The higher education bubble personified

The higher education bubble personified.

From Friday's New York Times, Again, Debt Disqualifies Applicant From the Bar. Excerpt:

[A] panel of five New York judges [denied] one would-be lawyer, Robert Bowman, admission to the bar because his debt approached half a million dollars.

“His application demonstrates a course of action amounting to neglect of financial responsibilities with respect to the student loans he has accumulated since 1983,” the judges wrote in a decision issued late last week. They went on to criticize his “dealing with the lenders.”

The decision, which comes as students borrow ever larger sums to cover the cost of higher education, blocked Mr. Bowman’s effort to have his bar application reconsidered after it was initially denied earlier this year. His long struggle to enter the legal profession was the subject of an article in The New York Times in July.

Without practicing law, Mr. Bowman said it would be difficult to earn enough to repay his debts which, because of fees, penalties and interest, were growing by about $10,000 monthly.

“This has destroyed my life,” Mr. Bowman said. “Everything I’ve worked for, every effort, every fight that I’ve taken to make this progress, has been for nothing.”

The photo above, of Mr. Bowman posing alongside his expensive wall decorations, accompanied the previous article about him in the New York Times and was credited to Suzy Allman.

The Higher Education Bubble: Not Bursting Yet

In previous posts (e.g., this one, this one, etc.) I've questioned the benefits of higher education and speculated that it might be the next debt-fueled sector to see its bubble burst. Not just yet, apparently, according to this front page article in today's Financial Times. Excerpt:

Americans are going back to school, choosing to sit out the worst employment market for 25 years in colleges, universities and business schools in the hope of better job prospects when times improve.

A spike in higher education enrollments has shown up this week in earnings announcements from companies in the otherwise hard-hit media sector, whose education divisions have far outperformed their better-known news brands.

On Friday, the Washington Post disclosed a further $89m in quarterly losses from its flagship newspaper and a $5m loss from Newsweek, its news magazine. By contrast, its Kaplan higher education division saw profits up 74 per cent to more than $70m.

The article goes on to give other examples of media companies' education divisions cleaning up, including the example of Pearson (the parent company of The Financial Times) which runs the NY Institute of Finance, among other educational ventures.

The Top Earning Degrees

A CNN Money article today lists the most lucrative undergraduate degrees (see the graphic above) and notes that, unsurprisingly, they all require math skills. A couple of thoughts on this. First, take a look at the first and third highest-paying degrees (petroleum and mining engineering, respectively). I've argued in the past for the economic benefits of facilitating more domestic natural resources production (e.g., here and here). One of the benefits I've noted is that natural resources extraction tends to create a lot of high-paying blue collar jobs. As this CNN article notes, it also creates high-paying professional jobs, which is another benefit.

Consider the benefits to California, for example, if it dropped its opposition to expanding offshore drilling. For one thing, it might improve the state's environment by reducing natural oil seepage. It would also generate much-needed royalty revenue for the state (in fact, the state could capture that revenue up front by issuing revenue bonds backed by those future royalty income streams). In addition, how many jobs would it create for petroleum engineers and oil rig workers? Couldn't California use the additional net tax payers and potential home buyers these workers would represent?

Another thought: given that the fifteen most lucrative college majors require math aptitude, does it make sense that the SAT has reduced the relative weight of its math section in the total SAT score from one half to one third (by adding an equal-weighed essay section to the math and verbal sections)?

"Get mad, you sons of bitches!"

The last post (on Joshua Persky) reminded me of another unusual job searching tack that generated national publicity, Robin Stearns's website Hire My Husband. That's Robin, pictured above in front of the Golden Gate bridge. From her site:

This site was born out of frustration with the job market. My husband graduated in 2008 with an MBA from Georgetown. After Mike finished his MBA, we moved back to California to be closer to family. We both had high expectations for his career and our life after business school.

