are plummeting, even community colleges have to make up the difference somehow. True, tenure contributes to the problem, but I think academic freedom is worth it. Also, I worked for the for profit sector for many years. I know we are considered the bad guys, but what many people don’t realize is that we are held to accreditation standards that are actually quite strict. Even if the economy is in the shiiter, the for-profits are still held to a 70% placement rate. The for-profits serve a segment of the populace for which higher education is not available, so of course we’re going to experience higher drop out rates and student loan defaults. This is a direct result of a lack of funding on education at the primary and secondary level of education. Face it, there are so many students who finish high school who are not prepared for college. You can’t fix higher education until you fix primary and secondary education. As long as you our school districts are funded by property taxes, there will always be a disparity in higher education (students that live in districts that have higher property tax rates will always have better funded school districts). I truly believed I worked for one of the good guys. Yes, I am under no no illusion that profit was the ultimate motive. But maintaining our accreditation was part of that. So we worked very hard to prevent students from dropping out, getting them jobs and preventing them from borrowing too much. Our cohort default rate was in the single digits and will likely be without any sanctions when the department of Ed moves to a three year cohort. How many for profits can say that? We aren’t Harvard or Princeton, but we served a community that isn’t served. We filled a need, just like any other business. I have no doubt that there are bad actors out there who will enroll anyone for the sake of their bottom line, but don’t lump all of us in that lot.

    All that aside, your post was very provocative and exactly what a lot of higher education officials already know. The student loan debt crisis is a horrible problem and alternatives are going to emerge. I hope to be part of the solution.

    Disclaimer: I am only defending the my company prior to new ownership taking over. I bear no malice for them laying me off, but if you somehow figure out who I work for, I cannot vouch for their educational or profit motives, since I never really worked for them.

    Comment by Herbie Telf -

  162. Pingback: 68: The Death of Dreaming (Part 1) | Jaded Reactions

  163. Great article. I’ve already got my degree/been there done that etc but not so sure if I had it to do over again I’d be in such a rush for university. I don’t really need a college degree for the job I have now. Just a thought.

    Comment by Jody Thompson -

  164. I agree. School loans seems to be the new mortgage house loans, and it might not be long until the bubble might burst again. I don’t think I would have gone into university if it wasn’t for the government loan. This might be all my fault but now I’m stuck with debt and a useless Bachelor of Arts degree. Sure I can go back to school but personally more debt and time wasted are not worth it. In terms of getting a job, I really think the type of degree matters. Most of the job listings are so specific on which type of education you have. I was a fool to think that school prestige matters. Anyone seems to be able to get into university nowadays.

    Comment by therantdiary -

  165. I could really rant on about this on so many levels….

    I cannot say I know what is happening in the US regarding education. I do however understand the logic behind your view and it is probably right to some degree. Others here however have made equally valid points. It has become a severe financial burden to get an education. It was back when I was in uni and it only seems to be getting worse. It is turning back into a situation where only the rich can afford to send their children to school.

    My first year after high school I stayed home because I could not afford to go and I was afraid if I took out loans I would not be able to pay them back under the guidelines of the loan agreements. In the end I went to uni and three degrees later I came out over $72,000 CAN in debt. Through those debt years (about 8 years) I often scrapped by with only change in my account at the end of the month. Needless to say I did not go out on the weekends or spend money on unnecessary items. I just could not afford it, the debt came first. I paid it all off on my own and I did not go home to mum and dad. I do question how many young people are willing to do that these days…

    As for on line learning. I have no idea about the cheap versions and their worth compared to a real uni. I have looked at on line courses offered by universities and they are as expensive if not more so than being in class! I wanted to take a few on line courses recently and nearly had a heart attack when I calculated the cost. It has become like bank fees…originally we were told to go to the ATM, its free, but noooo now you get charged more and more just using a card in a machine.

    You might be okay with taking a kid from a cheaper school but when it comes down to it many are not willing to do so. How can they prove they are as good as a kid with a degree? When I was in school the key was to volunteer to get experience but that is a joke too. I even volunteer now but I bet if I asked prospective employers if they called that reference I’d get a no for an answer. You can have all the skill in the world and the degrees but I find in the end it is not what you know it is who you know and or how well you can sell yourself. I have watched people get a job via friends/relatives etc or talked their way into a job they could not do and then somehow manage to blame others for their own shortcomings when making excuses to the boss for their own screw ups.

    All I can say is in the end everyone wants to squeeze the last dollar out of you…

    Comment by ljr3 -

  166. This was a great post. My husband and I have had many a conversation on exactly the same topic. We have both lived in other European countries where the education system is much different. In fact trade professions are in great demand and pay very highly there.

    Comment by triptracker -

  167. I can’t tell you how much I agree with some of the amazing insight in this post. I won’t tell you how much I owe in student loans, but it’s a reasonable house in many states. It was way to easy, and all I could see was getting a college degree. I got it from a private college. I should have gone to a much cheaper college, but I wanted the degrees faster. I did land a great job, but I have a house mortgage, two cars, child support, and baby to provide for. With a budget, I don’t have enough money for everything. I’m freaking out as I simply don’t have the money for everything. Talk about being to be loaned money too easily for college. I’m really stuck.

    Comment by Matt George -

    • Hey Matt, assuming you have credit card debt, if the credit card interest rate were dropped to 1.9%, could you pay down your credit card debt?

      The bigger point I am trying to make is that there are literally tens of millions of people who could pay down their debts if the interest rate on their credit card, student loans and mortgages were significantly reduced. That in turn would spur more circulation of money locally, which would help local economies everywhere.

      Comment by alexlogic -

  168. No matter what happens, we want education fund to remain untouched!

    Comment by charleywvya -

  169. Mark, to quote Eldridge Cleaver. Either you’re part of the solution or you’re part of the problem.

    Comment by Dr Joe Nolan (@globaltweetcher) -

  170. Pingback: Is Higher Education A Bubble? « 520 Chestnut

  171. There’s one huge flaw to your argument that I’m not sure anyone brought up yet. Student loans are far different from housing or car loans in one major way. If you can’t pay your mortgate, you lose your house. If you can’t pay for your car, it gets repossessed. Not immediately, but this is an “end” to the problem. Obviously not desirable, but afterwards you’re done with it and can move on.

    If you can’t pay your student loans, it doesn’t end, though. The loan companies will go through a process that allows them to take 10% of your wages directly from your paycheck and possibly taking any tax return you may or may not have(not have if they take it) received. So even if you can’t pay your student loans, you’re still going to end up paying unless you work under the table for the rest of your life(and then they’ll take whatever meager social security earnings you might have when you’re old and dying). This is 100% legal and allowed under current student loan legislature and there’s very little you can do about it unless you can convince a judge during bankruptcy/failure-to-pay-student-loans proceedings that you will absolutely never be able to pay the loan back(this doesn’t happen often, except in disability cases).

    It’s extremely risk free for the student loan companies to give out student loans. They will almost 100% get -at least- the money they put in back, and most likely they’ll get far more than that in the long run.

    I don’t see this changing much unless the government intervenes. They started doing it with government supplied loans, which is great(making repayment far easier for everyone), but there’s still a ton of private loans out there through various companies that are essentially legal loan sharks. I’ve -heard- that Obama would like to do something about this, and legislature is in the works, but there’s been nothing as of yet. Who knows how that’ll go? I sure don’t.

    Comment by Josh Lemay -

  172. We as a society have overvalued college, it’s not for everyone yet there is misplaces pressure confusing people. As pointed out, costs are crazy for the ROI.

    There are no longer “career promises.” For example, the IT industry is largely migrating offshore, there is no compelling reason to go to school for this industry.

    Even the medical industry is moving work offshore. There are very few “white collar” professions where there will be no competitive challenges coming from “offshore”….even manual labor is seeing the impacts of pre-fab coming from offshore.

    Trade schools need to become a much more viable option for many people. There is still a place for college that is appropriate for many, we simply need to offer up more options to high school graduates beyond; 1) college, 2) military service.

    We also need to give purpose to those in high school wondering why they should finish if they know they cannot afford college…many drop-outs do so because they cannot envision the future.

    Comment by Scott Gjerdingen (@ScottGjerdingen) -

  173. “As an employer I want the best prepared and qualified employees. I could care less if the source of their education was accredited by a bunch of old men and women who think they know what is best for the world. I want people who can do the job. I want the best and brightest. Not a piece of paper.” I’m glad to read that somebody believes in hiring someone with a true potential rather than hiring only because he comes from a top- ranked college. I hope more employers read this and implement such principles. Congratulations on getting freshly pressed. Its assuring to see a post concerning grave economic issues amongst the zillion photography posts which get freshly pressed everyday (I love those too!) but specially glad to find this one amongst the others! Kudos 🙂

    Comment by Mansi Gandhi -

  174. One more thing:  the value of higher ed is based on the certification of the effort and accomplishment by someone (or an institution) with a reputation.  There have always been ways around that (the school of hard knocks, for example) but there are more ways now.  The reason people are questioning the value of higher ed now is because we have diluted that certification and inflated prices artificially.  Khan Academy, etc., have clear value to those with existing records, or who’ve proven themselves reliable and competent in other ways.  For the legions of folks out there who think that they can skip formal education and just get some “badges,” we’re still a long way from that.  Real college is still the best way for many folks to gain some credibility through the institution.  Online is great in several ways, but if it short-circuits certification it won’t benefit anyone in the long run.

    Comment by Timothy Michael -

  175. Pingback: Hey Don L get bent.... :X - Page 472 - DTMPower BMW Forum

  176. I am all for education, but as Mark said we should want to hire the best and the brightest for what they bring to the table, not based on where they obtained a sheet of paper. You don’t have to go to school in order to gain the knowledge you need to succeed in life. There are several ways to do so and if higher education wants to continue to be one of them they need to change how they operate. Otherwise, people will be wondering, “College: Is it worth the hassle?”

    Comment by LaTosha (@TargetStars) -

  177. I’ve always had a thing against stuffy, traditional forms of education. It seem like a one size fits all approach. The idea that we teach for the job, like trade schools or non accredited institutions is a great one. With new advances in online classes and networking coupled with the technology such as the iPad offering textbooks, we are poised for a technological/educational boom. Just think of the possibilities if you got a lot of professors and educators on board.. you could rewrite curriculum and and tailor it to specific fields on interest and certain students. Those students could then access the brightest minds on the planet and other students from around the world. Talk about creating a well rounded education. You could even do online/iPad internships, you could for instance do study groups with you, Mark Cuban, about business or sports or both. If you took successful people like yourself, Mr. Cuban, you could create a network of “professors” that could give real world applications to those entering particular fields all for the fraction of the costs that it costs today. I always say I’d much rather learn on the job, while doing the job then in classroom. High tuition and boring lectures wont cut it forever. The world is moving and traditional universities better get with the program. (I love talking about education and technology and all the possibilities)

    Comment by John Paul (@JP2photog) -

  178. Someone had commented that a college education should not be viewed as a right. The problem is that you will find many employers asking for a minimum of a bachelor’s degree education. It isn’t that college education is a right, it is an expectation. Very rarely can anyone get around it – substituting skill for minimum education requirements. A lot of companies who hired and trained kids right out of high school are a thing of the past. Or they followed the rest of their corporate bretheren and shipped operations overseas.

    As for debts – I did my bachelors degree at a public university in Florida. A large chunk of the tuition was covered by a state scholarship that only required that students (who were state residents) maintained a B average each semester in order to retain the award throughout their undergraduate degree. The other half of my tuition was covered by a pre-paid program my grandparents invested in for my brother and I. By the time I was in college, I either received money back or wound up just having to cover books. It was bliss.

    Graduate school is much harder to finance. Credits cost more, and tuititon assistance is much harder to come by, except in the form of loans. I found this out in law school. And again in getting my masters. Signing up for the loans to repay these tutitions were all too easy. In the blur of my memory, we received our confirmation letters that notified us of being accepted into a program, along with a summary of per-tution costs. And when we arrived on orientation day, we took a few seconds to sign away for the loan to cover it all. You hardly even think about it. And suddenly, you’re thousands of dollars in debt and wondering what the hell happen. I only wish the acceptance letter read, “Congratulations on acceptance to our reputable university. Are you really really really sure you want to go here, because we’re really expensive. If yes, please sign and return this form. If no, we understand and thank you for applying.”

    Comment by dweebcentric -

  179. Pingback: The coming implosion of the education bubble « NegativeCreditLine

  180. Check out the Mythgard Institute and Signum University. They are doing this, they are making higher education more affordable and doing it with excellence online.

    Comment by Karl Helvig (@KarlHelvig) -

  181. “Online video classrooms with lively discussions dont need a traditional campus to teach kids how to learn.”

    Yes, as the The Great and Powerful Oz tells the Scarecrow in the movie version of the Wizard of Oz: “Back where I come from, we have universities, seats of great learning, where men go to become great thinkers. And when they come out, they think deep thoughts and with no more brains than you have. But they have one thing you haven’t got: a diploma.” What he forgets to mention is that many of those people also get into a lot of debt for that diploma.

    I was “fortunate” in the sense that I studied hard to get and keep academic scholarships, I worked at a grocery store and tutored during school so that when I was done I was able to pay off my loans very quickly, within five years of graduating college. I know some people in my peer group whose loans are larger now, due to deferments and other trickeries, than they were when they graduated, despite making monthly payments. I honestly don’t get it.

    I put off going back to school for a master’s degree for more than ten years. What finally prompted me to return is that I found a place exactly as you describe that met the criteria I wanted. I am now well on my way to getting an MA through The Mythgard Institute (, which is part of Signum University ( There are also Mythgard and Signum Academies, which are geared toward helping high school students learn in a non-traditional (i.e., “public school”) environment.

    I’m very happy as a student of Mythgard University. It’s not for everyone, but then that’s the whole point — where there’s a desire, the free market will provide. At least, it has for me!

    Comment by Curtis Weyant -

  182. Lets face it, next to religion, higher education is a the best racket going..

    Comment by Public Relations -

  183. Mark, I encourage you to check out both and I am a student currently enrolled here for my Master’s Degree and the format, availability and pricing make going back to school much, much easier!

    Comment by dankinney -

  184. It’s high school graduation season and everywhere I look, someone’s bright-eyed son or daughter is choosing which college they want to spend the next 5 years at, and I just want to scream “Don’t do it!! Don’t waste your money!!”

    There is a high demand for trade-school type jobs in my area: HVAC, forklift drivers, welders, massage therapists, and truck drivers. Other than the medical field and k-12 education, there is no demand for anyone with a college degree.

    Comment by Pam Cameron -

  185. As a university professor I took some heat for an article I wrote about one of the headlines you would see during an actual economic recovery being “University and College Enrollment Drops”. But it’s true. I see students “hiding out” in the University who are unable to find jobs. Graduate schools are filled with them too.

    Comment by Holly Gunderson Bell -

  186. Before I read your post, I thinks about how what is happening in higher education is any different….
    This is really a good work. Thanks for sahring…

    Comment by lijiujiu -

  187. As a senior in high school my parents and I had many similar discussions regarding this topic. I was one whom was caught under the spell of the “best business schools rankings”. I tried everything that I could to allow myself to go to the “best” business school that I could get into and I was willing to take on loans to do so. I almost made a huge mistake. Now I have selected a school where I will be happy, where I will make valuable connections and where I will receive a great education in entrepreneurship and marketing that I can afford. Thank you for your insight Mark.

    Comment by Connor Raehsler -

  188. What a fantastic post Mark! You are a true visionary! I believe that teaching kids entrepreneurship at a very early age will assist in keeping America on the right track and make us #1 again.

    Comment by Matthew Toren (@matthewtoren) -

  189. As someone who spent the past twenty years in the system learning how to be a tenured associate professor of finance, I’ll suggest four drivers behind the loss of value that graduates see at the end of their 4 years. The idea that everyone has to go to college has diluted the value of college degrees, as we’ve created degree programs that marginal students can pass and enabled that with aid and/or loans that are cheap and easy from the govmint. The number of administrators and staff have exploded. Finally, administrators have created an expectation among underclassmen, in particular, that campuses are supposed to be destination resorts instead of learning institutions. To reflect on part of this: since when has a psych degree guaranteed you a job? It’s the same as 20+ years ago, but now people will throw $ at you to spend 5-6 years getting that degree. As with Fannie & Freddie throwing money at the housing market, prices are bound to go up, at least until the intrinsic value starts to go down.

    Comment by Timothy Michael -

  190. That’s why I’m not going to grad school – waste of time and money. If you care about what the traditional old folks think, and cared about tradition, by all means…

    Comment by AlphaWolf -

  191. You outlined a lot of my feelings for grad school/college. I realized that a lot of individuals have a similar major as me and have chosen the respective fields that I would get my master’s degree in. I realized that having a master’s degree isn’t going to help me to get where I want. I’ve realized that most of these master’s degrees are nothing more than a gigantic waste of time and money and doesn’t mean the person can actually do a job or run a business.

    Comment by zenlifefrugal -

  192. The big difference is, you can’t get out of Student Loans, unlike mortgages…and also unlike mortgages, there is no tangible asset. Apples and Oranges. Probably not going to be as big a deal as housing bubble was…

    Comment by Public Relations -

  193. Mark — here’s the paradigm shift that no one has anticipated it’s called WEU – World Education University and over the coming decade or less this new FREE education model will change the face of education.

