Graphic of the Day: The Next Bubble?
A video by the Theil Foundation (advocates of opting out of college) compares higher education to the housing bubble. But how similar are the two, really? Cliff Kuang at Fast Company argues that there are some key differences. He writes:
The very idea suggests that the value of an asset might suddenly crash, as people come to their senses and reevaluate how much that asset is actually worth. But people can’t buy and sell their college degrees. The "asset" in this case isn’t going anywhere.
But don't get too optimistic yet, he warns. Our market is not strong enough to support all of the college graduates we have. And if you end up without a job, you can't just declare bankruptcy, like you can with a house.
"That is totally unlike the real debt markets, where lenders adjust their behavior based on default rates," Kuang writes. "If you make a bad bet on a borrower that can’t repay, you should get burned. That’s the only way that the market can regulate unsustainable debt levels."