That was their first mistake, unfortunately. Georgetown apparently has a good business school -- a cursory glance at U.S. News & World Report's list of top programs has it ranked #20 (the FT ranks it 40^th globally) -- but MBA degrees from all but the most prestigious schools have never been a guarantee of financial success, even in better times than these, and Georgetown's business school isn't one of the most prestigious schools. Back to Robin, from her site:

However, those expectations quickly changed as we were faced with this horrible economy. After almost ten months of watching my wonderful husband work tirelessly to find a job, I decided to take matters into my own hands and help him stand out in a sea of unemployed.

Take a look around my site and get to know Mike. Learn more about him on the About Mike and Meet Mike pages. If you have any questions or would like the opportunity to meet my husband, you can email me on the Contact Mike page. Please pass this website along to friends, family, colleagues, and those who are hiring. I know each visitor to this site will think my husband is as great as I do.

That's sweet, Robin, but not realistic. You love your husband. The men you hope will hire him don't. Our opinions about those we love are rarely objective. That's completely natural, but it's naive to expect others to share our opinions about our loved ones. Here's a short video clip of Robin's husband Mike, from Robin's website:



I wish Robin and Mike the best of luck, but here are a few observations:

- What was the point of Mike's video, exactly? Put yourself in the shoes of a business owner. What about that nine second video clip would make you want to hire Mike Stearns? Nothing I can think of. Here's your shot Mike: a business owner clicks on that video. Does he see a confident elevator speech from an aggressive job seeker? Not at all. There's something missing here, Mike. On his blog The Nearby Pen, former commenter Daniel Wahl offers "art antidotes" -- an Edward Guest poem, or a short clip from the film "Amelie" to stir readers to action. Here's my "art antidote" for you, Mike Stearns -- Alec Baldwin's showstopper in "Glengary Glenn Ross":



If you watched the clip, now you know from whence the title of this post came. More observations:

- Is the novelty and publicity factor of your wife creating this sort of site for you outweighed by the negative implications of your wife's advocacy? Again, put yourself in the shoes of a business owner -- what would you think? You might not have heard about Mike Stearns otherwise, but now that you've heard of him, thanks to his wife's unorthodox efforts, you might wonder whether his wife isn't the one with more creativity and initiative.

- National publicity seems to be of limited utility in getting an unemployed person hired. Persky may have gotten a job through his efforts, but it was short-lived.

- National publicity might be of more use in other ways. Persky seems to have made more of an effort to explore this, having written a couple of quickie e-books which he sells on his site, and using his site to generate leads for speaking and other engagements. The Stearnses haven't done this; they have nothing to sell on their site. They should remedy that. Even if they don't have a product or service of their own to offer, the web is full of people who do, many of whom, I'm sure, would be willing to partner with the Stearnses in exchange for the added traffic.

Infinite Corridor

In the previous post on the Sonic situation in Northern NJ, I mentioned the late author David Foster Wallace, who was known for his well-reviewed (but, I suspect, infrequently-read) door stopper Infinite Jest, and for his copious use of footnotes in his writing¹. Somewhat coincidentally, yesterday I received an e-mail from Joshua Persky, the subject of this post from last December, "Infinite Connections or Infinite Jest?".

Persky, you may recall, was the MIT alumnus and former investment banker who gained national attention for his unorthodox job searching method: handing out resumes while wearing a sandwich board in Midtown Manhattan. In that post last December, I noted that Persky had found a new job with an accounting firm, but Persky informs me that he left that job a couple of months ago, and is currently open to job or business opportunities in "writing, inspirational speaking, career counseling, valuations and business development consulting". If you are aware of any such opportunities, and would like to contact him, below is Mr. Persky's website and contact info:

917 650 8700

joshua.persky@sloan.mit.edu

www.JoshuaPersky.com

In that post last December, I also questioned the value of MIT's alumni network (the school's alumni organization is called "Infinite Connections"; hence the post title) given the challenges of Mr. Persky's job search. In our e-mail correspondence, Persky seemed to agree, writing,

MIT's alumni network has not been as helpful as it could be. Unfortunately, although the education is wonderful and rigorous, the school lacks in social connectivity. It's pretty much up to each student to find his/her own way. I imagine that the other ivy league^[2] schools are a bit better at networking. However, MIT is trying and encourages alumni to be in touch and mentor each other.