    Comment by Steve Vicory -

  194. Pingback: The Coming Meltdown in College Education & Why The Economy … | Starting College

  195. Reblogged this on College: Extremely Overrated and commented:
    Couldn’t have said it better, thanks Mark!

    Comment by collegeoverrated -

  196. Mark,

    While we agree that being saddled with debt is a large problem staring in the face of the current economy, we diverge on the importance of what it takes to get interviews for the very few jobs that are out there: a great college degree. Just as you might look at a college basketball player from North Carolina that averages 18 points per game and think “That kid can play some basketball. Let’s send a scout to see him in person first thing,” employers will look at an applicant with good-to-great grades from the elite schools and value them more highly than an applicant from a trade school or a school with a poor reputation. From basketball to tax law, these GPAs and PPGs are signals and predictors of future success. By no means is it 100% accurate, but I can confidently look at a resume from a Harvard Law grad that finished with a 3.8 GPA and know he can get the job done. Maybe he can’t, but he will be one of the first people I interview. Similarly, students use their degrees as signals or predictors of future success when applying for jobs. More often than not, the extra $150,000 one pays to attend Harvard over Eastfield Community College will be made up in the first 3-4 years of the Harvard graduate’s career. Of course, the ultimate goal as an employer is to find someone that can get the job done, but how do we narrow the list of candidates? How do we locate those people who we are willing to give the chance? We look at their resumes, and, if we like their resumes, we interview them. It is damn near impossible for an Eastfield graduate to go toe-to-toe with a Harvard grad in a resume faceoff and come out on top. That doesn’t mean they can’t do the job, but it does mean that the Harvard grad comes with better indicators of future success. The NFL isn’t comprised of a bunch of Division 3 athletes, and the NBA doesn’t have a bunch of hardnosed 6’6” power forwards, because D3 athletes don’t have the pedigree and being 6’6” is an indicator that you will be at a mismatch against the other power forwards. Make no mistake, Charles Barkley and Dennis Rodman were both 6’6” power forwards who dominated the boards and were tenacious on the court, but they didn’t necessarily pass the sight test. You have to imagine there are countless Division 3 football players and 6’6” power forwards who could have contributed and gotten the job done, but they never got the chance because of their perceived lack of qualifications. Just like you’d be more likely to take a flyer on a 7’0” center than a 5’10” point guard, an employer would be more likely to pick up the phone and offer an interview to the Harvard kid over the Eastfield kid. Doesn’t matter that the 7’0” center ends up being Michael Olowokandi and the 5’10” point guard ends up being JJ Barrea, you are statistically better off having the pedigree than not having it. Moreover, if you had asked an 18-year old JJ Barrea if he’d take on $150,000 of debt to transform into a 7’0” center, he’d take that deal 100 times out of 100.

    All of this is to say that students will not flee the prestigious universities just because of price increases, if they feel the job market for them will be immensely better if their piece of paper bears a better names than other people’s pieces of paper. Not when we as employers are looking for the pedigree from the prestigious universities. Blame the institutions for raising the prices, but blame the employers for relying mostly on those pieces of paper as foolproof methods for future success in the workplace. If college students thought they could get their dream jobs without taking on $150,000 to signal that they have the pedigree, universities would be held more accountable.


    Comment by Adam Harden -

  197. Interesting, huh? Look at the student debt issue,but also consider the quality of education students are receiving. Encouraging students to learn all the time – both inside and outside of the classroom early on, might give them a good idea as to what they want to do. Part of what I teach college-bound high school kids with the KPLC: Creating Experience Workshop is to do more outside of the classroom to expand their skill sets and professional network….

    Comment by Karla Lárraga Anzaldúa -

  198. Good storyline and logic except for one thing: a college education is still considered a prime asset and while top firms like Morgan Stanley are wise enough to know that a college education does not “a perfect employee create”, they still savor the fact that colleges are great outplacement centers for pools of talent. That is, to say, Dartmouth is a better pool of talent than some Tennessee school. While that trend is still in place with most employers, college educations and therefore student interest will still remain elevated.

    What might and should happen is that lesser schools should start getting bench-marked (at lower tuition levels) to prime schools (why pay $45K for a year at Boston University when a Harvard University costs $50k? – 5k more and plenty more upside potential!). That trend should be initiated with bargain-hungry student populace who see the high fees and weight that with lower long-term employment trends. Once that ball gets rolling, natural arbitrage will occur in the student market to bring down overall prices.

    Comment by arjkondamani -

  199. What I find frustrating is that these schools have an incredible capacity to make money. None of their revenue generating abilities offset the costs of education.

    Comment by Glenn G Gutek -

  200. Government subsidies artificially push out the demand curve which is the sole reason you get this astounding growth in tuition costs. The US government needs to stop blindly guaranteeing all student debt and dismiss this belief that everyone should go to college.

    On a side note, you know which graduates aren’t having any problems putting away monthly savings and paying all their personal expenses? STEM majors. Those guys and girls have jobs locked up fall semester of their senior year, if not sooner, and are making solid dough. These are majors worth subsidizing.

    Comment by Pablo (@SharkWolfLion) -

  201. Join the ‘student loan debt’ advocates & champions in the fight towards changing American perceptions; there is a movement to reach and change societal norms in regards of how people think of ‘student loan debt’ and the serious repercussions in aggregate when the next financial crisis hits. When the student loan bubble bursts, and it will; the devastation will be long reaching into our financial institutions, and then society will finally understand the foreboding economic condition and the actors who were involved in allowing this student loan debt catastrophe to happen: the responsible persons for the Student Loan Debacle, is majority of Congress & the Senate.

    Robert Applebaum OR

    Denise Smith who is feverishly working for those older students who are over 50 & also those who under 50 that are saddled with student loan debt.

    Natalie Abrams

    And the many thousands of individuals who are rising up and saying to Congress and the Senate “enough is enough, get out of the pockets of special interest groups; quit catering hand and foot to the PACS,” and do the job you were elected to do by the American people, in assisting the American people and not big corporations, you know the United States citizens, the ones who are paying your salaries!

    I can’t emphasize enough, walking away from student loans is really not an option. Because, your student loans never go away! EVER! There are many ways in which your debt can be dealt with the utilization of various programs.

    Comment by Kristen Franks -

  202. Another horrible fun fact is that MOST community colleges in the Los Angeles area do NOT offer complete degrees online! You can take a random Math, English, or Soc class but that’s it. The online Universities I’ve looked into so far, charge MORE than the traditional over-priced private school I used to attend!

    Comment by Michael Matthews -

  203. The college tuition/student debt bubble is one that Uncle Sam will work VERY hard to keep propped up and bailed out. The housing bubble (and other bubbles) burst as they were too deeply ingrained in every day commerce. College tuition has enough insulation to keep it propped up for decades to come, regardless of whether it’s done with funny money or not.

    New forms of education, though, that actually give an employer what he/she needs and wants? All for it!!

    Comment by Stan Dubin -

  204. I think Higher education will change significantly in the coming few years… College in it’s current form will probably become irrelevant in the not too distant future…
    my 2 cents.

    Comment by -

  205. I was trained in electronics in the Marines, for which I traded several years of my life. I took that training, worked, gained experience, and started a semiconductor company, eventually hiring about 3500 people.

    There are many ways to gain the necessary education to “have the skills to pay the bills” as my son-in-law enjoys saying. He earns great money in the IT field now, after his education in the Navy.

    All too many graduate college with no marketable skills.

    Comment by Richard McCargar -

  206. I agree with most everything you said, but how can $1 Trillion in student debt that took years to accrue be considered a larger threat than the Trillions of dollars of debt the govt has? The fed govt is averaging over $1 Trillion in new debt per year! Whatever the greatest single threat may be is for another argument. An economy that only keeps running based on the ability to incur debt is the biggest overall threat to our future.

    Comment by Joe Schmitter (@CoMoJoe) -

  207. It is nuts how they just like health care, turned Education into a business.. I am not saying it’s okay to freeload but surely we are all entitled to a shot at getting a good education without having to commit to a $50,000 plus loan. Just what does that get you? The average college professors salary is $80,000. Does a college coach need to be on a $1m salary?? Our focus has changed so much in the last 40 years, Paramedics, Pilots, Teachers all jobs which were once considered mid to upper class now pay peanuts. Kids no longer want to be doctors, engineers, pilots, teachers… etc. People need to reevaluate what matters and forget about trying to be “famous”

    Comment by Lloyd Fehily -

  208. “Remember the housing meltdown ? Tough to forget isn’t it.”
    Sorry to say, my very wordy friend, but you screwed it up.
    It should read “Remember the housing meltdown? Tough to forget, isn’t it?”
    Didn’t really pay attention to the rest, though.

    Comment by averystrangeplace -

  209. Lots of comments! What I don’t get is why college costs escalated so fast? They seem to have followed the medical industry. Back in the ’60’s I went to a private college (on scholarship) and then to a State university when the private school wanted to change my ride to a loan. If I recall, the State U tuition cost something like $200 – $300 per semester (2 per year then). But even accounting for inflation, the cost is a lot higher now and private schools are even more. I was in the California system, which had state funded colleges plus the UC system. These worked with community colleges (two year schools) which provided the potential for students who couldn’t afford a 4 year college or who didn’t have the high school grades for a 4 year school to get a BA or BS (or more) at a reasonable cost. At the time, it really did provide the chance for anyone who had the inclination to at least try to go to college. Today, it seems as if the Internet offers the best chance to do something like this. Maybe even creating some localized networks that would allow web-based students to get together in-person to discuss their subject on certain occasions. I’m not sure how all this would work, but there must be some way to provide public higher education at a reasonable cost. I am a believer in a broad-based background to help the student to understand the world’s society and to learn how to think analytically, as well as to expose kids to a number of potential subjects and careers and integrate them into society by meeting people with diverse backgrounds. The University system in this country may be the best anywhere, but it won’t do any good to be the best if no one but the wealthiest of Americans and international students have access.

    Comment by maduceone -

    • Sadly – it’s become a really just another BIG business – with way too much money swirling around. For a really good primer on that – check out College, Inc – a PBS Frontline piece that ran in May 2010. Shows how the “bubble” got built – and that is still getting fueled to this day. Healthcare’s another bubble – and it’s sad because the 2 combined are the bookends to a society.

      Comment by Dan Munro -

      • Dan – Thanks for the link to the Frontline piece. They ARE the “bookends” of society. Control education and medical care and you can control the individual within the society. It seems that our present system is based on a lifetime of debt both for the society as a whole and for all but a handful of individuals. My view is that the entire system – political, economic, legal, educational and social – is obsolete and a transformation is required in order to continue to exist in any form. Too much for this comment in any case. The medical care bubble is still another example of this – I hesitate to frame this as health care since what we have has little to do with health, just the treatment of illness, disease, injury, etc. An economy cannot run on the requirement to have an ever-increasing supply of sick, diseased, injured and dying people in order to feed the necessity for a profitable and growing portion of the GNP – even now it may be “… too big to fail …”! Thanks again.

        Comment by maduceone -

  210. I am a recent college graduate with 32k in student loan debt. I have a degree in business administration (the most popular?). I’ve actively been seeing employment since December, when I graduated. I’ve gone on interviews, I’ve made phone calls. I’m applying everywhere online and visiting local businesses that may need help. I’m still partially unemployed. I work two part-time jobs that can’t give me the hours I want, but it’s all I have. I have 10 years of work experience prior to college.

    I can only hope that the college meltdown happens faster, so that future generations won’t be in the same position I’m in. It needs to return to how it used to be. I like and agree with MC.

    Comment by Norris Mantooth -

  211. Great post. But its sad to see people from within the education system representing themselves so poorly. Most would prefer to chalk everything up to specific, small-potatoes gripes that ultimately are born out of the same flawed system they are defending. Or simply taking pot shots at their competitors. None of this changes the central premise and truth of Marks assertion: college is simultaneously saddling graduates with debt, while scarcely improving their job prospects or their chances of liquidating this debt before it becomes a problem for the greater economy. As I see it Mark went pretty easy on IHEs leaving out some of the dirtier games they play. And the people arguing semantics against the points he does make are at least guilty of lies of omission. What about Universities’ long standing practice of dumping huge money into facilities to lure in more students. As opposed to using it to keep tuition low and the quality of education high. My alma mater, the (prestigious) University of Akron, recently built new football and soccer facilities. Pray tell me what impact this has on the quality of the curriculum in the physics department I graduated from, despite the fact that tuition is now considerably higher than what I paid. Despite winning a National Championship in Soccer, these facilities are eons away from returning their investment costs. Instead the cost is passed along to students, while the schools themselves enjoy all rights of ownership. And what do they do with these things totally void of any educational value? Use them to bait new, overpaying suckers. So its laughable to hear ‘education professionals’ talking about the integrity and value of the ‘higher education experience’. They’re running a pyramid scheme at best. Can’t you buy the same textbooks they teach from at Borders (or free on Google)? What do football stadiums, professor publications, tenure, manicured grounds, etc have to do with the content of those books, their supposed ‘product’. Nothing. They represent costs that won’t return a penny for your education dollar. And if you borrowed that dollar, you’re fucked, and they still have a window office and a guaranteed job.
    Shifting the discussion to insignificant subtopics may be a great way to avoid meeting these questions directly but it doesn’t contradict Mark’s claims. All the facts and trends in both the costs of education and the anticipated return on the investment make two things clear:

    -college loans are nothing more than a repeat of subprime lending
    – and the entire higher education industry is absolutely in a bubble

    Don’t shoot the messenger.

    Comment by dublds -

  212. Reblogged this on Cries from the Crowd and commented:
    Interesting post for a college student, written by Mavs owner Mark Cuban

    Comment by stephenchott -

  213. Pingback: Don't law schools have an obligation to teach law students how to use the Internet? : Real Lawyers Have Blogs

  214. Reblogged this on mercyxfoster and commented:
    Being a college student myself, and will have a lot of debt once I graduate, this is a good thing to think about now and when I graduate. Higher Education shouldn’t cost as much as it does, but with all of us just getting loans because the institutions know that we will pay the costs, they can keep raising the prices.

    Comment by mercyxfoster -

  215. hey Mark-eb3 here. Great article. What do you think about the feasibility of converting the universities and/or JC’s into trade schools or even hybrids including trade schools?

    From MC> Trade schools for what kind of trades ? I think certification offerings could be of huge value. In many cases more valuable to an individual , at least in the short term, than a college degree. It could have an even greater value as a complement to a college degree for someone who needs a job now

    Comment by Earl Browning III -

  216. You’re looking at it from the wrong point. In terms of pure cost, yes, college education is ridiculously expensive. But if you are going to use that argument, it healthcare or insurance needed? Both have rising costs, too.

    Outside of the tech industry, every non-blue collar profession needs the college experience. It’s much more than the educational benefits one receives — it’s about the experience. It’s about growing up and learning to live and make decisions on your own.

    Does it take a college education to create the next Facebook? No. But the world doesn’t revolve around Facebook. Do you want an imature 18-year-old in charge of your finances? Do you want a young, curious 18-year-old performing your surgery? It’s much bigger than the tuition argument.

    Comment by Kasey Skala (@kmskala) -

  217. Another portion of the problem that I have not seen addresses is WHAT these students use the loans for. One of my children had a full ride academic scholarship to a prestigious private Christian University. At the beginning of her Sophomore year I found out she had taken a college at the suggestion of the Financial Aid office. She did not NEED the loan but was it was “Sold” to her as a “NO payment and lower interest than she could get from a bank”. So, she took the loan used the money to party and have fun with her friends through her Sophomore year.

    Guess what? Her grades dropped and her scholarship then shrunk…to guess what?!?! The EXACT same amount of the NEXT college loan. The whole time it was explained to her “You’re an adult, you don’t have to tell your parents”. So, she just completed her Junior year and realized she is swimming in debt. Her solution? She has dropped out of school so she can work and earn money to afford the lifestyle she became accustomed to while in her Sophomore year and used credit and loans to fund through her Junior year.

    And they blame Mortgage Companies for being Predatory Lenders?

    Comment by Michael Felton -

  218. Reblogged this on Dt2358.

    Comment by dtaws -

  219. Pingback: The Big Guy - Mark Cuban (of all people) calls it. The Coming Meltdown in University Education…

  220. Reblogged this on My Blog and commented:
    Student loans are far to easy to get, furthermore, college loan interest rates are two low and should be increased. There isn’t another loan in the world that can be taken out for as low of interest rates as college loans. It gotten to the point where college students will take out student loans for schools and instead of putting that money toward their education, they will purchase a car or other high ticket item, just so they can keep their cost low and limited interest rates.

    Comment by Dustin Mooney -

  221. I’m not sure if this was addressed by another comment — but the biggest difference between a student loan and other loans is that student loans cannot be extinguished with bankruptcy. Why wouldn’t banks just loan out money forever if there was no risk that people could discharge the debt? If we wanted to address the rising costs of education — let’s start with removing this special classification for student loans, and let the banks put some skin in the game. If they have skin in the game, then they won’t just hand over unlimited amounts of student loans, and universities consequently won’t be able to charge whatever they’d like because the pool of people able to afford it would be much smaller. It would have a domino effect that would eventually lead to education costs being more in line with what the average person could afford and/or rightfully borrow. -Neil

    Comment by Neil Kusens (@neilkusens) -

  222. Pingback: Mark Cuban Blog Post on College Education Bubble, Coming Meltdown

  223. I totally agree on this topic and have been for a while. If you’re looking for a trade (just like John Paulson owned CDS contracts from The Big Short in order to short the real estate market), one can short “For-Profit Education companies”. APOL, CECO, COCO, DV, EDU are some.

