Article Response

      In this post I will be responding to an article written by Peter Wood. This article, entitled, The Bubble: Higher Education’s Precarious Hold on Consumer Confidence, can be found on the National Association of Scholars' website, www.nas.org. It's specific link is http://www.nas.org/articles/The_Bubble_Higher_Educations_Precarious_Hold_on_Consumer_Confidence
This article was published on September 13'th, 2010, which means that the information is current. Another sign of credibility is the website on which it appears. According to NAS's website they present daily opinion and commentary on developments and trends in higher education. Also, according to their website, they are linked on several major publications. While all this does need to be taken with a grain of salt, because they are talking about themselves, there are enough positives and evidences of positives, to make this a good sign of credibility. A final sign of credibility is the author's credentials. Peter Wood is the executive director of the National Association of Scholars. He won the Caldwell award for leadership in higher education from the John Locke Foundation and his articles have appeared in several other scholarly journals. I will only be responding to the first three sections of his article, the introduction, section 1, and section 2. I am doing this because these three sections most pertain to my focus on this topic.
        I need to start by defining what the college bubble is. Any kind of economic bubble happens when the price of some asset is driven up past its value. The bubble will burst when people realize that the asset is way overvalued, and seek cheaper options. The college bubble has occurred because the price of college has consistently climbed over the past few years, while the resulting education  has not significantly improved. Eventually people will realize that they are paying too much for too little and will seek other options. It is when this happens, that the bubble will burst, and, the price of college will drop. In short, I completely agree with Peter Wood's definition of the college bubble. While he does not address the reason for the price of college rising, he does give a sufficient definition of the bubble, which is all that is necessary for my current purposes. In the first section of his article, Peter Wood addresses the statement that, the high price of college is warranted. One of the most important ideas that I can take away from this section is that, a large reason for the rising cost of college is that many colleges are focusing on the amenities. They are selling themselves as the best because, they have the best gym, the best dormitories, the best campus activities, instead of, the best education. As we consider a college, we must consider what it is that college is selling. Are we buying the best campus climbing wall in the midwest, or are we buying the best education in the midwest. These are crucial factors to consider when you are deciding whether or not college is for you. If you are more concerned with the amenities than the education, you may want to rethink whether or not it is wise for you to go to college. In the second section of his article Peter Wood responds to the statement that, A college degree is still the best investment. What really stood out to me from this section was what he said about career earnings. While it is true that a college student, on average, will make more than over the course of his lifetime, this does need to be weighed against some important factors. One of those factors is the debt that many students amass while in college. Those higher career earnings do not mean much if most or all of them go towards paying off your college debt. Another factor to consider is opportunity loss. If you go to school for a major that has nothing to do with your career, you probably would have been better of gaining experience on the job for the four years you were in college. The result is that you are probably in debt and probably making less than you would be if it was your fifth year on the job. However, this is certainly not the case for everybody. There are people who get benefits out of college that they could not have received any other way. My point is simply that a four year spree at a high priced college, is not the best route for everybody. Finally, I want to point out that there are viable options other than college. A community college is one of those. Another option would be a trade school. If you are going to be an electrician, spending four years getting an ancient history major will not do you much good. Spending two years at a trade school, on the other hand, may be one of the best investments you could ever make. Not only is it cheaper, it also increases your value on the job market. What I can take away from this article, as a whole, is that, a college degree is often not the best investment. As it becomes increasingly overpriced, it becomes less and less worth it to spend the money on a degree that often has very little to do with your career.