Persky also was able to shed some light on the origin of the name of MIT's alumni organization, mentioning that the main hallway at MIT is called the "Infinite Corridor".


¹The Onion once hilariously mocked Wallace's tendency to write door stoppers and his use of footnotes, "Girlfriend Stops Reading David Foster Wallace Breakup Letter At Page 20". Excerpt:

BLOOMINGTON, IL—Claire Thompson, author David Foster Wallace's girlfriend of two years, stopped reading his 67-page breakup letter at page 20, she admitted Monday.

"It was pretty good, I guess, but I just couldn't get all the way through," said Thompson, 32, who was given the seven-chapter, heavily footnoted "Dear John" missive on Feb. 3. "I always meant to pick it up again, but then I got busy and, oh, I don't know. He's talented, but his letters can sometimes get a little self-indulgent."

^[2]Although MIT is more prestigious than some Ivy League universities, and is located close to Harvard geographically, it is actually not part of the Ivy League.

What is Walter Kirn Whining About?

Cue the world's smallest violin for Walter Kirn while you read these excerpts from his column in today's New York Times Magazine ("Life, Liberty and the Pursuit of Aptitude"):

When Sonia Sotomayor sits down next week before the Senate Judiciary Committee to answer questions about her qualifications to serve on the U.S. Supreme Court, thoughtful observers may do well to reflect that, by certain measures, she shouldn’t be there. That’s because decades ago, in her late teens, Sotomayor faced another important test — the SAT, the traditional route to top-tier placement in our national meritocracy — on which, by her own admission, she didn’t do well. What exactly her test scores were she hasn’t said, but she has revealed that they “were not comparable to that of my colleagues” at Princeton University, where she was admitted as a self-styled “affirmative-action baby.” The fact that¹ she later graduated from Princeton with highest academic honors and went on to reach the upper echelons of her chosen career, the law, speaks well of her intellect, her drive and the discernment of Princeton’s admissions office, but it doesn’t speak well, necessarily, of the conventional, test-based notions of merit that might well have stopped her, had they been strictly applied, before she even got started.

As a product of the same education system that molded Sotomayor (and as a fellow Princeton graduate who took his degree seven years after she did), I would like to think that I know a tiny something about what she and others experienced while trying to scale, percentile by percentile, the ladder of academic and social distinction. I call this group of contemporary strivers — a group that has largely supplanted the moneyed gentry as our country’s governing class — the “Aptocrats,” after the primary trait that we were tested for and which we sought to develop in ourselves as a means of passing those tests. As defined by the institutions responsible for spotting and training America’s brightest youth, this “aptitude” is a curious quality. It doesn’t reflect the knowledge in your head, let alone the wisdom in your soul, but some quotient of promise and raw mental agility thought to be crucial to academic success and, by extension, success in general. All of this makes for a self-fulfilling prophecy. The more aptitude that a young person displays, the more likely it is that she or he will have a chance to win the golden tickets — fine diplomas, elite appointments and so on — that permit you to lead the aptocratic establishment and set the terms by which it operates.

[...]

Only when I entered Princeton did I start to have doubts about the system that got me there. Some took the form of doubts about myself. My impressive performance on the SATs (whose supposed biases I was blind to, perhaps because I was a middle-class Caucasian and they operated in my favor) didn’t seem to count for much now that I found myself having to absorb volumes upon volumes of information rather than get the right answers on multiple-choice tests. Yes, I had a large vocabulary, and yes, I knew how to deploy it to good effect in classroom discussions and during professors’ office hours, but suddenly my prowess felt slightly fraudulent.