    Disclaimer: This is not a buy/sell recco… I have no position nor am I a registered financial adviser. Always do your own DD before placing a trade.

    Comment by Jose Casanova (@jcsnv) -

  224. Online education is the way to go but:
    (1) the online UX experience is awful. Teachers take up to 12 sessions to figure out how to manipulate web 1.0 collaborative apps
    (2) Interactive real-time video classrooms do not scale (nsquared problem) especially in lower bandwith environments
    (3) GatherEducation takes the Microsoft Kinect and enables a teacher to teach or lead a discussion interactively to anyone, anwhere in the world in 15 minutes. video —

    The teacher’s bandwith on this video was made with .25 up and 1.25 down.

    Comment by Pano Anthos -

  225. 1. It has already been mentioned but not everyone learns effectively through technological means.

    2. College campuses are not run efficiently. Each department is often seen as a separate business unit with sales goals. This model is flawed.

    3. There is no real good alternative out there. You can’t tell me that a BA in Bus. Adm. from UT, Notre Dame, Boston College, NC, or A&M is just as good as the “same” degree from the University of Phoenix online.

    4. There is great value in networking with others through college campuses. This does indeed help people further their careers and find better jobs.

    5. What about literature, history, biology, mathematics, education, and sociology? If business is the only valid model where would we get our authors, historians, scientists, teachers, etc.

    6. Some of these so-called fast track institutions that guarantee a job after graduation are a gimmick. I have a friend (recruiter) who worked in such an institution where they realized only one out of six students would graduate. The push was tremendous to get the students to get federal student loans even though the graduation rate is known by the administration of the institution.

    Conclusion for students about to graduate high school: College is still an important part (and may be in at least the next twenty years or so) of seeking a career. Work part-time during college. Work full time in the summer. Live a frugal life. Apply for grants. Go to a Community College for the basics and take the Major courses at a highly visible, accredited university. Network with fellow students. Do everything you can to graduate in 4 years. Clep Tests and summer courses (May terms?) are a good option. Get an internship the last year of college. Hopefully get a decent job once graduated from college. Get the company that hired you to help pay for your Masters.

    Conclusion for college grads: Get a Masters or MBA. I did and with some luck/divine providence landed a job paying two times what I made previously.

    Comment by Jonathan Key -

  226. I am no genius on this topic. I just have a few observations that may or may not add value, I know the problem is much more complicated than what I have to say. But one thing that bothers me is the fact that highschool goes through 12th grade here, then we have about 2 years of a core curriculum in most colleges, which teaches many of the same subjects but in further depth, on the “college level”. What I feel I would have really benefited from was the British system where they go through 10th grade, then have 1? 2? years that are more specialized, before they go off to college – and then college can be their terminal degree, like medical school, law school, etc. They are done at a much younger age – and they were better able to focus in on what they wanted to seriously study and do as a profession – the focus is encouraged earlier on in their academic career. Not only do they get out earlier, there is less of a chance, I would think, that they’d feel lost coming out of college or feel the need to go back and take on more schooling, or change their profession, etc. Next, I noticed in England the college facilities were much more basic than their US counterparts. Yes, the buildings might have been old and lovely. But their cafeterias, the food offered, the computer labs – these types of things were far, far, far more basic. All essentials were there – but no extra frills. I think there are many ways in which what is offered on campus could be simplified and the prices would be greatly reduced.

    Comment by rebelsprite -

    • Mark, I agree that there are a lot of frillies that colleges have these days. When I was in college dorm room walls were often cinder blocks.
      Unfortunately colleges are in a kind of arms race to see who has the fanciest facilities. Until parents and students start looking beyond brand new multi-million dollar dorms and science buildings, the arms race will continue.
      Once they put up a new building the maintenance and updating of that building are baked into tuition costs basically for ever.

      Comment by imarunner2012 -

  227. It would appear nearly every institution is heading in this direction as it is now expected to milk the consumer for every nickel whenever possible.

    Comment by Alex Mcarthur (@alexmcarthur) -

  228. I am so tired of these articles. You writers keep saying that our educations are worthless. Well, you know what? I owe a lot more than the average you quote and I do not regret it. I am not going to go down letting you say that I diidn’t learn anything that it’s all for “fun and entertainment.” I don’t know what kind of school you went to but I am at a top tier school. Yes it’s expensive but it is also very hard and totally worth it to me. Just because you and all the others who can’t find jobs now partied through college, doesn’t mean we all do. Instead of constantly talking about how stupid we were to go to college, why don’t you talk about what to do now that we have debt and employment is down?

    Comment by addicted to gummy bears -

  229. My daughter’s experience at Drexel in Philly was a bit different. Almost all undergraduate degrees there have at least one, if not two, paid internships factored into the time it takes. As such, most students are on a five year track before graduation but with a full year’s worth of relevent work history as well as networkable connections. The University assists both iwith intern placement plus with finding jobs for seniors upon graduation. Not a cheap school, but they understand how the game needs to be played.

    Comment by Eric Thiessen -

  230. Dear Mark,
    I am the best and the brightest. Take my word for it. Hire me.

    P.S. I’m not sure if I’m trying to make a point, or trying to score a job, but a piece of paper can certainly be telling.

    Comment by Igor Tretyakov (@SiR_FoX) -

  231. Love it Mark. I think that the market will change from “Where did you go?” to “What do you know?” When that happens, university presidents better hold on to their hats!

    Comment by Bobby Dinero (@robwilsontv) -

  232. Pingback: 3 Most Important Areas of Your Life | Michael G. Stults

  233. Pingback: The Coming Meltdown in College Education & Why The Economy Won’t Get Better Any Time Soon « A Moral Outrage

  234. Lyubov, haven’t you ever heard of the saying that your C students become the bosses of your A students? Mark is a businessman, not an editor. He thrives in leadership – a place where many of the grammar Nazis lack.

    Comment by omgsorrythatsiteexists -

  235. Pingback: Mark Cuban on the Coming Meltdown in Higher Ed « On Higher Ed

  236. Pingback: Student Debt Bubble: Impending Doom for Colleges | Sense on Cents

  237. Unfortunately, the most popular/easiest way to judge an applicant is from the school he went to and his/her grades. It is the most efficient way, because I doubt ever employer has the time to sit down and have a long chat in deciding if you’re the ideal candidate. Good schools and good grades simply make a good filter. The only drawback is that often we don’t get those hidden gems out there who aren’t necessarily your overachievers but are well equipped with the right principals, but what are we looking for again – leaders or drones?

    Comment by omgsorrythatsiteexists -

  238. Pingback: On College costs, Vice Presidents and Massachusetts « Radio Free Steve

  239. Kind of ironic that an article about higher education contains so many typographical and grammatical errors.

    Comment by Lyubov Kalaska -

  240. Great piece, but it’s “couldn’t care less.”

    Comment by Stella -

  241. I am from a small African country. I live in Norway. College education, grad school included is absolutely free, plus getting a job (if you’re white) is one of the easiest things. That job is enough to take care of your bills + textbooks. While doing my masters I had a classmate from the US, he got a job in the first month of being here. So, why not come here (or Sweden- Its also free there) for college and then go back to the US with zero debt and get a job?

    Comment by Ndimuganda (@Iamamuganda) -

  242. As a friend of mine Casey pointed out, “What is very scary about the student loan debacle is there is absolutely no asset as collateral like there was in the housing collapse.”

    Comment by John Huntinghouse -

    • John Huntinghouse, I have to respectfully disagree about no collateral being a big problem. This is the ultimate scam being perpetuated by wall street through their banking interests and their paid political minions.

      Unsecured debt can be secured AT ANY TIME when a default has occurred by simply going to the rubber stamping courts and having it converted to a secured debt! Talk about bait and switch for the purpose of life long debt servitude, all so financial institutions can sit back and collect 9.9% court ordered interest rates on top of a debt that will never be paid down, at best, the debtor can only make interest only payments but will continue to simply be treading water on the actual debt, which in turn stifles the economy for main street.

      On top of that, if a person HAS collateral such as home equity, but no job, they can’t access their home equity line, no matter how large it is.

      The result? Banks can literally STEAL a house if a person is unemployed but sitting on a ton of home equity they may have spent 30 years building up.

      This is why DEBT NEUTRALITY is the best solution. People accept they have a debt, and in exchange for no new interest rate charges, penalties or fees on that debt, they agree to make monthly payments whenever their monthly income is above a certain monthly threshold. This solution WILL NEVER be mentioned by either political party, who would rather polarize the issue to “get a job” and “debt forgiveness”, neither of which addresses the issue correctly, but does succeed in creating political adversaries who fear the other side unnecessarily so.

      Comment by alexlogic -

  243. I just analyzed my undergraduate transcript (degree in accounting) and discovered only 30 credits (which equates to one academic year) were in accounting courses including the low-level classes required for admission to the program. 44 credits (~1.5 years) were earned in “business core” classes and the preliminary math, economics, and statistics pre-requisites. 28.5 credits (~1 year) was spent in “general education”, where the most useful class was the 0.5 credit library orientation. 5.5 credits were from an earlier major and could not be counted as gen. ed. and 19 credits were free electives.

    The last figure is the one most people would write off as a waste of money, but I disagree. I’m still very interested in meteorology and astronomy and have passed along some of that knowledge to children’s groups, the horticulture classes kept me sane and knowing the ins and outs of vegetable gardening isn’t a bad thing during hard times, and the music ensembles were just a part of being a lifelong musician. Financially and personally, I would have come out ahead if I could have skipped the “gen. ed.” garbage. Other than helping with a few Jeopardy! and Trivial Pursuit questions and excluding the aforementioned library class, I’ve not been in a situation where I _needed_ the information from those classes. Had I been able to cut off that one year’s worth of classes, I would have completed college debt-free since, ironically, I borrowed almost exactly the amount required to cover one year of tuition and fees.

    20+ years later after working for four different institutions of higher education (including in Financial Aid and the Business office) and becoming a faculty spouse, I have seen some of the other side of college life. Universities are trying to run on a business model where each academic department is a business unit and is supposed to show a profit. Under this model, departments that provide the common gen. ed. classes will fail because they are required to spend a large part of their time and money on courses taken by students who are not majoring in (an asset to) the department. Remedial level classes also eat into the “profit”. 4-year schools should get out of the practice of teaching remedial classes and should seriously rethink the need for general education. If classes on this level are truly needed and not readily available elsewhere, then the large schools should find a more cost-effective means of delivering the information.

    A degree doesn’t _have_ to cost so much, and at the current rate, it is increasingly a bad investment.

    Comment by Brenda Conover Lewis -

  244. Reblogged this on Carpet Bomberz Inc. and commented:
    Mark Cuban weighs in on the College Loan Debt problem in the U.S. Hopefully this can sort itself out soon without an major disruptions in the Industry. (fingers-crossed)

    Comment by carpetbomberz -

  245. Absolutely brilliant. My family and friends have been pestering me for the last 4 years to go back to school and the more and more I’ve watched the job markets and educational institutions, the more I feel justified in waiting for a better solution. As of now I have no higher education debt and my net worth is nearly 80X that of my friends my same age. People like to cite statistics about how much more a graduate degree can earn you in a lifetime, and yet, what good is all that extra money if it’s going to a school loan. I might as well have worked as a BA wage and put that money in my pocket, especially if the market won’t pay MA’s or PhDs. Silliness. Absolute silliness.

    Comment by Matt Rose (@MattTheRose) -

  246. Higher education is now a completely distorted marketplace in which anyone with ambition is suddenly able to “afford” tens of thousands, if not hundreds of thousands, of dollars worth of education courtesy of the federal government. That Uncle Sam distributes loan money like candy creates a moral hazard problem. Students no longer evaluate their degree’s marketability or their ability to repay their debt upon graduation (e.g., law school and the dearth of jobs available); government ignores worthiness of borrowers, notably whether they’ll be able to pay back the money they owe (case in point: the $1tn student debt crisis everyone’s discussing now); and — perhaps most flagrant of all — institutions, including public universities, get to artificially set prices not based on organic supply and demand, but rather on how much money they’re guaranteed to be paid by the federal government’s loan programs (e.g., a school can charge $10k a year or $35k a year, and the gov’t will allow students to borrow up to their eyeballs for either one… so why not charge $35k a year?). The loosey goosey gov’t credit market and the market manipulation it produces is, IMO, a huge reason college is no longer always a smart investment in terms of ROI. If gov’t actually discriminated based on SOME type of worthiness, perhaps prospective student borrowers would think twice about the obligation they aspire to take on – and evaluate carefully the circumstances they may well fall into upon graduation. Take this to the logical extreme (where gov’t doesn’t operate on a carte blanche basis) and you’d have downward pressure on prices in the education marketplace, since those institutions previously reliant on so much free money would be required to adapt without that. Perhaps we’d see the rise of ultra-local, ultra-affordable institutions a la community colleges or trade schools. Of course, any politician hopeful of re-election will continue to spout the need for “education for all” in the name of fairness (or other nebulous fantasies). But I think there’s an argument to be made that this issue has many similarities with the housing bubble and government’s huge part in having created it due to aggressive advocacy of home-ownership and loose lending standards.

    Comment by Stephen Dewart -

  247. Not sure about the US, but in the Uk a lot of courses with very little value have been created to make money for colleges. One I love is a 3 year Batchelor of Arts in – wait for it – party planning! I know lecturers who are dying to retire – sick of lecturing to kids who are too bored to do any work, and they are unable to fail them for fear of colege statistics. Degrees are worth less and less, the jobs that need them are disappeariing. We are now hearing we get other things out of them. Courses are fillling up with wealthy pensioners. So I agree with much of what you say. It is really cruel to give kids hope of a future that will never happen, but that they will have to pay for in their young adulthood when they most need the money.

    Comment by Barb Drummond -

  248. Not only will students get out of college having an incredible burden of debt they will come to realize they were not the only one to have received easy money for school. They will now suffer increased competition in their chosen field in an economy and government structure of increased taxes which already punishes employers for hiring new workers. These students are hoping they only have to make their payments for 20 years under Obama’s “student loan bribery/debt forgiveness scheme for votes” deal. If Obama loses they are screwed.

    Comment by Todd Hickman -

  249. Pingback: This & That

  250. Here’s interesting analysis from Reuters on Friday… Student Debt: “Where You Attend College” Matters | 05-11-12 | via @reuters –

    Comment by Brian Zimmerman (@brianzimbz) -

  251. It wasn’t the Real Estate Agent causing the prices to go up or getting the people the money for the loans, it was the BS coming from the Federal Government forcing banks to make loans to unqualified people because of there bully tactics thru banking regulations. Smart business people don’t make stupid loans, Stupid politicians force banks to make those loans. People borrow more then they can afford, another bad choice. Lets stop forcing private businesses to make bad loans and lets stop the welfare pipeline of student loans. Until we as a country get back to ways of you have to qualify and can afford the loan you are taking on, this will not stop. The government is not a bank and should NOT be a bank. Allow the private market to handle the business of lending money with maybe a cap on total amount on interest rate. I don’t, nor does every American need to be paying for all the dead beats and poor choice makers of this country. Once this is brought back in line, then all these institutions will stop the unwarranted increases that seem to be the norm. Maybe we demand more for our money from those who receive it. Mark a smart business man like yourself knows this and it’s a shame you don’t blame those who really caused the problem, Fannie– Freddie and the Feds.

    Comment by George McKnight (@McKnightGeorge) -

  252. Mark,

    Thanks for the post. Just opened my doors a few weeks ago. I recently began working with high school students on personal finance and some of them commented on skipping college because they have no idea on how to pay it back. WSJ had an article recently on the future of an un-educated America because minimal finances will cause students to turn away from high priced college and start work after high school.

    We all saw it coming but kept buying anyways. 67% of college grads said they did not know what they were signing up for when acquiring loans for college. YOU MUST TREAT YOUR FINANCIAL LIFE AS A BUSINESS. IF YOU WERE AN INVESTOR, WOULD YOU BUY YOUR COMPANIES STOCK HAVING ALL THAT DEBT ON YOUR BALANCE SHEET? The problem is not only the high (and rising) costs, but the lack of financial education. This is why I started The Finance Friend. I am currently 24 with a 780 credit score and no student loan debt (or any kind for that matter). I owed $18,000 when I graduated and paid it all off in 6 months. Why? Because I worked 5 jobs each summer in high school, saved money (even collected cans and water bottles (worth 5 cents in Maine)), and worked a full-time job during 4 years of college. As a 20-something, I am helping educate the other 20-somethings on how to navigate this mess with focus on:

    ★ Investing
    ★ Credit
    ★ Loans & Payment Advice
    ★ Finding Alternative Sources of Income

    Follow me @myfinancefriend or on

    I find the problems here to be the lack of financial education and human spirit most of the people who came before us had. They were willing to do whatever it took to become financial stable for their family and understood fundamentally what they were signing up for when obtaining a loan. Somehow they understood living within their means. They also gave bail-outs the finger and did it themselves. Thank you Mom & Dad.

    Keep the posts coming Mark. I appreciate following the business mogul you are.

    Make it a great day.