Credible source summary

       In this post I am going to share another credible source, as well as a summary of the article. The article, written by Steven Horwitz, is titled, Bubbles, Malinvestment, and Higher Education. It's home site is www.thefreemanonline.org. The specific address is http://www.thefreemanonline.org/headline/bubbles-malinvestment-and-higher-education/.
      Once again, there are several reasons that this is a credible source. One is the author. Steven Horwitz is a professor of Economics at St. Lawrence University. He has degrees in economics from George Mason and the University of Michigan, and has also authored two books on economics. Another sign of credibility is that this article appears on a scholarly journal's website. The Freeman, a publication of the Foundation for Economic Education, has been in print for over 50 years. One final sign of credibility is that the author provides a way to contact him on the site.
        This site is useful to me for a couple of reasons. One is it's currency. This article was posted on May 17'th, 2012. Another reason that it is useful is that he directly addresses some of the questions I have, such as, What is driving this process and what consequences does it have for students? This process, refers to the college costs outpacing the inflation rate.
       Steven Horwitz begins his article by addressing the topic. Many people are wondering if the next bubble to burst will be the debt that many former college students have acquired. College costs have outpaced inflation. Why is that, and what are the consequences are for students? One factor in the rising cost is the government provision of student loans at very low interest rates. This encourages too much borrowing, resulting in many people spending much too long in college. Essentially, people are investing in general human capital, rather than specific human capital. They are opting for the general knowledge and skills that come with a  college education, rather than, the specific experience and worksite training that come from entering the workforce immediately. Even if everybody has that knowledge and skill, which is what would happen if everybody went to college, we would still have basic workforce labor that needed to be done. This would result in an unsustainable structure of human capital that would not meet the demands of the market. When that happens, graduates do not get jobs. When graduates do not get jobs, they cannot pay off their debts. That is when, as Steven Horwitz says, boom will go bust. Another factor is that, with cheap loans, comes more money for the students to spend at college. This leads to an increased demand, which in turn, leads to higher tuition. Schools also have started to offer more, and better than necessary, amenities, to attract students. This also leads to a hike in tuition. While forgiving student loans seems like a tempting option to solve the boom, it really is not. The problem is, if the government forgives these debts, it sets a precedent that will result in more and more poor decisions. To get out of this boom there are two things that need to happen. First, replace low interest government loans with market-driven loans and interest rates. This will draw out those that really value higher education. Second, provide real competition. This will drive down costs, and hopefully, stop the boom before the bust gets worse.

Credible Sources

       In this post I will provide you with two sources that I believe are useful. I will also begin to narrow my topic down a little bit.
       The first source that I want to share with you is an article by Megan McArdle. This article was published in this week's edition of Newsweek as well as being posted on The Daily Beast's website. http://www.thedailybeast.com/newsweek/2012/09/09/megan-mcardle-on-the-coming-burst-of-the-college-bubble.html. There are a couple of reasons that this article is a credible source. One is the author's credentials. Megan McArdle used to be the business and economics editor for The Atlantic. She has also been featured in The Economist, The New York Sun, The New York Post, and other publications. Currently she is a special correspondent for Newsweek and The Daily Beast, covering business, economics, and public policy. Another good sign that this is a credible source is that it appeared in print.
        The second source that I want to share with you is an article written by Radhika Miller. http://www.usnews.com/education/blogs/student-loan-ranger/2012/09/12/finding-the-value-in-a-college-degree. Once again this article makes a good source because of the author's credentials. Radhika Miller is a program manager for Educational Debt Relief and Outreach at Equal Justice Works. She has also served on student loan committees in the Department of Education's negotiated rulemaking focusing on the College Cost Reduction and Acces Act as well as other debt relief initiatives. Another good sign of credibility is that her article appears on the website of a recognized news and research source.
        Megan McArdle's article is useful to me for several reasons. One is that she provides statistics on the jobs that people graduating with a bachelor's degree end up with. This helps me answer the question, Is the reward worth the price? Another reason Megan McArdle's article is useful to me is that she discusses why the price is going up and what the consequences will be. Radhika Miller's article is useful to me because it presents the other side of the argument. She argues, among other things, that a college degree is worth the cost because it provides job security. This is useful to me because it will help me balance what I write, as well as helping me decide what topics to address. Both articles are useful to me because of their currency. They both address current aspects of the argument, which is necessary for me to provide useful information.
        As I continue to write I will be focusing mainly on whether or not the price of going to college is worth the reward. As I write some of the other topics will be addressed. However, they will not be addressed to the same depth as my main topic.

My Subject

For the next month and a half or so I will be blogging about the college price bubble. If you are wondering what this is, good, maybe you will keep reading. The main reason I will be writing about this is because it pertains to me. I am looking at going to college next year, but I have to consider, among other things, is it worth it? Is the price worth the reward? Currently I do not know much about this topic. What I do know is that the price of college keeps going up. What I will be learning is why does the price keep going up, is a college degree worth the price, will the price ever go down, if it does, when and why will that be, and are there other viable options. As I learn about these topics I will share what I learn with you, my audience. Speaking of my audience, the ideal audience for this blog will be those who are considering college. I will not claim to be an expert of any kind, but I will attempt to compile meaningful, credible, information into something easy to read.