While I dished out the high-level baloney that my aptocratic mind excelled at, I looked around at the students who didn’t resemble me in terms of skin color and background and wondered how they were staying afloat at all. As a child of the rural Midwest, I felt decidedly out of place at Princeton among the debonair Eastern prep-school graduates who still, in the early 1980s (just a decade or so after the campus went co-ed) seemed to embody its privileged heritage, so I could scarcely imagine the alienation of these other yet more marginalized students.

[...]

What’s more, the poorer and browner of my classmates — particularly the women — seemed to study twice as hard as I did, clocking endless hours in the library and forgoing weekend parties for late-night cram sessions. Maybe their SAT scores were lower than mine, but they ranked higher than I did on the effort scale. And on the bravery scale too.

[...]

The orthodox combination of high-school transcripts and SAT scores that allowed me into Princeton wasn’t, I found out after I was admitted, a guarantee of my ability to make the most of its academic offerings. Put simply, I wasted a lot of time there, I engaged in a lot of shoddy, pretentious dodges, and maybe I shouldn’t have been there in the first place. Perhaps someone else deserved my spot — someone whose talents weren’t so easily indexed but might have been another Sotomayor.

That's a nice trick Kirn attempts there, whining about the alleged unfairness of an education system that he benefited from while continuing to cash in on it. Of course, no one put a gun to Kirn's head and forced him to do well on the SAT, or to attend Princeton. He could have easily gone to a state school in the Midwest and left a spot open for another candidate. That's water over the dam now, but if Kirn really wants to eat his own dog food today, I'd be happy to suggest some ways for him to assuage his guilt (assuming he really feels any) for his success.

For starters, he could donate all the proceeds from his new book about this subject, “Lost in the Meritocracy: The Undereducation of an Overachiever.”, to a scholarship fund at Princeton for prospective Latina students whose talents might not be "so easily indexed". Kirn could also give up his slot as a frequent contributor to the New York Times, and recommend it be given to a harder-working, braver, minority journalist. With Vibe Magazine shutting down, there are surely a number African American journalists now out of work. If these journalists are anything like the "poorer and browner" classmates Kirn remembers from Princeton, they are braver and twice as hard-working as Kirn. It's too late for Kirn to give up his Princeton spot to one of them, but it's not too late for him to give up his New York Times gig to one of them. What do you say, Walter?

¹Does anyone read Strunk & White anymore? The egregious phrase "the fact that" could easily have been replaced with a simple "That" in that sentence.

The Atlantic's Fifteen Ideas to Fix the World

The July/August Atlantic magazine offers this modest collection of brief essays, on ideas that range from reasonable to stupid, "15 Ways to Fix the World". One of the reasonable ones comes from Andrew Bacevich¹, "Give Up on Democracy in Afghanistan". Here's the key excerpt:

[T]he attempt to create a cohesive nation-state governed from Kabul (something that has never existed in modern times) is a fool’s errand. Better to acknowledge and build on the Afghan tradition of decentralized governance. Let tribal chiefs rule: just provide them with incentives to keep jihadists out. Where incentives don’t work, punitive action—U.S. air strikes in neighboring Pakistan provide an illustrative example—can serve as a backup. Denying terrorists sanctuary in Afghanistan does not require pacification—and leaving Afghans to manage their own affairs as they always have will reduce internal instability, while freeing up the resources to allow our own country to tackle other challenges more pressing than the quixotic quest to modernize Afghanistan.

A couple of the stupider ideas come from Thomas Toch, co-director of a think tank called Education Sector, and Kerry Howley, a contributing editor at the libertarian magazine Reason. In Toch's essay, "Tell the Truth About Colleges", he offers these revelations,

Tuition has been skyrocketing for years, with little evidence that education has improved. Universities typically favor research and publishing over teaching. And influential college rankings like the one published by U.S. News & World Report measure mostly wealth and status (alumni giving rates, school reputation, incoming students’ SAT scores); they reveal next to nothing about what students learn.