    Comment by thefinancefriend -

    • Parents do shoulder some of the blame here. By not talking to their kids about the cost of college and how it will be paid for they are sending their kids into a debt filled future. Kids are kids and we cannot expect them to be as sophisticated as savvy investors.
      Parents need to be more aware of the cost/benefit of a college degree and in particular, the one they are paying for. It makes no sense to pay $50K per year to become a teacher or librarian. Sorry, that’s just the way it is.
      Kids should not be shocked by their loan payments after graduation. They need to be aware of what they are getting themselves into and think about it.
      My daughter is at a private engineering university. She knows all about the costs and what she will be responsible for upon graduation. But, we are reasonably confident that a mechanical engineer will be able to pay for this education.

      Comment by imarunner2012 -

      • I completely agree that parents should take some of the blame. It is tough at a young age to prepare for big issues that are less understandable as a kid. I was more forced to learn how to manage money after tons of creditors called the house as a high schooler looking for my mother. I had to learn quick that she was not the act to follow. My biggest concern is with many of the ill-educated younger parents holding massive amounts of debt not knowing how to teach themselves or their little ones about money management. The past few years are not the kind of history I’d like the next generation to repeat.

        Comment by thefinancefriend -

        • I have that concern also. Ignorance perpetuates ignorance.

          I feel that Mark’s blog and all of these comments are only talking about the cost of education and not the value. Would we be having this conversation if tuition was not so high? If college was affordable and graduates did not have such massive debts would we be concerned about producing French Lit majors? Probably not.
          I’m not disputing that there is a problem but I think the argument discounts the value of teaching people to think and how to learn.

          Comment by imarunner2012 -

  253. Wholeheartedly agree. Not sure if you saw this recent article in Sunday’s New York Times? It talks about exactly what your discussing…

    Comment by Camille Anne -

  254. Reblogged this on and commented:
    A well thought out piece about College Education and its impact on the economy

    Comment by aswingle -

  255. I work in scholarships at a university, and I can back up what Mark is saying 100%, I have been telling my spouse the exact same thing pretty much for months.

    Being the person answering most of the incoming calls to our office, call volume is way up lately. There is no question that in the last year especially, that parents are starting to see some of what Mark is alluding to. They may really love the campus, and their kids may REALLY want to come here, but moreso than in past years the parents are putting their feet down and saying no to their children on coming here if little or no scholarship help is available. The usual fallback I hear of are the community colleges, to get the first two years of basic stuff out of the way, but I also think it will go more towards online education. It certainly doesn’t help matters that while we keep raising tuition, the scholarship $s are getting tighter and much more competitive. Estimated cost of attending for next year, for just the one year, is well over 25k for a resident and 40k for a nonresident. Those type of numbers will make even those fairly well-off balk; for the many more we have lately that have a lot of unmet need, I can tell when I talk to them that they quickly write us off sometimes. They know the realities, they have heard that half of graduates can’t find work now, and that 3.4% interest rate on student loans may soon go to 6.8%.

    We try to keep incoming undergraduate classes here at a certain number. Last year was higher, but the latest estimate I heard for next year is several hundred lower. One of the individuals in charge here in my dept. doesn’t seem a bit worried, just keeps pressing us to sell the quality of what they are getting here vs elsewhere. I do so since it is my job, and hear the others all do so, and for all of us the response is almost always a reply (from polite to nasty; we do get yelled at a lot by frustrated people) to the effect that they know this, but they aren’t going to ruin their finances for that bit of difference or they just can’t make it work.

    So, while some here have their heads in the sand, and continue the plans to build amenities that best belong in resorts, and renovate places that have no need of it, I’m keeping feelers out elsewhere so that I might be the first rat off the ship.

    Thanks for saying what needed to be said about this, Mark!

    Comment by ahigheredworker -

  256. I loved your article. But it’s spelled ” fuhgeddaboudit “

    Comment by danielleantonio -

  257. @ mayormckinney
    Why don’t you ask the big corporations to bring back jobs in the US and stop outsourcing? It is not the import of foreign labor, but the export of jobs to foreign countries that is killing jobs in the US.

    last but not least…

    May I remind you that FIAT (Italian Automobile maker) and his CEO Sergio Marchionne have saved Chrysler?

    Here are a few interesting articles….

    …and now let’s focus on the student loan debt problem, which is a pretty serious problem!

    Comment by Linda D'Alessandro -

  258. I couldn’t agree more with what you said. I was considering to become an international student here in the states and in my post I listed some pro’s and con’s but the huge amount of money that I would need to get educated in this country is scary.

    Comment by annikaritter -

  259. I think that one crazy thing is that students can rack up so much debt for the degree. I tell my kids that there is probably hundreds of ways to spend $40,000 to better prepare yourself for finding work, but no one will loan you the money for it. Imagine if you could get business loans as easy at that or any age.

    Comment by dasher007 -

  260. Mr. Cuban, with your permission, I would like to post your book preview and this blog to my site (Athletes with Degrees). This is really good stuff.


    Comment by Athletes with Degree (@AthletesDegrees) -

  261. I absolutely agree and have written about the topic several times. Here is the latest post I created dedicated to this issue:

    Comment by Yura Bryant -

  262. My name is Brian Ransdell, I graduated from Indiana University and was born and raised in Dallas, so needless to say I’m a fan of everything Mark Cuban. I have an idea for student debt relief that will provide hope to millions of Americans and stimulate the economy. I also have a very specific business venture that I’d love to share with you were I able to implement these changes.

    That being said, I want Congress to provide an exemption to the current tax code which would allow for donations to student debt to be considered charitable contributions, and therefore be deductible from income. I have started a petition on titled “Modify Tax Law for Student Debt Relief” that currently has 107 signatures in 3 weeks, and it has been featured in an article by Bill Conrad of the Plano Star Courier.

    I envision large corporations buying the idea that if they designate a portion of their annual charitable donations towards student debt, then they could free up that equivalent amount of cash for student debtors (consumers) and immediately impact the US economy. But first, Congress must provide the incentives for these corporations to do so. Many people may believe that student debtors don’t deserve money for getting themselves into this debt, but the fact of the matter is that the US has a crisis on its hands, and rather than make unproductive judgements and pointing fingers, the ethics should be left up for the donor to decide. At the very least, we should exhaust our efforts to find creative ways to provide relief. My idea does not place a burden on taxpayers and would be completely voluntary.

    Please help me stir debate across the US about my idea by signing it and publishing it on your blog. I have copied links below both to my petition and the article by Bill Conrad. Thank you very much for you consideration, and please pass this on to anyone who may help.

    Comment by Brian Ransdell (@Brianese) -

  263. Mark, It really depends on which industry you’ll get yourself into after college, if your’e an aspiring fortune 500 CEO you better get an MBA from the most respected universities, however for tech skills, these things can be learn through online tutorials. With the growing demand of global tech jobs, and increasing number of credible online tutorials college education could become obsolete particularly in the tech field. You wouldn’t hire a programmer with a college degree but doesnt know how to code.

    Comment by Chris San Agustin -

  264. Mark,
    College is ingrained into kids very early on, and by the time kids are in high school, they are programmed to believe they can make something of their life if they go to college, and will end up a nobody if they do not. The college experience is in movies and TV, SAT prepping is huge business, and there is no end in sight to parents who push their kids to achieve in this country, and the first stop on the way to their dreams is college. Reprogramming what college means will take a concerted effort by all parties.

    Comment by metrosetter -

  265. This is exactly why I have completely changed my approach to educating my children. My two high school children are enrolled in half-day career programs while attending school. My son will have a slew of certifications in computer related studies and my daughter will be a fully certified nursing assistant BY THE TIME they graduate high school. Therefore, they can become employed immediately and decide on further education at that time. I intend to do the same with my younger children as well. I am so glad I saw this!

    Comment by truthsparked -

  266. Reblogged this on Anand Jeyahar's static…..

    Comment by Anand Jeyahar -

  267. Reblogged this on The Joseph Ratliff Letter and commented:
    This post is so spot on it’s not even funny…

    Comment by Joseph Ratliff -

  268. More kids/parents should be aiming for skilled trades – there’s a huge shortage, the wages are awesome, and you can work while you go to school. There’s also a looming number of trades people who will retire in the next few years – no end to the opportunity in sight.

    Comment by Mark Anderson (@MARKatCoreworx) -

  269. Great post. The whole structure of “education” is messed up. I made a deal with my kids. Told ’em that I’d keep them out of these horrid, boring places called schools if they wanted me to. Told ’em that school was no place to spend one’s childhood. Go enjoy yourselves and learn what you want to. Pursue the things that interest you. I did tell them that they might enjoy looking into science, math and reading great stories that had stood the test of time. Told ’em that they should get outside, run around, explore, go on adventures, lie on their backs, stare up at the clouds and wonder.

    Result: one kid entered MIT at age 15 but left before graduating to work in biotech industry in Silicon Valley. She aced all her classes but found the environment kinda meh, except for a few exceptional teachers and TA’s. She’s now 18 and working unbelievably hard in a profit-seeking company. She ways she’s never been happier. Other kid is 15 and is in high school after starting school in the 7th grade. He’s written two screenplays and is planning on making his first movie this summer. He may or may not go to university. If he does, he’s going to have to find a way to pay for it. I figure that’ll make him think twice. And learn the value of making real risk/reward decisions.

    Everything I learned that was worthwhile, including math and physics, I learned outside of any school. Everything I learned that turned out to be wrong, counterproductive and really stupid, I learned in places called schools.

    The education bureaucracy in the US (and everywhere else for that matter) is a scam. If what they do is “education” then I’m a rhinoceros. What I don’t get is why most smart people don’t get that. Oh well.

    Comment by jwdeming -

  270. We compete in a global economy. It is time our education focuses on results, not a piece of paper.

    My wife and I have a combined student loan debt of $450,000 which cannot be erased by bankruptcy (not that we want to). It’s as if we borrowed money from the mob who will get their money back at all costs.

    Comment by Jarom Lamoreaux -

  271. The bubble in student loan debt is a consequence of a fundamentally flawed financial system, of which Cuban himself is a perverse beneficiary. For example when he built, managed, and sold his 1st company, MicroSolutions, he sold it in 1990 for $6M. That’s Million. Ten years later, during the world’s most destructive speculative bubble, he built and sold an on-line radio service ( to Yahoo! (a company that, at the time, was 3 years old) for $5.9B in Yahoo stock. That’s Billion with a “B”.

    During the intervening 10 years, something fundamentally critical to the world order took place, namely that the Federal Reserve Board supported “repeal” of the financial industry’s regulatory backbone, the Glass-Steagall Act, which stated that “insofar as it prevents bank holding companies from being affiliated with firms engaged in securities underwriting and dealing activities”. It was Alan Greenspan’s appointment to lead the Federal Reserve (and his dismissal of Paul Volcker’s warnings about moral hazard in the combination of commercial firms and banks), that seeded the potential for a deal differential between two similarly sized company: One which sold for $6M, the other for $6B. 10 years, 1,000% inflation. But not one person really knew the value of either, and when the deal fees could be 1,000x higher, why bother knowing?

    Anyhow the point here is that neither nor the paper stock of Yahoo! were as valuable as the underwriters in the investment banking industry made them out to be. And this sort of asset inflation, which includes behind-the-curtain asset valuations (think CDOs, CDIs), “mark to market” accounting and the like, has become so fundamental to the finance industry, and has helped generate the extraordinary wealth amassed therein, that industries reliant upon financial intermediaries are at systemic risk of collapse. Let’s not blame the universities, or mortgage brokers, or construction companies (or even the government), for consuming products and services offered to them brokered by “honest actors” in finance. Just follow the money. Or as my colleagues at the universities ask of their financial services friends, “Where are your customer’s yachts?”

    Sadly, there is no way to put the genie back in the bottle. Cuban is right about the coming student loan bubble, but as an outsized beneficiary of an industry laden with perverse incentives for outsized returns, perhaps he should first assess how the tree got so damn big, before singling out individual branches.

    Comment by Brad Smith (@bradsmithjr) -

  272. Coincidentally, I wrote something very similar last week to my local paper after they published an article about politicians trying to keep interest rates on student loans down. My question to people was, why not let them double? It was published today if anyone is interested.

    A friend pointed me to this blog post because they are both on the same topic.

    Comment by Craig Kohtz -

  273. Mark, I love that you are blogging on this. Thank you. Here’s my most recent post which will appear this week in Huffington Post. You can also find it at

    Andrew Martin and Andrew Lehman have a front page story in Sunday’s New York Times: A Generation Hobbled by Debt. The top of the fold color picture features Kelsey Griffith, age 23, in debt $120,000 from her college loans, now working two restaurant jobs. She’s about ready to move back in with her parents. Her mom co-signed her loans. Kelsey is one of five sisters. The article doesn’t say whether she is the oldest or the first to attend college, but I imagine so. It’s impossible for anyone to read the story and not ask: What the heck was she thinking? Maybe more importantly, what the heck were her parents thinking? Martin and Lehman’s actually don’t ask those questions. Instead, their question boils down to this: what the heck was Ohio Northern thinking when they allowed her to attend?

    The story is full of good information:
    –The percent of students who have to borrow to attend college has doubled in 20 years.
    –The average debt was $23,000. Less than 3% of the students borrowed as much money as Kelsey. 10% borrow 50%.
    –11% of students attend for-profit colleges, yet they receive 25% of the federal grants and loans. The rate of default on those loans is twice those of who attend non-profit institutions and their rate of graduation is about a third of private non-profits.
    –State and local funding of higher education has reached a 25-year low, adjusted for inflation, down 24% nationally.
    –The cost of a public degree has gone up 72% in ten years; for a private non-profit degree, up 29%.

    I’ve written about most of this before. The trend is unmistakable and unsustainable. I’ve also written that while funding for education has declined, those same dollars have gone to building residence halls for those we choose to incarcerate and for guards to staff them. I don’t quarrel with much in the article, except the proclivity to feature the extreme case like Kelsey’s. She represents one in a hundred, but the story focuses on her and others like her. It makes for good reading, I suppose, but I’d have preferred a focus on the more typical student with a more typical debt burden. That story ought to be compelling enough. As President of a private liberal arts college, I see young people like that every day, graduating with something like $20,000 of debt after four years. I had a young woman from Florida come see me just the other week. She had just finished her first year and had excelled in and out of class. She loved Oglethorpe, but her mother had to take out a $10,000 loan for her to complete just one year. She knew that was not sustainable and I told her the same thing. I also asked nine trustees to join me and personally cover a substantial portion of her tuition next year, on top of the generous financial aid she was being awarded. Every one said yes. But even though she gets up at four every morning to work her shift at the nearby Starbucks, that will only help her complete year two. She is likely to have to transfer to a less costly school a year from now. If that is what happens, I will know that she has two great years under her belt of an exceptional education. No one can ever take that away from her.
    What I would like to share here is a little sense of what it takes to provide that kind of education. I hope when you are through reading this, you will understand that at least one school (and trust me, in this regard, there are hundreds and hundreds more like us) does everything it can to hold its costs down. I’ve been President since 2005, finishing year seven. I think in two of those years, we were able to provide a cost-of-living increase to faculty and staff and even then, it was just one or two percent. One year, I had to cut everyone’s pay and stop contributing anything to their pension plan. A full-time faculty member with a Ph.D. who was chosen from over 300 applicants made $50,000 his first year. Our staff is tiny; everyone is doing two or three jobs. I think it was in my second year, the roof of our 100-year old library was leaking and wouldn’t hold a patch anymore. My only option was to call a trustee and ask him to personally write the check. He did. We provide $15 million dollars a year in financial aid, on a budget of less than $40 million. And with these limited resources, we are among the best liberal arts colleges in the country and provide our students an exceptionally rigorous education. Our typical student pays $1650 a month for this kind of education. I’d be hard-pressed to suggest a better investment. If they want to live on campus and eat 20 meals a week, they will pay about $1100 a month. Trust me, that’s not bad for living in Atlanta.

    It’s true that Oglethorpe is one of the less expensive private options. Some other schools I know cost three or four times what we do. And I have absolutely told lots of families that Oglethorpe is every bit as good a choice as one of the higher priced options. And if money is an overriding concern, they ought to consider a lower-priced school, at least for the first two years. We have also created a viable option for well-prepared students to complete Oglethorpe in three years. One of the great things about higher education in this country is its diversity. Until the last couple decades, I’d also have said our public policy was designed to provide access to that diversity of schools for the less financially able. I can’t say that anymore. Instead, we have consistently and deliberately acted to limit access and that’s shameful.

    Comment by petrelwords -

  274. What a load of crap. Going to college to “learn how to learn” is just bombast spewed by those too lazy and/or too unmotivated to take their college education seriously. The problem isn’t that you can rack up $20,000+ ($80,000+ in my wife’s case) in student loans, the problem is that you can do it while going to school to be a teacher/artist/other-low-earning-potential-career. *That* is the issue. Money for education should be fall-off-a-log easy-to-get as long as your earning potential for paying it back is a non-issue. $80,000 in student loans is a massive amount of student debt, but my wife and I took it on so she could go into a career where she now designs bridges for a fortune 500 company. It was a lot of debt, but it was *smart* debt. And while I will agree with you that the institutions are *part* of the problem here, why does nobody want to call out the sheer stupidity of the people taking on this debt getting near worthless degrees? In a commercial, capitalistic, lobbied system like ours where it can be nigh impossible to regulate effectively, maybe we should start holding the individual responsible for their own stupidity.

    Comment by Tay Howland (@edifyingheresy) -

  275. This is great, or not. I completely agree. I was lucky enough to get a decent job four months after graduating, but feel that the university cost was more than what I got out of it. Part of the problem is that students aren’t prepared for the work world. For one, they aren’t prepared for college when they begin (very immature and irresponsible). Secondly, students in universities are too busy learning how to please their professors for a good grade instead of learning the material and what the professors are supposed to be teaching. How can the universities be held accountable? Not all the professors are this way, but many that are remain.

