I won't attempt to summarise the case for there being an education bubble here (see links below for some pointers). Rather, my questions are:
1) assuming there is an education bubble, when will it -- as bubbles tend to do -- pop?
(This plausibly entails some disjunction of *hundreds of thousands to millions of students defaulting on their debt, *lower number of college applicants, *non-top-tier colleges laying off faculty, *substantial reductions the signalling value of obtaining a diploma, *substantial reductions in tuition fees, *reduction in the level of education required by various employers, and more)
2) Which assets will be more scarce/in demand as that happens? Are there currently available opportunities for "shorting" the education bubble and invest in ways which will yield profit when it pops?
(I hereby preface the comments by noting that nothing discussed there is investment advice and no users can be held liable for investment decisions based on it.)
Peter Thiel summarises the inside view of there being an "education bubble" well.
And here are some interesting numbers:
- In the last 35 years, median household income has grown by about 20% (FRED). In roughly the same time, the price of college has grown by 300% when adjusting for inflation
- College spending is one sixth of US economy UPDATE: this is probably false/misleading, see comment from paulfchristiano below.
- Student debt is at >$1 trillion (for comparison US GDP is around $20 trillion, US federal budget is around $4 trillion)
Btw, Lambda School twitter is fun to follow. They're doing some impressive stuff.