Shocking, no? Toch must be wracking his brain wondering why so many students are desperate to apply to elite schools such as Harvard, which favor research and publishing over teaching. Apparently, no one has explained to Toch the signaling value of a diploma from an elite school.

On to Kerry's howler, "Welcome Guest Workers",

Say you’re a Bangladeshi taxi driver struggling to survive on your daily wage in Dhaka. A couple of nongovernmental organizations have offered you help, but you can pick only one form of assistance: access to microcredit^[2], or a chance to work in the United States. What’s the better deal? According to a recent analysis by the Center for Global Development, microcredit loans might net you an extra $700 over the course of a lifetime. Working stateside, you’re likely to make the same amount in a month.

Howley goes on to describe a grand plan by Harvard economist Lant Pritchett to achieve "economic justice"³ by having every rich country "hand out enough work visas to increase its labor force by 3 percent" so that Bangladeshi taxi drivers can work as taxi drivers and such in developed countries such as the United States. It's tough to decide where to begin in responding to this one. The first thought that comes to mind is how politically tone-deaf Howley is to bring this plan up when the unemployment rate here is the highest it's been in a quarter century (Howley at least admits in her essay that the timing for implementing this plan would be a tad inauspicious now). That political tone-deafness must be common among libertarians, which may help explain why they never seem to win any elections. My next thought is to wonder whether Howley has ever considered why countries such as Bangladesh are poor in the first place. Is it really because not enough of their citizens have gotten guest worker visas to drive taxis in the U.S.? Has there ever been a country that pulled itself up to affluence by cashing in on the remittances of its citizens working as guest workers in rich countries?

If Kerry Howley cares about Bangladesh, she ought to donate some of her own money to WaterAid, the charity mentioned in this Financial Times article from last year, "How toilets transformed a Bangladeshi village". An excerpt from this article will demonstrate, I think, that Bangladesh has bigger fish to fry before worrying about getting its taxi drivers a temporary raise overseas:

It was 16 days since the chairman of the local council had been murdered by militants who swept in under the cover of a travelling circus to erase one of their political enemies. Now, as the Professor sat in his dried-mud dining area, eating a breakfast of last night’s rice, he was told that a group of strangers had arrived.

He headed to Mosmoil’s sole strip of asphalt, a road bisecting the riot of vegetation that has otherwise recolonised the village’s 63 iron-roofed homes in a tangle of crawling stalks and fat leaves.

The strangers had arrived on a motorcycle rickshaw. They carried documents and pens. They did not wear coloured lungis – the dress of men in rural Bangladesh – but the dark trousers of city dwellers.

“I suspected that because the murder had taken place, they were either government spies or members of a terrorist group,” the Professor recalls. Instead, they pursued an unexpected line of questioning. “Where do you defecate?” they asked him.

“It was the first time I’d heard such a thing,” he says. Overcoming his surprise at the question, he forgot his initial fears, allowed his curiosity to be tweaked, and gave an honest answer.

He told them that sometimes he used a “hanging toilet”, a metre-high bamboo structure built on the banks of a pond, where users climbed up a rickety ladder to a squat hole that was shielded imperfectly from view by a sack cloth cubicle. Other times he ventured into the paddy fields and betel groves that surround the villages of west Bangladesh and squatted, preferably out of the sight of others, over the soil.

“Do you know that you eat this goo?” one of the strangers asked, using a Bengali word for human waste, which spans the English spectrum of social acceptability from the scientific right through to “shit”. “If it rains now, it will wash some of the goo into the pond,” the stranger continued. “Then you bathe there, you wash your dishes there, and you wash your food with water from the pond, so you are eating it.”