    Comment by Matthew Kimsey (@GovernorKimsey) -

  276. Mark,

    I agree with the sentiment of this post: the amount of debt people are taking on is too large, particularly when it doesn’t provide as much return as you would expect (or hope).

    I also agree with the view that current higher education system is not adapting quickly to new opportunities. Much like the newspaper industry (as you note), there is a lot of “wrong” movement to technology (like online delivery of education, which frankly does not work for MANY classes, particularly those classes that you want (a) actual interaction with instructors and (b) creativity). Many universities are investing in online education to just reduce costs, without actually increasing (or even matching) the quality of the educational experience from traditional models. However, there are opportunities for completely changing the way education is delivered that capitalizes on social networking, group-based learning, and other such changes to education.

    That being said, there are a number of missing issues here (including some unfounded assumptions).

    1) Rising tuition is not often the fault of the university itself. Over the last 20 years, the percentage of funding for universities coming from the federal and state governments has decreased to nearly zero. Take a look at Penn State – One of the largest public universities in the country, and the amount of money coming from the state is almost non-existent (which means it will likely no longer be a public university in the near future, either from the implicit practices of the Governor to cut all funding, or the explicit decision to cut itself away from a state that keeps giving money and demanding it back several months later).

    Yes – some schools screw this up badly and take on unreasonable debt for growth (new buildings, etc). However, most schools only build the new buildings when they have gathered enough funding from external donations for that explicit purpose. That is, they aren’t buying these building with debt, or even tuition money – they are buying them with donations from alumni.

    2) Primary education in this country is broken. You no doubt have seen one of the many documentaries on this that come out every year (e.g., Waiting for Superman). But the fact of the matter is that our push for standardized testing has led to a standardized learning experience for MOST students, which just doesn’t reflect the different ways that students can and should learn. The race for the almighty “A” grade has led students to spend 3-4 hours a day doing homework and studying so that they can ace that multiple choice test. Creativity is quickly being killed.

    You talk about wanting to hire creative, hardworking people in your companies. The problem is that by students reach college, many of them have had that creativity and individualism beat out of them. They are rewarded for regurgitating material, not by thinking differently. Trust me – I teach these kids at the college level and their ability to handle ambiguity is almost non-existent. And yet, if you want to find someone who will create the future, they have to THRIVE in ambiguous situations, not just tolerate them.

    Fix primary education, and you will have more kids that might have a chance at thriving in the future.

    3) Do something. If you honestly believe the system is broken, do something to fix it. Give $5m to UT-Dallas to create a “charter school” equivalent of an educational experience. Require that that money be used specifically for trying new methods of education. There are MANY faculty that would love to try something new, with hundreds of current faculty trained specifically in instructional design. Yet, the biggest thing stopping most of these innovations is university bureaucracy. Big universities often have big problems turning (not an excuse). Many of the start-up universities lack teachers actually versed in cutting edge knowledge (hell, many big universities are staffed with faculty who haven’t updated their knowledge in 20 years – ask business students if they have taken the Myers-Briggs Type Indicator and the vast majority will say yes … And that scale was discredited for being COMPLETELY useless over 20 years ago).


    Look – I want to agree with the sentiment of this post. I think you are right to be outraged at the debt. I also believe that we have WAY TOO MANY people currently enrolled in 4 year universities, taking on too much debt for an education they are ill-suited for. Trade schools are a great opportunity for many people, and something we should actively encourage more students to attend. Yet, I also believe the liberal arts education is something we shouldn’t throw away. Steve Jobs talked about how the most useful class he ever attended was caligraphy, as it gave him insight into form and design. We need to encourage more creativity and more flexibility at the college level – more exposure to different ideas, different ways of thinking, and provide more opportunities for unique integrations / applications of knowledge.

    Thank you for putting out your thoughts on this. I hope that you don’t just there — you have been a voice of change in many places, even when you have no skin in the game (e.g., the playoff system in college football). I encourage you use your pulpit to continue to advocate for a larger change, beyond just a revisitation of how college debt works.

    Comment by Stephen Humphrey (@SEHumphrey) -

  277. I agree that there is a bubble in tuition prices, but I don’t agree that the market is analogous to housing, because education is a continuous process. The incoming stream of students is relatively stable, and colleges can adapt to a budget crisis quickly by firing a few professors and increasing class sizes. Unfortunately for the students, their debt is external to the college, due upon exit. That is the problem, and it points to a simple solution: DO NOT DEFER LOAN PAYMENTS. The reason students are willing to take on too much debt is not because of low interest rates. It is because they do not feel the mounting impact on their monthly payments, and the exponential effect of taking loans to cover current payments.

    Comment by daviddiel -

    • Mark:

      I think you make some great points. My freshman year in college I remember learning about price/demand inelasticity in the context of rising tuition costs. It surprises me there is no true alternative to traditional private/federal loans that pose real problems for students in that they all require prompt repayment or deferral only for an exhorbitant fee. It seems like this creates a blue ocean opportunity whereby approaching lending to students differently can create a huge business opportunity. Do you think there is a market for covering student repayments on high interest loans for 1-2 years in return for a 10-15% return on that investment. Obviously screening criteria would need to be used to identify lower risk candidates.

      Comment by Garrett Dallas -

  278. @markjmessmer – Before plunking down money on grad school, which it sounds like you don’t want to, try this….find out who is hiring for the job you are applying for (the hiring manager) and make a direct connect to that person and sell yourself on your experience and accomplishments. As an HR person, I can tell you the HR person is acting as the gatekeeper for the hiring manager. They are passing along applicants that meet the requirements the hiring manager has given them. These requirements often times look like the hiring mgrs credentials (people hire people like themselves). So all they are looking at is your resume and if you don’t have the MBA that the hiring mgr has and everyone else does, they will pass on you. But they might still hire you…you just have to find the person doing the hiring and sell yourself.

    Here’s how you find the hiring person. Find out the title of the person who is doing the hiring (it will probably be a supervisor, manager, or in smaller companies a director). If you are unsure of the possible title of the person hiring for the job, ask someone who would be familiar with corporate structure. Once you have the title, go to LinkedIn and see if you can’t find the person on there. If you can’t find them on LinkedIn, call into the company (this can get tricky because most companies have an automated phone system) and find your way to that person. If the company has an automated system, just dial a random person’s extension and once they answer, ask to be transferred to the Finance?Accounting department. Once you get the hiring manager on the phone, make your sales pitch. You need to have it less than a minute, 30 seconds is ideal. Practice this sales pitch. Create a pitch that will make the person on the other end want to hear more. Practice this sales pitch. Again, practice your sales pitch.

    If you do this enough times, you should be able to find a job. Why? Because most people don’t do this. They send the resume and then wait. If you are aggressive and proactive, you will find a job.

    Hope this helps.

    Comment by RamRants (@theFUNemployed) -

  279. You said it all in one reasonably short article. And you’re wrong, the post-secondary education bubble burst isn’t coming; it’s here. At least in Canada anyway. The 30 somethings are arguing with their parents because they are telling their younger siblings and children to get a trade and the parents are telling them to follow their hearts.

    Comment by sedrate -

  280. I don’t know what I would have done had my mom not paid for undergraduate school and then put up the money so I could pay her back instead of the government to get my masters. Because even with all that, it still took me four years to find a job that paid a salary and I am not lazy.

    I am glad you have the mindset that it’s not the institution, it’s the learning in your approach to hiring. If more people had that outlook, I think kids would go to the cheaper community colleges to get the same education and not have to worry that it’s not “prestigious” enough for a potential employer.

    Comment by Krystina Lucido -

  281. The competition from new forms of education is starting to appear. Particularly in the tech world. Online and physical classrooms are popping up everywhere. They respond to needs in the market. They work with local businesses to tailor the education to corporate needs. In essence assuring those who excel that they will get a job. All for far far less money than traditional schools.

    I concur with your views on the modern University.

    On the other hand, without wishing to argue about definitions, the idea of an “education” tailored to corporate needs is pretty jarring. Businesses generally care about your ability to write code, repair automobiles etc. but learning those things, though they may be of great instrumental value in the workplace, isn’t education.

    I understand education to be the process of learning how to think, such that one can tackle arbitrary intellectual problems to the best of one’s ability. In my opinion the best way for a child to be educated in the modern West is if he is unschooled, and teaches himself by reading books – which are freely (hehe) available in the internet age – and the classier part of the blogosphere. At the age of 18 or earlier, a really smart guy might want to seek out the company of other super-smart people, as a final stage in his education. That could be through going to Harvard, Y Combinator, or almost anything.

    I don’t see the need for online academies in this picture, any more than the bog standard state education system. Online, corporate-sponsored academies – along with good trade schools and a German-style apprentice system – might be highly suitable for certain kinds of training in workplace-relevant skills, and that is a valuable thing to the population in general, but let’s not mix it up with the distinct notion of education as defined above.

    It’s important not to lose the ability to express the concept captured by the word “education”, through the misuse of this word in conflating it with other things. That is because real education is the key to avoiding having other people’s (including the ruling caste’s) malice and stupidity inflicted on oneself, and more people are likely to obtain a real education as long as the very concept remains widely understood.

    Comment by David Price -

  282. One crucial error in your logic, which is that most student loans do not allow you to forgive them via the bankruptcy process the same way you could with a mortgage, car loan or credit card. So equivalating student loans with other lending is a bad starting point. All else aside, I agree that the propensity of student loans is actually driving cost, and not the other way around. It’s basic supply and demand. If you have an unlimited number of applicants with adequate financing (Uncle Sam via Sallie Mae) then you continue increasing your cost of education by marketing. All the while, and rather ironically, the value of the degree has dropped tremendously making today’s bs worth almost bs and an ms the new bs. I often disagree with you Mr. Cuban, but not here.

    Comment by Bryan (@MDTerpsFan1) -

  283. Reblogged this on News You May Have Missed and commented:
    The Coming Meltdown in College Education & Why The Economy Won’t Get Better Any Time Soon

    Comment by genomega1 -

  284. The other big part of college/university income is also from the government for research grants. Certainly public companies could pick this up, but as yet haven’t needed to and when the bubble bursts, not many may be willing or able to step up immediately. That leaves colleges/university in a big budget crunch. Can you say layoffs? Think what that will do to the economy. Huge numbers of highly educated, formerly highly paid people now having to find “shovel ready” jobs. I don’t think so. Can you say “revolution” brewing?

    Comment by VS (@broverb) -

  285. It’s my understandting that schools such as Harvard, with such enormous endowments, could actually not charge students anything and still be fine. If that’s the case, that adds for me an even more acute moral element to the discussion.

    Comment by Bob Brooks -

  286. Great post.

    One solution that really isn’t commented on is the way colleges are ranked (creating a closed loop feedback system that allows them to keep prices high). The pricing is all inherent all in the “brand”, with little regard to the actual product.

    Without two critical pieces of information, it will take a while for the system to change:
    1) How much money grads make post-graduation
    2) How much students learn

    Neither of these two factors are tracked at all. #1 is something the government should just mandate and publish.

    #2 can be accomplished with scale through national standardized subject tests (like the AP exam).

    Until these two things are public, students have to “guess” what the ROI of attending school ‘X’ is.

    disclosure: I’m the CEO of

    Comment by Guy Friedman -

  287. I do believe that there is value in a liberal arts education. Everyone can’t be an engineer or scientist and we need people to think and be creative in ways that engineers and scientists often are not.
    On the other hand I think that some of these liberal arts colleges need to think twice about the programs that they offer. Many degrees will never earn enough money to pay back the loans required to pay for a $50K per year education. On top of that, the government needs to re-evaluate making or guaranteeing loans to these schools or to specific programs.
    When I constantly see new buildings going up on campuses and fancy new facilities it makes me sick. Each new building adds to their fixed costs and they never seem to shut anything down.
    As long as the government makes or guarantees loans without evaluating the programs being offered and the ways that money is being spent, we will continue on this dangerous path.

    Comment by imarunner2012 -

  288. Mark,

    Admittedly I’m a member of the group you are criticising (I work at a small liberal arts college) but my view is that college is what you make of it. By the way, you’ve got a grammatical typo (or maybe it’s a “thinko”) up there. The sentence ‘Until its not.’ should actually be “Until it’s not.’ Perhaps you should have studied a little more when you were in school :-]
    be well,

    Comment by Charlie Derr -

  289. Excellent article that is right on. Colleges and universities will become the next bubble to burst. Too many people, many of whom have no need to be in college, are chasing degrees. That alone is going to make a degree worth less than it normally would. Of course colleges have no need to hold down costs when most student loans are subsidized by the federal government. A regular business, unless it’s one of those ‘too big to fail’ companies, can’t operate the way most colleges are now because they can’t count on a bailout. There will be no more money to bail out the colleges once the bubble bursts.

    Comment by zachfoster71 -

  290. Great discussional and policy article. One every high school child and their parents should include in their reading list while selecting colleges. An option: should they go to a traditional, four year college for a liberal education, should be part of their discussion. For example, acting college degree. Most of their potential employers would agree that acting school may not be the place where they hire their actors and actresses from. Yet, acting schools charge the typical liberal arts college fees, with some going up to $65,000 a year. Also, some of these prestigious acting department penalize a student for getting any experience in a professional TV or movie or theater for which they would have to “miss” “valuable” class hour study from a professor who never held a professional acting job, but only taught it. The students are only allowed to participate in student run productions and only after school hours, which somedays can run upto 10pm. Actors, actresses and musicians are known to be working tables as waitresses when they graduate waitiing for the big break that often eludes them, while their contemporaries “risked” it all by beginning right around high school for the career of their dreams. Some made it. Others failed and moved on to perhaps a job-earning sensible degree. Although, like Mark in this article says, often that degree may be a piece of paper too. In the end, it is experience that counts. Teach your child to be innovative and curious and to seek out a mentor and get experience in different fields while young. Then discerning employers will come seeking him – like the young man I met during a recession who was offered six jobs in the middle of the deepest recession.

    Comment by pursuenaturalny2008 -

  291. Pingback: Instapundit » Blog Archive » HIGHER EDUCATION BUBBLE UPDATE: Mark Cuban: The Coming Meltdown In College Education and Why The E…

  292. Pingback: The US higher education bubble and the prospects of transformational change « authentic learning

  293. Finally someone brings this up.

    Just finished lecturing for a semester at an institution which sent out a note about the financial situation for upcoming year. Pretty sure most faculty missed this but it caught my attention.

    The institution is going from surplus to deficit because of a sudden drop in incoming freshman. Parents are concerned about the economy and have been balking at tuition costs. The institution is planning cutbacks in services/faculty, but still forging ahead with building projects.

    Seems like they might be caught in the squeeze you describe faster than most.

    Great post.

    Comment by James Yang (@yangmeister) -

  294. If the traditional universities aren’t taking notice, then how do you explain the reasoning of more and more of them offering OCW? What about the increase in AP high school courses or the trend toward the strategy of two years at community colleges before applying to a state university or private college? Beyond the comparison to the housing market not making a close enough parallel, your argument is slightly flawed, at least the part that contends that traditional universities and colleges are unconcerned about actual education.

    Comment by Spijder -

  295. In large part, I agree with your arguments. But what I don’t agree with is the notion that traditional universities should fill the growing gap between the needs of the market and the training of individuals to fill it. To me, this sort of thinking is just as short-sighted as universities bringing in every-growing numbers of students with every-expanding debts. The university system should be place to learn specific skill sets related to very specific levels of employment. The notion that we can all work at that level is noble, but misguided.
    What we need is a new means of training our workforce or to repurpose a current means which is being undervalued. I believe that level is the tech/trade school. In terms of money spent, tech and trade schools are currently garnering the best returns, because they provide a specific level of education which liberal arts education doesn’t (and was never meant to) prepare students for. The problem is that this level of education is stigmatized and disincentivized by students’ belief that they deserve “the college years.”
    But none of these reforms, neither those you suggest nor those I suggest, will be effective until the distribution of wealth and the value of different levels of labor are reevaluated in this country. If we don’t realize that skilled labor is just as important to a strong economy as upper management and begin compensating workers accordingly instead of focusing exclusively on profit, then this conversation won’t matter in the least.

    Comment by bullsear -

  296. Reblogged this on adaptivelearnin and commented:
    Great article to read about the problems with Higher Education debt and education alternatives. The current problem is compared to the housing bubble. Please read this, it has great points.

    Comment by adaptivelearnin -

  297. Good article, how true. Problem is in this country we don’t have the ability to fix problems. We let nature take its course. For every person that sees the problem there’s someone else who disagrees. Just like the real estate bubble we will have an education bubble burst but that will be nothing compared to when our gov’ts bubble burst.

    Comment by billbly -

  298. The way Americans finance higher education is bizarre. Setting aside where education is going in terms of public, private and branded (in Australia the most successful institutions are heading towards being a mix of all three) the very way education is financed is fundamentally flawed. In Australia I paid a reasonable amount for my undergraduate education – 16k for a 3 year BA at a university ranked 19th in the world. This money I borrowed off the government and repay through the tax system. When I am working and earning over a certain amount (It might be around 40k/year now, not sure) my repayments are simply taken out of my pay cheque. Not working? Not earning much? No repayments. The only interest is a rise with inflation, maybe 2% a year? There are also discounts for upfront payment of fees. This is a fair and equitable system. Society benefits from having educated people, loading down someone with 100,000 dollars in loans that can spiral out of control simply to get a decent job, like being a lawyer, is odd.

