Does the increasing student loan debt load carried by college students today represent an economic bubble? Probably not.
There’s a big flaw in the bubble argument, though: things may look grim for college graduates, but they’re much grimmer for people without a college degree. Though recent college grads are having a hard time finding a job, it’s much harder for recent high-school graduates, who have an unemployment rate of nearly twenty-two per cent. And the over-all unemployment rate for college grads is still, at 4.4 per cent, very low. More striking, the college wage premium—how much more a college graduate makes than someone without a degree—is at an all-time high. In fact, the spiralling cost of education has to some degree tracked the rising wage premium; as college has, in relative terms, become more valuable economically, people have become willing to pay more for it. It’s telling, in this regard, that the one period in the past sixty years when college-tuition costs flatlined was during the seventies, which also happened to be the one period when the college wage premium fell.
To be sure these are difficult times where the future is far from certain. But even in this climate, higher education still holds economic value…..not to mention the intrinsic value of, you know, an education.