The Professor was stunned. “That was the first time we realised we were eating our own goo and I felt something very strange inside,” he recalls. “Not hatred but disgust.”

That article goes on to explain that the "Professor" is, as you may have already suspected, not a real professor; he earned the honorific "Professor Goo" (i.e., "Professor Shit") by becoming an evangelist for the use of the composting toilets introduced by the NGO WaterAid. A nation that shits where it eats has some remedial work to do before it can waste time worrying about any of Kerry Howley's or Lant Pritchett's grand plans. Would Bangladesh be better off if Professor Goo were driving in a taxi in New York instead of teaching his countrymen how to safely and profitably⁴ dispose of their waste?

¹Bacevich, a professor at Boston University, former Army officer, and Vietnam War veteran, had a son who was an Army officer as well. His son was killed in action in Iraq two years ago. Bacevich, who opposed the war in Iraq, wrote this Washington Post op/ed about it at the time, "I Lost My Son to a War I Oppose. We Were Both Doing Our Duty."

^[2]This is more commonly called microfinance. We've blogged about its limitations in the past, e.g., here.

³I've long been skeptical of any phrase in which "justice" is modified by an adjective. "Justice" should stand alone. Once you put an adjective such as "economic" or "social" in front of it, you're really talking about a form of redistribution. If justice demanded redistribution, there would be no need to call for "economic justice"; it would be implicit in the term "justice". Since it isn't, it's up to the advocate of redistribution to demonstrate that redistribution is just. Saying it doesn't make it so.

⁴The article notes that the compost derived from human waste increases the villagers' vegetable yields, earning them more money at the market.

The "Lipstick Economy"

Dr. Mark Perry has blogged about this before, but since I haven't mentioned it here before, it's worth noting his most recent post on the topic, from his Carpe Diem blog on Sunday, "Happy Father's Day; Welcome The "Lipstick Economy" And Major Jobless Rate and Degree Gaps". Below are the charts Dr. Perry used to illustrate the gender gaps in jobless rates and college degrees, followed by a quote from him.




Dr. Perry speculating on the implications of these trends:

On this Father's Day, we should maybe recognize that we are witnessing what might possibly be a permanent structural change in the labor market and higher education, which will have profound and lasting implications for family roles, career choices, divorce settlements and child custody decisions by family courts, public policy, etc.

For example, just thinking out loud here, would it be possible in the future that a college-educated, professional woman working full-time would pay alimony to her unemployed ex-husband who hasn't found employment since the Great Mancession of 2008, and he might also get primary custody of the children and be paid child support?

The photo above, of the Lipstick Building in Midtown Manhattan, comes from Laura's NYC Tales. Incidentally, this is the building in which Bernie Madoff's ponzi operation was headquartered.

How to Borrow Money and Network at the Same Time

The Styles section of Sunday's New York Times featured an article about Unithrive, an organization founded by the three Harvard alumni pictured above to connect students seeking small loans with alumni lenders, "I’m Going to Harvard. Will You Sponsor Me?". The maximum dollar amount of the loans is fairly small: $2,000 -- an amount a college student could accumulate with a part-time job, or put on his credit card, if need be. Money isn't the main issue here; bonding with alumni is. As the article notes,

The appeal of direct donor-to-student loans, Unithrive’s founders say, is that alumni will have a personal connection to current students: those requesting loans list hometowns, majors and classes they have taken. Alumni can lend to students with whom they feel a bond. They are promised updates three times a year from students they support — not unlike the letters that sponsors of poor children in Africa receive through the Christian Children’s Fund.

