The Three Drivers of Our Education Bubble
Modern liberal education is predicated on a very simple notion: If you want a productive, innovative economy, citizens need access to a broad education in the sciences and the humanities. Unfortunately, that kind of education has become incredibly expensive. At a private 4 year university, the average tuition bill is $31,000 for the 2015 academic year. The steep price of that education, coupled with lackluster opportunities for college graduates, has produced what Peter Thiel has coined the “Education Bubble.”
I agree with Thiel that formal education is in crisis. But the education bubble cannot be understood unless its three component problems are identified and assessed independently.
There’s a tuition bubble, which is driven by easy access to college loans. As Thiel argues, tuition costs have reached stratospheric heights because we tell students that economic growth will continue unabated and then provide unfettered access to capital to fund their education. At no point does anyone ask whether tuition costs are reasonable in light of their expected returns.
The second problem is that colleges and universities still adhere to the tournament model. Under this model of evaluating performance, students are pitted against each other and must compete for grades, status, and opportunities. The tournament model is based upon the idea that performance should always be evaluated in a linear fashion. X is better than Y, and Y better than Z, and so you would never hire Z if X were available and willing to work for you.
If you’ve worked in any kind of company, you already know what’s wrong with the linear model: It’s not consistent with how individuals really perform because it ignores the non-linear, compounding effects of well-functioning teams working toward common goals.
The third problem is that technological change is occurring so quickly that most college students do not really understand the importance of individual ownership of their own future. To truly thrive in tomorrow’s tech driven economy, it is not enough to collect or degree or two, nor is it enough to have broad familiarity with STEM subjects. Flourishing in this new, unfamiliar world requires owning each and every professional decision, which includes most—if not all—of the required technical preparation.
So, at a very high level, the education bubble is comprised of three problems: the tuition bubble, the tournament model of learning, and the need for individual ownership of practical training. To address the tuition bubble, we need an overhaul of the educational loan system, perhaps in the spirit of what Senator Elizabeth Warren has recently advocated.
The second problem is exceedingly hard to tackle. Universities don’t yet realize that the tournament approach to evaluating students is actually an impediment to preparing them for the real world. We need to demonstrate why change is necessary here.
Silicon Valley is starting to get the message out. Google recently announced that it’s old, linear hiring approach had to be scrapped because it too often overlooked the best people. As a consequence, Google is now looking for fresh new ways to evaluate talent, and is deliberately looking outside the Ivy League for excellent contributors to the company’s mission.
As for the problem of individual ownership, there has been some progress. For example, entrepreneurial young people have already started to take ownership of their own practical training by enrolling in highly focused coding bootcamps. Yet there is still a lot of hard work ahead. Most simply do not grok the difficult truth that your future is truly in your own hands like never before.