    Comment by claudiagrant -

  299. …with the expectation that the price of the home would go up and it could easily be flipped or refinanced at a profit…Can someone please explain to me how what is happening in higher education is any different ?

    You can’t flip an education.

    Comment by i (@isomorphisms) -

  300. My biggest beef with education is, not only is it expensive, but for the first two years at the typical university, you’re required to take “core classes,” which, pardon me, but shouldn’t we have learned this in high school? (I mean, no, unfortunately, we didn’t. We learned very little in high school.) I hate, hate that I’m giving universities two years worth of tuition money for a common-sense education. I went to university to specialize in something, can I buy the relevant classes please?

    Comment by Janet -

  301. I always suspected that I might be doomed.

    Comment by Jbot -

  302. I am not surprised that this is happening in a country whose population does not seem to care about having an illegal president and a lot of other corruption and deception. I ask like pastor James David Manning: “What’s wrong with you?”

    Comment by Magnus Johansson -

  303. I think one factor everyone is leaving out is extreme societal pressure & job market pressure to get a college degree. More employers are requiring a degree for jobs that really don’t require them. You always see the numbers thrown around that college grads make more than their non degreed peers. People are panic’d about not having a degree. This is still going to be a problem until a viable alternative credentialing system takes root.

    Comment by George Lara (@saandstorm) -

  304. Important subject; superbly written exposition!

    Comment by Michael Palmer -

  305. I paid only 10 € for my whole studies in public universities. I have worked as an engineer in computer science for about 5 years. Welcome in France.

    Comment by gouessej -

  306. COULDN’T care less. Not COULD. Unless you really mean you COULD care less.

    Comment by Daniel Kirsner -

  307. Great post — something my siblings and friends discuss frequently — e.g. will it be worth it for our kids. In addition to comments already made, I think there are 2 other factors at play:
    (1) Despite high levels of federal funding, the US university system has no allegiance to US-citizens as preferred students. They are the best in the world and often because of federal and state-funding, yet they are often neutral when accepting students and see international diversity as a plus. Coupled with high costs, colleges and universities are accepting more foreign students because they often pay the full tuition, whereas US students need “financial aid”. There has been a lot of press on this recently especially at state-universities. Name another country where universities or graduate programs accept 20 or 30% of their students from overseas?
    (2) Universities are slow to change. I was researching whether to go back and get a PhD- and was told by several Deans that the work I am currently doing outside the system is more “cutting-edge”. [e.g. why bother unless I wanted to become tenure track faculty]. Universities are still very siloed in their operations – e.g. business vs. medicine. engineering vs. business, etc. Cross-disciplinary majors are still difficult to manage yet those are the skills needed by today’s workforce.

    Comment by chameleon -

  308. Pingback: The Coming Meltdown in College Education & Why The Economy Won’t Get Better Any Time Soon « that dismal science

  309. Well said! This is the logic I used when I decided to bypass the 4yr route to take on self education. I’m a firm believer in learning on a need to know basis, surrounding yourself with strategic mentors and education through execution– trial and error. Learning in a self directed pace is so much more efficient I’ve turned into an advocate of autodidactism.

    The scales are tipped in favor of universities and part of that is due to corporate America’s mandatory requirements during the new hire process. I’d love to see more weight placed on real world experience and business savvy vs a generic four year degree.

    Comment by Nima Jacob Nojoumi (@domainadvisor) -

  310. Reblogged this on ramblingbog.

    Comment by ramblingbog -

  311. Nice post Mark. I’m 28, didn’t finish University, couldn’t find a job in the USA so I left to go to China to find work. In 6 years of pure sweat at tears, working 18 hour days and not being able to afford to go home for years at a time, we are prospering far more than my counterparts that finished Uni. I started off sleeping in a factory with the workers, 8 to a dorm room no bigger than my garage back home, next to the toilets and injection moulding machines that were running 24×7. I ate on 2USD/day and didn’t have a car or a drop of beer for 3 years cause I couldn’t afford it. Now we have a toy company with 1500 employees, distributing to 63 countries worldwide. I still sleep in the factory because we reinvest every cent we make, but we had an 9 figure turnover last year with 8 figure net profits.
    Kids forgot how to sacrifice for what they want, forgot how to hustle, and forgot what its like to be hungry. Jobs aren’t your right, they are a privilege that you have to earn. I started a toy company, probably the worst business to get into, but I was hungry and willing to sacrifice. My brother, who is also our sales manager, had his first meeting with Walmart when he was 17 years old. No degree, not even High School. But he was hungry.
    I could care less about a 9-5 and a degree. All my Chinese staff work till 10pm at night without overtime pay 6 days a week because they want to succeed in life. Only 1 person in our US office has a degree and that is the secretary. They also work their butt off for every dollar they make. We profit share with our best employees now, but only in the past 2 years. Hell, give me 1 guy that knows how to hustle over a team of 5 degree certified graduates any day. All I learned at college was how to cheat, what I learned here in China is how to succeed.

    Comment by Blake Wong -

  312. Mark is probably the first billionaire to admit the truth about consumer debt and the economy. Credit card debt plus student loan debt (and may I add the loss of 7 to 10 trillion dollars in home equity since 2006 – data courtesy of Chase Bank) will continue to erode the economy.

    The solution is scarily simple. Don’t forgive the debt, just don’t charge interest on any debt that is being PAID DOWN, and no more penalties and fees either.

    Instead, the progressive democrats and the neo con conservatives continue to polarize the discussion into debt forgiveness versus deadbeats go get a job!

    NOBODY discusses the concept of “debt neutrality” in which the debt remains and it can be paid down interest free with no more penalties or fees added in.

    Comment by alexlogic -

  313. The easily found but hard to implement fixes are:

    Bring down highschool graduation rates to no more than 25-50% rate.
    Forgive student loans not for public employees but through income tax.
    In the US, credit say 25% of the income tax paid as payment on student
    loans. When the lender is the government, this can be made automatic,
    for private lenders, the government should cut them a check.

    This will drive away people seeking Mickey-Mouse educations, among
    other beneficial effects.


    Comment by Nils Andersson -

  314. What is wrong with the collegiate system of today? It has been and will always be the same. It is a formula that has been working and will continue to do so. Why fix what’s not broken? Going to an unaccredited university is possibly on of the worst decisions you could make in this society, which is ruled by paper. Especially what is written on that piece of paper. People rather see a comma then just a period on their paycheck. And to drive my point where did your CFO graduate from? And with how many degrees? And your chef?

    I don’t disagree rather endorse the idea that people are going to school to learn how to learn, pushing out, at best the pillars of our society, middle class. An there is absolutely nothing wrong with living as such. But there are always the exceptions, the ones that run the country and not support it. And college is a long term investment. And is not and end to endless shit we have to trudge through. Point being while trudging through said shit, would you rather be wearing rain boots or sneakers, personally I’d like to keep my feet dry.

    But as time passes degreed earned entail less then in the past, this is normal. With given more, it is inevitable that we are seen to produce more. Candy and soda don’t cost a nickel. Progress dictates progress to be made. Darwinism is capitalism which is the essence of America. And it cannot be the people who use EBT who can initially sway the tides of the US economy, without a carrot dangling from a stick.

    The housing market crashed because of speculation, borrowing on a deficit (more speculation), tax cuts, and a war. These are the fundamentals of why we are in this rut, not because student loan interest rates fluctuate from 3 to 6 percent. And once again short term speculation of our economy is going to be the root of our downfall. Who can judge a growing economy on looking at unemployment on a monthly basis? A speculator. Media is America’s greatest gift to the world, and the root of its demise.

    We have the Franklin’s, Bell’s and Jobs’, the Zuckerberg’s and Cuban’s, being molded and polished into the future doers of America. by said people. Their inventions will be created and upheld, thrown into fame and riches becauses of the masses, the suckers, the materialists, and ultimately the buyers. But only the influential can trickle down the affects of moving the money and reintroducing it, into the gears of America.

    Invest in the reason you are the 1%. Why does everything need to be a government handout. It hurts like removing a splinter, but foundations set by billionaires offer scholarships with no interest rates attached.

    And there are no free lunches.

    Comment by Devenesh Patel -

  315. As someone who just found a job after being unemployed for 4.5 months, I feel that others do not agree with the line:

    “As an employer I want the best prepared and qualified employees. I could care less if the source of their education was accredited by a bunch of old men and women who think they know what is best for the world. I want people who can do the job. I want the best and brightest. Not a piece of paper.”

    I saw plenty of mid-senion positions ask for graduates of elite universities. If feels like more and more HR departments are filtering on that piece of paper. I would love for you to give more detailed insight into your hiring practices. Maybe it would enlighten other employers.

    Comment by earthdog7900 -

  316. Couldn’t agree more – and maps exactly to the PBS Frontline story back in 2010 – College, Inc. ( There’s one other *really* nasty element to the EDU bubble – the loans are not dischargeable through BK. Also, EDU represents the bookend to the other out-of-control bubble – healthcare. Now at $3 trillion/year – rising at 5% per year. On our current trajectory, the average annual household healthcare insurance premium will equal the average annual household income by 2025. Tilt.

    Comment by Dan Munro -

  317. In all of this eagerness to anoint technology as the destroyer of all things traditional in higher education, you seem to leave out one simple fact: Not everyone learns effectively through technological means. There is a significant body of research (research which might not exist in Cuban’s model, since he seems so eager to dismiss the benefits that accrue to institutions of higher education and society from broad-based research) which indicates that different people learn better in different environments. Some people thrive in online courses, some do better in the traditional classroom, and some do better in a combination of the two. Expecting one format to win out is simply unrealistic and is not supported by the research or experience of many educators.

    Are too many college campuses run inefficiently? Yes. Are too many traditionally structured classrooms set up in a way that discourages positive interaction? Yes. However, neither of those are insurmountable problems. While I agree that administrators have a way to go in terms of embracing new models of teaching and learning, they are coming around.

    Furthermore, all of you business-minded people in this thread are so eager to overthrow the credentialing authority of higher education, but you have nothing with which to replace it. Adi Rabinovich asserts above that creating a “high quality testing organization focused on confirming people’s actual abilities” is but a small matter that can be done at low cost, ignoring the fact that testing regimes of ANY kind are wildly expensive to produce and only marginally effective at predicting performance. After all, if producing such a regime as Rabinovich anticipates was so simple and easy, it would have been done already. The fact is that predicting human performance is never an easy matter — the best SABRmetricians in baseball can only predict player performance within a 60-75 percent degree of accuracy, and that just involves hitting and throwing a ball.

    Mark, are we to stop teaching, learning, and researching about literature, history, biology, mathematics, education, and sociology just because it entails a cost and does not show an immediate gain? Are we to monetize all the activities of university faculty, as Gov. Perry seems to advocate? You sarcastically dismiss the notion that tax dollars which subsidize higher education are not “our money”, but your point of view speaks only to a corporate perspective that demands immediate short-turn return on investment. For one who seems so eager to invest in people on “Shark Tank”, you display here an appalling willingness to reject any investment that does not accrue to the bottom line of someone’s business.

    But I get it… you are merely speaking up for an educational model that is cheaper and more efficient. If only it were that simple. Education is an incredibly complicated and important field. There is no one right answer — there just isn’t. The idea that traditional higher education is going to be destroyed by prevailing trends is simply false. This is not the newspaper industry. Aside from some local news, what added value do newspapers provide? Students attending a university or college have innumerable opportunities to add value to their education, as Michael Leggett refers to above. And, for the record, a high-quality education is there if they so choose to pursue it (I’m sorry, but people who leave college saying they learned nothing put nothing into learning anything… not the kind of people you want working for you).

    I have no doubt that there will be institutions out there which fall subject to the rules of attrition in the new economy, but they will be marginal institutions which were not thriving in any case. The Harvard’s, Stanford’s, UVa’s, UNC’s, UCLA’s, and hundreds of community colleges are going to be just fine because they offer things that few upstarts can: quality and reliability. THAT is what the future of higher education is about. Will there be some new institutions to emerge that challenge the traditional players? Yes, but they will just become new players in a huge and complex world.

    Comment by Jeff Freels (@publius2k) -

  318. I found this post interesting, but the comments more so. As someone with education as a life long interest, as well as an education major, I still value higher education. One fact that hasn’t been mentioned is what the piece of paper actually means. The paper, no matter what educational level, is meant to be proof that the person listed on the document has attained a certain level of knowledge. One change in traditional education that I think is a plus is more emphasis on project-based education, combined with creation of student portfolios as proofs.

    College curriculum is designed by experts in the field of study. Expert educators determined that for my degree, this body of knowledge is what is required for a beginning educator, and that is what formed my coursework. While the details can differ from one college to another, the overall content will not change. The passing grades say this is what I learned.

    As someone with formal education about educational issues, for-profit schools are currently being investigated as to their legitimacy. I do believe they are a source of the current student loan crisis. I have been courted by several, and they make loans way easier to get than traditional universities. Red flags went up because they seemed more interested in getting me in and getting money than in educating me. Perhaps I think this because they couldn’t satisfactorily answer my questions about course content and structure as well as they could about getting the door open for me.

    My experience with traditional universities is that they track academic progress well, usually preventing poor academic progress before it becomes an issue. At least that has consistently been my experience. Knowing what I know about for-profit schools, I would NOT waste either my time or someone else’s money in one. I would also be cautious about “free” educational resources to gain employment skills, both as a student and if I was an employer. Because the benefit of passing the tests is that is there is more of a guarantee of skills than a self printed from the Internet certificate from a freebie place. Yes, I have done some on-line freebie classes; their best content was much poorer quality than my worst college class.

    If I were an employer, I would want to be able to verify skills. For someone with no job experience in the field, a college degree would pretty much be mandatory. I enjoy visiting museums, and have taken several art history and art appreciation classes: what kind of career would that get me? I’m not trying to be a smart ass; it’s a valid question looking for a valid response. I’m interested to know how you would determine the best and brightest for a youngster wanting a job with no experience? Or for someone who wants to make a career change? How do you get past entry level, low pay jobs with out a degree or experience?

    Comment by Debra Contreras -

  319. I agree with this post 100%. Education costs are WAY too high, and kids aren’t getting much of a return. There’s no reason to go $50k in debt to get a degree. ESPECIALLY when there are online options popping up that provide more value than traditional universities. On top of that, the rate of change is so high that universities aren’t able to keep up. If someone really wants to be on the cutting edge, they have to work on projects on their own. I read an article in a recent INC edition that talked about a media school in Chicago that was giving students WAY MORE value than traditional universities which makes sense to me because what you learn from a degree is NOT worth $50k (I’m saying this as a UT Austin marketing grad who got a 100% free ride from a scholarship but felt like I BARELY scratched the surface of learning anything about marketing). Big schools better wake up or else they’re going to face serious competition from online and other for profit options. And no, Phoenix doesn’t count. Actually, I’d love to start an online MBA program that costs a fraction of what MBA programs cost but gives 100 times the value. It wouldn’t be that hard to do and B Schools wouldn’t know what hit them. Not until it’s too late.

    Comment by Joseph Putnam (@JosephPutnam) -

  320. Pingback: The Coming Meltdown in College Education & Why The Economy Won’t Get Better … | Education News

  321. @mayormckinney
    “With the average undergraduate salary at 47K/yr most student loans could be paid off given a reasonable amount of time. ”

    Where did you get this information? And who’s average salary? The average undergraduate that is now an accountant or computer specialist? This is a bogus number.

    If I were making $47K a year, my $80,000 in debt would not be such a burden. I am not. In fact, when I graduated, I made $10.50 an hour. There needs to be an alternative.

    Comment by Lianne O'Shea (@FlashdanceOShea) -

  322. Yea, and I’m a bit annoyed. My 100k bschool debt is equivalent to like 7 bucks to a billionaire like M. Cuban. Really?! Stop talking all this mess just to annoy me instead of providing any relief.

    Sorry, never been a good ass kisser. Guess that’s why the corp world is totally not for me.

    Comment by sosodeff -

  323. This is so funny reading this… being 2 years out of college, living with my parents, owning one uniform I wear everyday, and working a minimum wage draw vs. commission job. Fortunately I have no debt right now or expenses right now, and all my earnings are saved.

    Comment by Nathan Krowitz -

  324. I’m waiting for somebody to take free MIT lectures (and the likes), wrap around social networking, and a rigorous examination regime, and deliver a bachelor’s-equivalent at a 10th of the cost (perhaps even less) and half the time. It’s so straightforward … does it exist and I just don’t know about it?

    Comment by Johannes Ernst (@Johannes_Ernst) -

  325. Mark-
    You’re basically describing what I’m already doing: The Emergency Management Academy’s Disaster Science Fellowship program is a non-accredited, year-long, intensive web-based (Skype and Basecamp) program where participants from all over the world read and discuss more than 33 of the most important books on disaster theory. As a former full-time professor of emergency management and graduate program director, I was sick of the university making millions while providing me with no additional faculty or resources, so I quit and designed my own program where I directly charge students about 1/3 of the tuition of my former university. We have already graduated 2 cohorts and have another two in the program, and have students from the US, Canada, New Zealand, and Australia.

    The key problem with this type of program is validators. That held me up for about 3 years as I tried to figure out what students would see as markers of quality before I had a body of graduates who can provide word of mouth.