This is a clever idea, based on an old, counter-intuitive principal of human nature: the quickest way to make someone your friend is not to do him a favor, but to ask him to do a favor for you. That this was the brainchild of Harvard alumni isn't surprising considering that Harvard seems to have the most effective alumni network of any elite school. Perhaps that's because it attracts students who are savvier and more aggressive about networking than those who attend other schools. Other elite schools may have similar academic prestige (e.g., MIT) or a similar Ivy League pedigree (e.g., Penn), but their alumni don't seem to have a network in the same league. If they did, then, presumably, an MIT alumnus wouldn't have had to resort to wearing a sandwich board in Midtown Manhattan to get a new job, and Atlantic blogger and Penn (and University of Chicago GSB) alumna Megan McCardle wouldn't have recently posted her latest lamentation about how she couldn't afford to go out with her friends while she was unemployed after earning her MBA.

As smart as this idea is, Unithrive co-founder Joshua Kushner, whom the article describes as "a scion of a wealthy real estate family", may get some heat from some New York Times letter writers for his apparent disdain for the sort of jobs many college students work part time for extra cash:

Mr. Kushner noted that the college still asks scholarship students to contribute a few thousand dollars a year from summer and school-term jobs.

“I have friends who would spend 10 hours a week when they are not in class working at a coffee shop or in the dorms,” said Mr. Kushner, 24, referring to time that he considered wasteful. “I think the most special thing about college is not just what you do in class, but what you do out of class.”

I doubt Mr. Kushner will be troubled by any opprobrium from lumpen letter-writers though, and he may be right not to be troubled by it: working a mundane part-time job might teach a college student humility, but what Harvard student needs humility when he can get the money interest free for 5 years and build a bond with potential alumni mentors at the same time?

The image above, of Unithrive founders Nimay Mehta, left, Joshua Kushner and Tanuj Parikh, accompanied the article and was credited to Michael Falco.

Better Late than Never

In the Chronicle of Higher Education, Joseph Cronin and Howard Horton ask, "Will Higher Education Be the Next Bubble to Burst?" (Hat Tip: Dr. Paul Price). Readers of this blog may recall that we raised this question in a post on October 1^st of last year, and later noted two subsequent Forbes articles on this question.

Intelligence, Education, and Earning Power

In a couple of recent posts (e.g., "Lessons from Brooklyn's New Economy" and "An Atypical Perspective on Health Care in the NY Times") we touched on the politics and economics of education. An article in the business section of Sunday's New York Times, a somewhat fawning profile of Google executive Marissa Mayer (pictured above) included a brief, tangential bit of candor on the subject ("Putting a Bolder Face on Google"). The main responsibility of Ms. Mayer at Google is controlling the "look and feel" of the company's search engine, but the article notes that she also has personnel responsibilities:

At a recent personnel meeting, she homes in on grade-point averages and SAT scores to narrow a list of candidates, many having graduated from Ivy League schools, whom she wanted to meet as part of a program to foster in-house talent. In essence, math is used to solve a human problem: How do you predict whether an employee has the potential for success?

How indeed. Why would Ms. Mayer, who holds a masters degree in computer science from Stanford, be interested in the SAT scores of college graduates? Presumably, because SAT scores are a more objective measure of intelligence than a college degree or grade point average, since the later two can be distorted by admissions preferences and grade inflation. This suggests some problems with President Obama's "college for all" initiative. Some advocates of education as tool for economic advancement seem to confuse the correlation of education and high earning potential with causation. Many high-paying employers (such as Google) demand highly-intelligent knowledge workers. The law since Griggs v. Duke Power restricts the use of broad aptitude tests, so employers often rely on other indicators of intelligence, such as SAT scores, or diplomas from elite schools (that generally require high SAT scores).

What would change if college degrees became as common as high school diplomas? Presumably, the use of college diplomas as a proxy for intelligence would decline, and employers would look more closely at SAT scores, or demand a higher degree to replace the signaling function of a college degree (e.g., jobs that now require bachelors degrees might require masters degrees). That would be a boon for the education industry, but it's unclear how it would help the average American worker increase his earnings potential.

I suspect that the focus among elites in government and punditry on the potential of higher education as a ladder to economic advancement is partly the result of most elites having gone to exclusive private high schools, where virtually all of their classmates were relatively bright and college bound. Had more elites gone to public high schools, where not every student was on a track to college, there might be more skepticism in public policy discussions about the broader utility of higher education.

