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WARNING: The U.S. College Degree Bubble Set to Burst

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WARNING: The U.S. College Degree Bubble Set to Burst

If you know anyone contemplating going into debt to get a college degree, please consider sharing this information with him/her for consideration.

A press release from the National Inflation Association does not mince words regarding what experts have been eluding to for at least the past year.

The National Inflation Association believes that the United States has a college education bubble that is set to burst beginning in mid-2011. This bursting bubble will have effects that are even more far-reaching than the bursting of the Real Estate bubble in 2006. College education could possibly be the largest scam in U.S. history.

NIA’s advice to the youth of America today is to think for yourselves. Don’t get suckered into overpaying for a college degree that is worthless because everyone else has one. College is only worth attending if you plan on actually learning something there. If you are only going to college because you think a piece of paper is going to help you find a job, you would be much better off skipping college and entering the workforce right now at any entry level job. Your experience will benefit you more than any piece of paper.

College Degree Bubble Could Burst In Mid-2011

How can this be? Well, even as the values of previous bubbles have dropped and stayed down – the stock market, housing, and oil specifically – the College Degree Dollar Signcost of a college degree has substantially increased. And then there is the multi-year loss of jobs, many of which required a college degree:

The annual tuition for a private four-year college was $21,235 in the 2005-2006 school year. Despite Real Estate beginning to collapse in late-2006, college tuition rose by 4.6% in the 2006-2007 school year to $22,218. Despite the stock market beginning to collapse in late-2007, college tuition rose by 6.7% in the 2007-2008 school year to $23,712. Despite oil and other commodities collapsing in late-2008, college tuition rose by 6.2% in the 2008-2009 school year to $25,177. Even after the Dow Jones crashed to a low in early-2009 of 6,469, college tuition still rose by 4.4% in the 2009-2010 school year to $26,273.

Annual tuition for a private four-year college in America is now $27,293, up 29% from five years ago. Meanwhile, the employment situation in the U.S. has deteriorated. There are currently 130.7 million non-farm jobs in America, down 3% from 134.5 million U.S. non-farm jobs in December 2005. 3.8 million jobs have been lost, while the U.S. population has grown by approximately 14 million people during the same time period. We would need to have seen the creation of 6.7 million non-farm jobs just to stay even, but now we are 10.5 million jobs short.

Like Others, College Degree Bubble Caused by Cheap Money

The college tuition bubble has been fueled by the U.S. government’s willingness to give out easy student loans to anybody who applies for them. If it wasn’t for government student loans, the free market would force colleges to provide the best quality education at the lowest possible price. By the government trying to make colleges more affordable, they have actually driven prices through the roof. Colleges have been encouraged to spend recklessly on wasteful construction projects, building new libraries, gyms, sports arenas, housing units, etc. Colleges spent $10.7 billion on construction projects in 2009. Although this is down from an average of $14.7 billion per year colleges spent on construction projects from 2005 to 2007, colleges are still struggling to pay off their old construction related debt. When interest rates start to rise, it will add further upside pressure to college tuition prices.

As many homeschoolers have discovered, education is not only available online, it can be a heck of a lot cheaper than traditional education sources. These sources, such as those described in Parent at the Helm’s “7 Top Sites for Great College Video Courses,” can provide a desired college degree while at the same time a student acquires work experience; likely leaving one a more valuable employee in an increasingly tight job market.

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