    Scot Phelps
    twitter: emergencymgmt

    Comment by Scot Phelps (@emergencymgmt) -

  326. I agree that something’s got to give here, but I think the value is being underestimated. I got very little value out of my classes (a HUGE missed opportunity for sure). I got a ton of value from the experience (which introduced me to SO many different people, ideas, etc), the relationships (met my best friends and my wife in college – not going to do that in an online school), and somewhat from being able to put “Rice University” name on my resume early in my career. It will be important to me (as a parent of two) for an alternative to provide these values.

    As for learning how to learn… I think we actually unlearn that in the first 12 years of school (spend any amount of time with a 2 year old and you know what I mean). So I plan to do my best to not have the first 12 years of school destroy the natural curiosity we are born with and teach how to chase that curiosity.

    Comment by Michael Leggett (@leggett) -

  327. College is the biggest scam in the world. You’re going to spend so much money to learn things that nobody cares about. I went to college and got a Business Admin degree (which nobody cares about), so I had to self teach myself computer programming languages to get a good job. Looking back I wish I would’ve dropped out of high school when I was 15 to got my GED. I would have such a big advantage if I did that….

    Comment by Casey Hardy (@KCRDvp) -

  328. Do not forget the additional impacts the student loan debt is having. Student loan debt not only affects students, but their parents as well. I agree that student loan debt is the largest factor in the floundering economy. As Mark said, students are now leaving college saddled with tens of thousands of dollars in student loan debt in an economy where finding a job to pay that large sum back is extrodinarily difficult. This is forcing these students to live with their parents (hurting the housing market) because they cannot afford anything else. This in turn puts more strain on the parents to continue to provide for their children, who in past times would have begun to live on their own and support themselves. What this does is cause parents who would have been approaching retirement or even just saving for it to put it off (hurting the job market) because they cannot afford to retire with a 22+ year old child living at home who cannot get a job to provide for themselves. the theory of student loans hurting the economy is cyclical. it in fact affects several areas, not just the housing market. students graduate and cannot get jobs. this leaves them with a ton of debt and no money to buy a house forcing them to live with their parents. this in turn forces the parents to work longer taking jobs away from the new graduates.

    Fix the issues with higher education and student debt, and many of the economy’s problems would be solved.

    Comment by pescatch -

  329. Hey Mark,
    As a recent graduate I say put you money where your mouth is.
    You said “As an employer I want the best prepared and qualified employees… I want people who can do the job. I want the best and brightest. Not a piece of paper.”
    The next time you have a job opening post it on your blog. Then list the non-academic achievements one could achieve without incurring costs in excess of $1000 to prove to you or your companies how they qualify for that job.
    I just think it’s easier said than done….How can you as an employer, without taking education into account, distinguish the best and brightest ( especially in non-tech industries) when sorting through thousands of resumes?

    I graduated last year with a double major in Economics and Cognitive Psychology from the University of California, Irvine, cum laude. I was aware of employers insistence on job experience so I worked at Bank of America for two years (where I was promoted twice) and at a real estate development company for the other 2 years. I also did research in finance for 2 years and research on globalization for another year with professors in the Economics department. Now the only jobs I am being offered are entry position with no possibility for growth. My track record shows that I have been successful at every place I have been employed, I graduated in the top 10% of my class, and was one of the few who didn’t party but employers still have a hard time determining my worth. While I am currently employed, I am working at a job where even if I outperform to the highest standards (which I currently am) I can only become a manager with a $70k job in 2 years ( and that is not where I picture myself in the future). To make over 100K (not now but in 2-5 years) the market demands that I have a MBA or JD.
    So if you have an opening that will allow for growth and stability in the future and determine a way to filter through tons of resumes in the next 3 months let me know because I am schedule to start law school soon. While I have a scholarship at a top 25 law school that will cover half my cost the job market is so weak that it still might not be worth going attending.

    Lastly, two things you did not mention that are worth pondering.1) Don’t you think employer like the fact that students are stacked in debt? That makes for a more cut throat and competitive market of employees. 2) While I am not a conspiracy theorist I think even the government enjoys the severe debt students are being forced to take on. Students and citizens with debt are so caught up in repaying their loans and making enough to get by that they don’t have time or energy to protest in a meaningful way against how lobbyist and wall street are bribing our government officials to the detriment of the common citizen. The irony of this is now there are so many unemployed people that Occupy Wall street caught on for a while..unfortunately it did not lead to any meaningful change.

    Sorry its seems like I wrote a blog of my own in your comments.

    -Mr Business Law

    Comment by mrbusinesslaw (@mrbusinesslaw) -

  330. Mark,

    I am an immigrant from Panama. We have public education (a semester is about 25 dollars). so not free, but very very cheap.

    I had a conversation with somebody the other day where they went to school in 1980’s. A college credit was 4 dollars.

    I went to school in 1998. My credit hour was 75 dollars. Out of state is 3 times that. Florida State. Top 50 State school in the country.

    I agree that is far to easy to borrow. But how do you fix it? You cannot claim a refund in your income tax return if you default in your loans.

    I believe the problem is the programs themselves. English majors, music, sociology, and all the ones people would label as “useless” where kids get into huge amounts of debt.

    On the other hand you have parents saving money and making huge sacrifices to pay for their kids school. I think this is noble, but a bad idea. Let your kid earn their education. Show them responsibility by understanding the purchasing power of their future.

    Education goes even deeper. College is just an extension of what goes on in the previous years. We have seen peoplpe go through college to end up being Mechanics or chefs or cooks. The “discover” their passion after they were lead in the wrong path.

    This is why i think street smarts plays a huge deal on it. Parents not encouraging their kids to follow their passion and forcing them to become lawyers, doctors, etc.

    The mantra is “go to school, earn good grades, you will get a good job and all will be ok”. This statement is destructive.

    Comment by Black & Denim (@BlackAndDenim) -

  331. I think the mentality of hiring someone with the right skills and not a piece of paper is gaining traction, but still a decade or so away from becoming mainstream. The reason is that the executives in charge of these corporations now were brought up in the system that placed an emphasis on a school’s reputation. Yes, times are changing quickly, but so long as these folks are at the helm of the corporations this mentality will be reflected. Give it another decade or so before you see more companies embracing prospective employees who did not go to an accredited university.

    Comment by Collin Lee (@joekahuna) -

  332. I just got back from Big Omaha 2012 in Omaha, Nebraska where the founders of and spoke about pushing donations and eduction to the edge or in other words to the people who know best what they need and how to get there. Colleges want to tell me that I have to take so many P.E. hours to achieve my goals in life and I want to tell them that they don’t know what they are talking about. I can cobble together $10,000 and spend that on Skillshare, Treehouse, and Tech Conferences to put together a killer set of programming skills that will get me a job paying more money than the average college graduate hands down. The paradigm is shifting and the ground underneath the college education is starting to shake very hard. If they don’t start getting their act together and actually preparing people for the working world they are going to learn a very hard lesson within my lifetime.

    Comment by Hansel Dobbs (@HanselDobbs) -

  333. As long as the government is writing loans, there isn’t any downward pressure tuition rates. The fix would have been to privatize the entire student loan industry, but instead the Democrats did just the opposite. The next step will naturally be for the government to step in and take over the secondary education altogether. Then we can get an expensive education where we won’t actually learn anything, but the unions will get stronger.

    From MC> the fix would be to put a maximum total that any one student would be able to borrow. That would change the dynamics of the market over night

    Comment by AngelaTC (@AngelaTC) -

  334. And what’s worse than this for college tuition prices: “Prices for traditional higher education will skyrocket so high over the next several years that potential students will start to make their way to non accredited institutions.”

    This: – You see, education is now a commodity. There is nothing new under the sun and technology has advanced to the position in time where Harvard level education is available for free. I applaud Mr. Khan in his revolutionary new service. I also applaud the soon (and fast) to come death of the “University” as we know it.

    The real value in education is only in how it advances production or services…not in the education itself. This can be illustrated by the specificity of educational knowledge in one area compared to general knowledge dispersed for any goal. It is only when a specific knowledge far outweighs the competition that a value is created.

    Now, I would like Wall Street to tell me if they are willing to securitize ABS loans from students after higher education endowment funds start becoming less favorable…that is, when endowment income starts drying up like a desert from decreasing tuition numbers…both the number of students AND the cost of tuition per student.

    The only thing you have to know about bubbles is that they always burst. Exponential growth of debt is not tolerated by linear or reduced growth of income.

    Comment by Jay Salvati -

  335. Great points. And it’s these debt-ridden graduates that will be funneling into the housing market. Makes for a very interesting future.

    Comment by Lisa in Flipside (@Lisa_inFlipside) -

  336. I’m a Dallas resident. Home of Mark Cuban.

    Anyway, I got my MBA from SMU here in Dallas, well known, prestigious Dallas private school. I racked up about 100K in student loans and YES, THEY WERE SO EASY to get.

    I made good grades in high school. Graduated top 5 people and I went to undergrad at UNT. Got enough GOVERNMENT GRANTS to cover all of undergrad. Not kidding. Got an internship at a fortune 500 senior year and got hired on after undergrad.

    After a year I went on to get my MBA (due to lack of guidance from anyone, and who knew more school could actually be bad for me). Work paid me 30k cash to cover 100k of cost.

    After I graduated with my MBA, after paying 100k for school, I found myself depressed and unhappy and confused. The corporate world kills you. I feel SCREWED with all this debt and totally unhappy with my job or any other corp job. Not my thing. I went all in too fast as a young 23 yr old thinking I would be successful and happy the rest of my life.

    I def think high school should help you more decide what you like, what you realyl want to do before u dive head first into med school, law school, business school, etc and end up totally unhappy like me; feel like a total failure and try to OD.

    Anyway my way out is defer my 100k loan that I got SO EASILY and take my 30K capital and start a business. Bc as stated by @lord_nolan:

    “I’m not made to play resume roulette to win a spot in a corporate cubicle.”

    I also want to do what I want. I also have no other choice.

    Look at me now. Graduated top 5 in high school, Deans List in undergrad, tried to OD due to getting raped by top b-school debt. Ugh.

    Comment by sosodeff -

  337. If all you want is docile workers trained for a specific job function in the great cogwheel of capitalism, then Mark’s recommendation makes sense. But it is a very crabbed view of the value of higher education and makes no allowance for the importance of creating minds that are adaptable, creative, and flexible rather than narrowly technocratic. I’ll bet these are not the really creative types of people that Mark would himself like most to employ. As for rising tuition costs, ask those state legislators who have decided that they have nothing to lose by cutting funds for higher education and leaving more of the burden on parents and students themselves. The “best and brightest” actually will not be much affected because they will be accepted to schools like my alma mater Princeton that guarantee that every financially needy student will get grants covering full tuition, not loans, and will graduate debt-free. It’s students attending the large public universities who will suffer the most. Mark doesn’t seem to understand the subtleties of the market here.

    From MC> You are right. Those public funds from the states are not our money. If universities were reasonably priced they wouldnt require so much money from the states. Walk through the campus of a public school. Do they really need a building for each school ? THink paying for research is a way to keep tuition costs lower ? And I have known parents who couldn’t afford to send their kids to IVY league schools , after they were accepted.

    And in this generation, creating creative, adaptable and flexible minds doesn’t require a TA in front of 300 kids in a classroom any longer.

    Comment by Sanford Gray Thatcher -

  338. I know for a fact that professors and especially the much-shat-upon adjunct profs are often directed to avoid material that is ‘too vocational,’ and instead focus on ‘higher-level’ (read: theoretical) concepts. It gets ugly on campuses when the word ‘jobs’ comes up.

    Comment by ToadInAshland (@ToadInAshland) -

  339. Amen… I spent a few years in marketing for a for profit college and left the indusrty quite conflicted. Today’s student debt load is abolutely staggering. But its not solely the for profits to blame. It’s all colleges. Perhaps some of the gainful employment rules now being imposed on the for profits should apply to all colleges. I support Open U, Straighterline other bold ideas out there, but accreditation is no small matter…. The accreditators fight anyone who offers a new model, and some form of 3rd party recognition of skills learned is important with employers. There is definitely opportunity out there, but as you said, the bubble will need to pop.

    Comment by Ellen (@emlee6) -

  340. Mark,

    I escaped Texas Tech University with around $15K in debt after two years. There weren’t many ways I could have avoided falling into to that trap. I hoped I’d receive more scholarship and grant money. I’m still baffled at how hard I worked in High School and early College and how little financial “aid” I was given. Maybe my scantron SAT wasn’t bubbled pretty enough, maybe being in the top ten percent wasn’t good enough. There should be more openness in the scholarship process.

    That’s why I’ve decided to become an entrepreneur. I’m not made to play resume roulette to win a spot in a corporate cubicle. I do what I want. I have no other choice.

    Comment by Nolan Clemmons (@Lord_Nolan) -

  341. Mark, great post. I think what we really need to break this bubble is to put together high quality testing organization focused on confirming people’s actual abilities. With today’s technology, I am sure it can be offered at low cost. I think only if we truly separate education from Test institution, we can offer something that employers can go by.
    I have seen many resume’s with top school references, and yet the person can’t answer simple questions during interview or complete one page quiz. Frankly, I am getting tired of putting together tests for candidates… I really with there was high quality national testing organization we could trust for various professions.

    Comment by Adi Rabinovich (@adir1) -

  342. The tech schools you put so much faith in are more exploitative than the real universities. They promise — promise — that if you attend their school, you will get a job. Likewise, the online diploma mills, which charge more than the average state university, also promise what they can’t deliver — a job. As a professor in a small, state university who teaches first generation college students, I assure them that anybody who tells them they should go to college to get a job is either a sociopath or a liar trying to steal their money. Higher education began to fail when the entire focus became getting a job. At that point, we switched from believing that everybody has a right to attend college to everybody has a right to graduate from college and get a high-paying job.

    Comment by aspatula -

  343. There are so many misplaced assumptions and bits of flawed logic in this post that I would not even know where to begin in refuting them all. Mostly I am just appalled at the lack of originality that Cuban displays here. Every point he makes in this piece has been articulated by someone else somewhere else, most notably by Peter Thiel about a year ago when he spoke of the “higher education bubble”. Thiel was wrong then and Cuban is wrong now.

    To be fair, Cuban does make some good points in addressing some issues in the structure of contemporary higher education, but he fails to address entirely the role that for-profit schools have played in the current “bubble”. Look up the statistics on student loan debt and delinquency for students matriculating from the likes of Phoenix, Strayer, DeVry, etc; the numbers are appalling. Yet, Cuban seems to advocate for a system that is MORE heavily embedded in the for-profit model. If a for-profit educational system is something for which you advocate, do not then be surprised when the only people who profit are the corporate stockholders who dominate yet another aspect of modern society.

    The idea that university presidents only care about increasing endowments and raising revenue is an absurd overgeneralization that would be the same as equating every professional sports team owner to Daniel Snyder (how many schools actually even have endowments of which to speak?). Further, Cuban’s characterization of accrediting bodies as nothing more than “a bunch of old men and women who think they know what is best for the world” displays his TOTAL ignorance of what accreditation is about and how it works. Go ahead and hire a bunch of people from unaccredited institutions and see how that works out for your business.

    If you seek to understand why tuition has gone up in many places in recent years, look up the statistics on state government aid provided to public institutions in the last 40 years; states have SLASHED subsidies to public schools, necessitating tuition raises almost across the board. While I acknowledge that many institutions have become bloated from out-of-control administrative costs, and facilities construction and maintenance has not been in line with economic realities, the truth is that the story behind the rising cost of college tuition is far too complicated for Cuban (what are his credentials on this topic?) to encapsulate in such a flippant manner.

    Finally, Mr. Cuban seems to believe that the only purpose of a college education is to prepare people to be his employees. This is not entirely his fault. As American society has shifted in the last half century from viewing higher education as a private investment rather than a public good, too often we come to view education as nothing more than preparation for the marketplace. In other words, our society has digressed into the proverbial child who asks “When I am ever going to use this algebra stuff anyways?” There is a failure to recognize that education has rewards that go beyond the monetary and/or immediate. Whenever I hear someone say that they didn’t learn anything in college, I know they are infected by that exact same mindset. After all, you get out of your education what you put into it.

    Comment by Jeff Freels (@publius2k) -

  344. Spot on, Mark and you are not alone in this sentiment, as one who hires: “As an employer I want the best prepared and qualified employees. I could care less if the source of their education was accredited by a bunch of old men and women who think they know what is best for the world. I want people who can do the job. I want the best and brightest. Not a piece of paper.”

    We surveyed hundreds of businesses – large and small – about what they looked for in a college hire & less than 9% of employers said the college an intern attended mattered. Employers look for internship experience, interview performance, and more.

    Comment by Yair Riemer (@YairR) -

  345. Its about time this topic was breached by some of the US business elite. Great post Mark. But, I’m surprised you didn’t discuss how privately issued college debt can’t be unloaded in bankruptcy due to legislation originally enacted in 2005. One of the main reasons that getting a student loan is too easy is that lenders get additional protection from the government (which treats people who don’t pay back student debt similarly to people who don’t pay child support). Why not loan money at low rates if there is basically no risk of default? A catalyst for the burst of the bubble could be a reversal of the legislation, due to voter pressure, which would lead to a massive and sudden unloading of student debt through bankruptcy. This would be a much more rapid and dangerous de-leveraging than the scenario you describe.