The photo above accompanied the NY Times article.

Update: for the benefit of new readers of this post, I am now blogging at Steam Catapult and Shadow Stocks.

"The Great College Hoax"

In a post on October 1st ("The Next Bubble to Burst in the Deleveraging Process: Higher Education?") I wrote,

Like housing, spending on higher education has been fueled by cheap credit facilitated by a government sponsored enterprise (Sallie Mae, in the case of higher ed). As with housing (up until the burst of that bubble), all this cheap credit has led to higher prices (interestingly, politicians who call for increased spending on higher ed every election year never seem to consider that this increased spending may have helped drive up tuition costs). Now, the common sense observation that, for many, college is a waste of money and time has started to seep into the mainstream.

[...]

How long until a clear-eyed consideration of the return on investment (of time and money) of college educations becomes part of the conventional wisdom?

Later that month, as I noted in another post ("The Coming College Bubble"), Forbes published an article with a similar thesis. The current issue of Forbes features another article on the topic, "The Great College Hoax", by Kathy Kristoff. Below is an excerpt from it.

Higher education can be a financial disaster. Especially with the return on degrees down and student loan sharks on the prowl.

As steadily as ivy creeps up the walls of its well-groomed campuses, the education industrial complex has cultivated the image of college as a sure-fire path to a life of social and economic privilege.

Joel Kellum says he's living proof that the claim is a lie. A 40-year-old Los Angeles resident, Kellum did everything he was supposed to do to get ahead in life. He worked hard as a high schooler, got into the University of Virginia and graduated with a bachelor's degree in history.

Accepted into the California Western School of Law, a private San Diego institution, Kellum couldn't swing the $36,000 in annual tuition with financial aid and part-time work. So he did what friends and professors said was the smart move and took out $60,000 in student loans.

Kellum's law school sweetheart, Jennifer Coultas, did much the same. By the time they graduated in 1995, the couple was $194,000 in debt. They eventually married and each landed a six-figure job. Yet even with Kellum moonlighting, they had to scrounge to come up with $145,000 in loan payments. With interest accruing at up to 12% a year, that whittled away only $21,000 in principal. Their remaining bill: $173,000 and counting.

Kellum and Coultas divorced last year. Each cites their struggle with law school debt as a major source of stress on their marriage.

The clever picture above, by Alex Nabaum, is from the article.

Infinite Connections or Infinite Jest?

Earlier this week, the New York Times reported that laid off investment banker Joshua Persky (the fellow on the right in the photo above) landed a new job several months after becoming famous for handing out resumes in Midtown Manhattan while wearing a sandwich board advertising his job hunt ("After Unusual Hunt, Ex-Banker Lands a Job"). You probably already know that Mr. Persky has landed a new job, since, as Mr. Persky notes on his blog today, his story has been picked up by all sorts of media outlets, including MSNBC, the front page of Yahoo!, etc.

Persky's successful job hunt is an inspiring story of persistence and originality, and that seems to be how most of the media have covered it, but as a cynic, it raises a question for me: What does it say about MIT's alumni network (here is its "Infinite Connections" website) or the prestige of an MIT degree that an MIT alumnus had to resort to such a stunt to find a job? Presumably, one can get an education of similar high-quality at a somewhat less prestigious (and less expensive) school; if the added prestige and connections of an MIT degree are of such little value that an alumnus needs to go to such extraordinary lengths to get a new job, than why pay more to go to MIT?

"The Coming College Bubble?"

On October 1^st I speculated that higher education could be the next bubble to burst in the deleveraging process ("The Next Bubble to Burst in the Deleveraging Process: Higher Education?").

I just came across it today, but on October 23^rd, Forbes published an article with a similar thesis, "The Coming College Bubble?".