    Comment by Victor Oleinikov (@VOleinikov) -

  346. Yes indeed a good post. I think the biggest problem with higher education is that people ‘expect’ a return on their college investment. They forget that a degree is nothing more than a piece of paper saying that you ‘passed the test’ of higher education – it is not a ticket to the ‘good life’. I have seen so many students come out of universities with no ambition, no creativity, no drive. They just expect a job to be handed to them.

    A degree is nothing more than a tool. When used in combination with ambition, creativity and drive it can indeed get you to the ‘good life’ – but not by itself.

    On a side note I would like to point out how everyone acknowledges the housing bubble as the major cause of the recession we are in. Yet all I hear on the news is how ‘slow’ economic growth is and politicians clamoring how they are going to get us back to the way things were. Is it me, or are people missing the point? If we go back to the way things were, would we not be in another bubble?

    I acknowledge that things could improve a little more probably, but for the most part, SLOW economic growth is probably a good thing, is it not?

    Comment by Tainted Wisdom (@taintedwisdom) -

  347. “The point of the numbers is that getting a student loan is easy. Too easy.

    You know who knows that the money is easy better than anyone ? The schools that are taking that student loan money in tuition. Which is exactly why they have no problems raising costs for tuition each and every year.”

    You make excellent points Mark, except you missed a very important one.

    WHY are student loans so easy to get?

    Because the government guarantees them.

    If sell pencils for a buck. However, I learn the government tells lending institutions they’ll guarantee the money if they lend somebody the money to buy a pencil. I raise price of my pencil to $2. Then $3. And on and on and on. Each time, the lending institution happily gives some kid the money to buy the pencil. And why not? His back is covered by the government.

    You want to see student college loans become harder to get? Get the govt out of the GSL business. This is yet another bubble that is ready to burst because of government policy, not in spite of it.

    Comment by Jay Caruso (@jaycaruso) -

  348. Pingback: Mark Cuban lays the smackdown on the higher education system | Jason Gooljar: The Working Families Party Man | Fighting in the Class War

  349. Mark, Great post. I find this very accurate at my current school. I am a double major in manufacturing engineering and industrial management (minors in business and economics). The cost of tuition at my school continues to rise ever year at a rate of 6-10%. At these rates soon students will no longer be able to afford this even with loans. The school I attend is considered “cheap” however, there is another school I know of, a trade school, whose 2 year programs kick out grads that are making 50-70 starting! Something is about to shift drastically. I’ve worked everyday since I turned 14 to pay for my college and I will be lucky and graduate with no dept, granted I work 7 days a week during the summer but it’ll be worth it. To be honest upon graduation I will be starting an MBA program with my left over saving. I’ll graduate from that program with nothing left over, hopefully I’ll be lucky enough to find a job.

    Comment by josephjlgraves -

  350. Great post — the law school bubble in particular proves a lot of what you’re saying. Law students often graduate with over $100,000 in debt.

    Comment by Mike Burshteyn (@burshteyn) -

  351. Education is important, but college is no longer necessary to get an education. It’s about credentials. Getting one’s ticket punched.

    Comment by Raymond (@RaymondinSC) -

  352. Couldn’t have been more on point. Great article. Sending this to all of my professors/upper-level employees at school.

    Comment by Michael Israel -

  353. The whole model for higher eduction in America is broken. It’s no longer relevant. – RG

    Comment by Randy Gage -

  354. @Dave Voyles I have been involved in the effort to eliminate foreign visa workers in the USA for the last 17 years. I along with others have collected wage and salary data on foreign visa workers that is presented to Congress every year. Here is a link that gives a brief but accurate summary of the data findings;

    Eliminate these visa work programs and 4 million jobs become available. Of the 4 million available jobs many would go to college graduates since employers will still want to keep wages down when the foreign visa workers leave.

    The news media, corporations and politicians have been spewing false propaganda about shortages of high skills. This has and always will be completely bogus.

    Foreigners should only be able to settle in the USA on work visas if they provide a basis to create jobs for USA citizens. When it comes to research in medical and other fields the visa holders should only be on exchange programs.

    Comment by mayormckinney -

  355. Great insight Mark, enjoy reading your posts. Enjoyed the insights on the olympics as well. Keep writing, love it!

    Comment by amalagaura -

  356. The parallels to the housing bubble are far deeper than Mr. Cuban suggests. I wrote about them here.

    Thankfully, entrepreneurs like Khan Academy are changing the game. The only thing that is needed is recognition by employers of the academic achievement, whether it is a complete AP-style sequence of exams or something else.

    Comment by Barbarian Capital (@BarbarianCap) -

  357. Thank you for another great posting Mark. I believe this massive problem has been boiling for some time, with not much media coverage or political attention. I’ve also heard that student loans are one of the only things not wiped out by filing for bankruptcy, making the situation even more bleak. Growing up in South Florida, I’ve seen first hand the boom and burst of the real-estate market, and your analogy to the educational credit crisis is right on! (very scary though)

    As a young business owner, our production company receives hundreds of resumes from recent grads from all sorts of schools. From private, public and technical ‘arts’ institutes. The honest truth is that: 1) the way people sell themselves via traditional text resumes is no way to showcase a persons potential. Especially since recent grads have little or no experience, and we hardly have the time to interview people around the clock. . 2) there simply aren’t enough good-paying jobs out there for the massive amount of degrees churned out by these ‘businesses’ (schools).

    In order to help give people a fighting chance when it comes down to getting noticed in ‘the real world.’ regardless if they’ve had full scholarships or paid hundreds of thousands of $$$ for their education, we thought there had to be a better way to utilize technology and media.. and decided to create the Ultimate Video Resume called ‘The Mini-Movie.’ We actually sent our business one-sheet to casting for The Shark Tank, and hope to one day present you with this possible game-changer.. since we all know a degree is not going to open the doors to the future people want.

    Comment by Bernard Dino Bonomo -

  358. Coming from Europe myself, I did 2 master degrees in Australia which was an awesome experience, and met so many people from all over the world.

    The good thing of having a student loan from Europe was also that I didn’t have to pay back my student loans straight away but there was a 2 year “transition” period. In comparison to a friend from the USA, where he got a his last student loan check one week, the following week he had to start paying back his loans..

    And in the current US economy this is an issue as the job are very limited. Much better of letting new entrants to the workforce actually find work and then start paying back their loans.

    Looking back, not sure if the university gave me the education that I wanted / needed. However the social benefits, experience and friends I made are priceless.

    Comment by Ralph Kooi (@RalphKooi) -

  359. Great article. I take full responsibility for my debt. I went to a top 20 architecture school and because of the curriculum I was forced to take on student loan debt. All throughout, I kept a close tally of what I would need to make to pay it off, etc, etc. When I started college, the school had a 100% Graduation to Job rate. When I graduated, not only did no one get jobs, but those who had jobs lost them (I lost a job at a big firm due to the economy a month after graduation).

    Today I am intrapreneur, working at an online retailer, and paying it forward in my community by spearheading an organization and founding a coworking facility. Half of my monthly salary goes straight to student loans each month, the other half goes to rent, utilities and food. I live check to check, with a “piece of paper from a top 20 architecture school with a 100% graduation to job rate.”

    Today I provide value where I can, support when I may, and advice as much as I can. You don’t have to buy your dreams and in many cases in today’s economy can’t. Work hard. Do what you love. Provide value. Don’t ever settle.

    Comment by Josh Clemence (@JoshClemence) -

  360. I’m not sure why it’s so complicated to understand. Here are 3 things I recommend if you want the economy to pick up at a faster pace:
    1) get out of other countries fighting wars
    2) stop exporting jobs overseas

    Shoot I forgot the third one…

    Comment by Amine (@amineTAGHA) -

  361. Mark, I’m a year out of college with no “real job” (BSBA in Finance/Accounting from top 50 school). I hustle my ass off, and have learned skills that earn me money to live on, but I genuinely love business/stocks/projecting growth. I learned more from readying blogs, books, and websites than I did in class. Thankfully I had a huge scholarship and have virtually no debt. I was busy working and making money in college that I didn’t intern.

    The problem is companies are not willing to take a flyer on someone with no experience. They want an intern, 4+ years experience, or an MBA grad. At this point, I’m considering getting an MBA at 23 because I know I’ll be able to grab an internship, which should help me land a job.

    I don’t NEED that MBA though. A company could pick me up right now and have a motivated 23 year old that has paid for everything he owns since he was 16. I worked throughout college, I rarely party, I like working, I’m super frugal and can cut expenses like a chef cuts parsley.

    For some reason though, if I get an MBA I can get a job. I can probably spend 300$ on books and learn more in 2 months than dropping 100k on an MBA…at least get better value.

    My favorite professor told me “Everyone is hiring for the right person”. I have had great feedback from HR people, but they go with someone with a masters degree or more experience.

    My experience isn’t in finance, but I was working with a bad product provided by another company. I ended up starting my own venture, and that bad product turned into a great product done by me. Researched, made it profitable in year 1, taught myself the skills, bought the equipment, hired the workers, trained the workers, managed the workers, kept the clients happy…is that not enough experience? (sadly that was a seasonal gig)

    You are right with this post. The problem is companies are going to go with the safe bets. The MBA’s. The people with 4 years of experience. I love business, but the opportunity was there for me to make money at 20 in something else so I did it. Now, I’d like to work in business but they want to see an internship. An internship where I make no money… I was building a small venture by my own in the real world and making a profit. Which is more valuable?

    Great article though and I hope it happens soon. If you don’t get a scholarship, you have to think hard about going to college.

    Comment by Mark Messmer (@markjmessmer) -

  362. Very good post. As a recent graduate, this is something i have been discussing with my friends. Although you hit the nail on the head addressing the role of universities, it is my belief that is only half the problem. The other half is the students themselves. I think it is beyond rediculous any student that needs financial assistance spends the first year or two paying $600 a credit hour for basic courses when they could be taking those same classes for $50 a credit hour at a community college. The other part is not all degrees are created equal. While two degrees from the same university may cost both students the same amount, each degree leads to a completely different starting salary. This is something that is not emphasized enough to high school students. Our society has become so focused on convincing our youth that the only way to become successful is to get a degree, many students do not realize how low some of the starting salaries are for jobs in certain fields. For instance, I worked at a major retailer right out of high school and became a Department Manager within 6 months due to outworking my coworkers. I then stepped down to focus on school full-time and 3 years later I am graduating with a degree that the average starting salary is 10K less than what I was making as a department manager. While money isn’t everything in life, it is certainly important when you are in debt.

    Comment by Clay Key -

  363. So true. People think that going somewhere and getting a piece of paper will guarantee you a job in the real world. It’s completely flawed thinking. The first thing I tell people looking for a job is that they’re a liability to a company before they’re an asset. That company has to write them a check every month, plus other related expenses. Now how can they bring value that (more than) offsets that liability, and gives that company a reason to bring them on?

    The sad answer is that most college educations today just aren’t preparing students for the real world where they need to bring value and produce results.

    Comment by Travis Skweres -

  364. That is definitely some great insight to higher education and student loans. Howeverm I think one area that is overlooked is the number of for profit proprietary schools that take take advantage of the prospective student market. While individuals go to school to improve through learning, a number of schools entice people into attending their institution using “sales” tactics. In fact, if the training of new admissions officers are investigates, a vast number of these schools would be found to teach selling. While we know that recruiting by definition will incorporate these strategies, many schools have goals (or targets) to hit, processes for contacting and following up with prospects, and employing procedres of how these “lead” need to be contacted.

    Also note that the majority of schools that used Federal Pell Grant money, were the for profit proprietary schools. These schools have low standards for admission, and will use the Pell Grant (along with the Stafford Loans) as a way for students to get to feel they can get “free” money with their stipend checks. It is creating a more student loan defaults because many of these students were not at all prepared for the education.

    Understand that I have worked in the higher education industry and seen many of these things first hand. For those who have never seen this industry from the inside would be shocked and those who have enrolled into these schools, would feel cheated. We preach that they are not going to be considered a number, but in the grand scheme of the organization, they are.

    Comment by George (@GeoInRealLife) -

  365. This is something that I blogged about a while back and I definitely agree. What concerns me is that Universities and Colleges may have become “too big to fail” like auto manufacturers before them. According to graphs like this (, the university bubble is far bigger than the subprime mortgage debacle, and nobody in my generation is willing to be the first to opt out. In fact, year on year median wages for college graduates began falling back in 1995 while prices kept accelerating. Yet here we are 17 years later and nobody in my generation appears to have noticed. When I mentioned not sending my kids to college, people give me a “you have to be kidding” grimace.

    Comment by George Saines -

  366. @mayormckinney “If that was true then why is there not even one foreign visa worker in the USA earning a salary equal or greater than any college graduate or experienced professional of US citizenship would? ”

    Where did you get this information?

    Comment by Dave Voyles -

  367. Good point mark. But I think the new wave of education startups will mature faster than you think, especially for technical fields, where there is a very clear path to a well-paying and relatively stable job (,, etc.). There will obviously be a lot of fragmentation initially. But over time, as the new industry consolidates, we’ll start to get standards, auditing, and all the other structures that make for a new kind of accreditation. And because it’s all delivered as a service, it should be 1/100th the cost of the brick and mortar alternative.

    Comment by David Beyer -

  368. “As an employer I want the best prepared and qualified employees. I could care less if the source of their education was accredited by a bunch of old men and women who think they know what is best for the world. I want people who can do the job. I want the best and brightest. Not a piece of paper.”

    You nailed it. Excellent piece.

    Comment by Dave Voyles -

  369. If the approximately 4 million current foreign visa holders were given a half hour to leave their “granted” jobs this week then the graduating class of 2012 could name their price when replacing them. With the average undergraduate salary at 47K/yr most student loans could be paid off given a reasonable amount of time. The focus should not be revising college student loan structure, or college curriculums it should be replacing 4 million currently working foreign work visa holders with US Citizens. Foreign visa holders are supposed to fill shortages of skills needed by corporations, universities ….. If that was true then why is there not even one foreign visa worker in the USA earning a salary equal or greater than any college graduate or experienced professional of US citizenship would? This is the real crises in the USA that is kept quiet and done without much debate. If only people knew better and took immediate action, only if….

    Comment by mayormckinney -

  370. Nail on the head again, Mark. I worked my way thru college (well, I spent 4 years there but I left a long way away from a degree) for fun & entertainment and to meet people more diverse than the people I grew up around in my small town in hillbilly Appalachia. I barely remember any of my classmates even talking about student loans much less going as deeply in debt as students do now unless they were going on to grad school in a specialized area like law or medicine. I learned a lot about life while I was in college but I didn’t learn anything in the classroom that benefited me in my radio career and I bet I’m not the only one that reads your blog that feels that way.

    Comment by Kevin McCarthy -

  371. The most recent Planet Money on NPR was about the cost of college. They point out that the price that has been rising is the “sticker price.” However, the average price a student pays for college hasn’t risen (except to adjust for inflation) over the past 20 years or so. The schools are raising the sticker price as a marketing tool, so they can give big need and merit based scholarships to woo desirable students.

    The reason student loan debt has ballooned isn’t because students are paying more, it’s because more students are paying. Federally subsidized loans aren’t increasing the cost of education, they are serving their purpose to give more people the opportunity to go to college.

    I suppose your point that it is a ton of debt and we don’t have a job to give to each college grad is valid. But, I am not sure the classification of it as a bubble is valid because we aren’t really seeing a rise in the cost of education.

    Comment by obo1892 -

  372. As always, great post. One of my favorite subjects in higher education. I lived in Europe for thirteen years. Most kids in Europe don’t go to the University, only the absolute best and brightest. Then and only then does government pick up a lot of the tab. Most kids are funneled into trade schools and apprenticeship programs. Serves them much better. We are starting to treat a college education as a right in the US. It really cheapens the vaule of those who go to demanding schools and for demanding degrees.

    I see this first hand in my life. My son is a recent grad from one of the best small colleges in the country and is still looking for meaningful work. There is an absolute glut of college grads on the market and it is really hard for employers to sort through the chaff. In my professional job, when we advertise for a postion we are getting 40 to sixty applications. After a while you get tired of looking at them.

    We need to stop sending so many kids to the traditional college and get them trained in jobs that suit them.

    Comment by Mike Martel -

    • Great comments, Mike Martel. I teach middle school math, and I’m saddened by our American model of education. The system is set up with the expectation that all students will fit inside the same box (by 2014, thank you Mr. Bush): master these standards, keep up with your grade level, so you can graduate high school, attend a reputable college, and get a job.

      I teach sixth graders and at just 12 years old, it’s already clear to me that some students would benefit from an alternative pathway; one where they could apprentice with a local business owner or take a more vocational or technical focus. You dont need a college degree to earn a decent living and work a respectable job!

      As it stands, this handful of students sit in my class, discouraged and/or failing, walking away with the conclusion that they can’t be successful in life because they don’t excel in a traditional classroom. Many students (and parents) turn their noses up at the thought of skilled labor as a career. Sadly, we don’t even offer hands on electives such as wood shop or auto shop anymore.

      I wish that there were trade school and apprenticeship programs built into our high school curriculum. More importantly, I wish that it was socially acceptable to deviate from this college track. This way students could find a pathway that was suitable for them, before–for lack of a better option–being swept up into this false promise of the American dream via a four year college (and the debt that comes along with it).

      Obama, think about an overhaul of our education system if you really want to stimulate our economy over the long term! Find those kids who can do something other than bubble a scantron; the Thomas Edisons and Ben Franklins and Bill Gates who struggled in school but had something else to offer society. We need a system set up to let those kids shine too.

      Comment by kimmartin22 -

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