I really do not like housing bubble to education analogies. There is a big and quite obvious difference between housing and education. You cannot flip a diploma. You can try to monetize it by getting a good job but it is not something you can sell. The way you monetize it is by living your life a certain way.
Education would be a big investment even if it were free. You still have to go to classes. You still have to expend effort. And if you want to get your money's worth out of your education you still have build a career. So you cannot buy 20 diplomas on credit and flip them in a month for profit (as some people used to do with houses). Which means that education is a completely different beast. Every housing analogy is utterly idiotic.
Now that is not to say that there are no problems with education. Of course there are. But they are different type of problems.
Personally I think too many loans are being given out because of the recent proliferation of for profit schools with dubious teaching abilities and academic standards. I think we need some kind of merit based system that will limit the number of loans being given out. The merit based system may test either the students or the schools or both, and only give out loans to those that pass the test. Thus, we can limit the loans to only those that can beneficially use them.
In both situations, people get themselves in deep debt with the expectation that they'll end up with a lot more money than they started. The housing market collapsed because prices fell after everyone realized the majority of the housing market was built on promises that could not be kept. The education market will collapse because available jobs and salary fell (analogous to prices in the housing market, and largely because of the housing market collapse) and the promises made to young people that they will be able to build a career cannot be kept for every student graduating today. I do not like the analogy either, because it ends with the country hurting hard, very hard.
It's easy to dismiss such analogies as idiotic when you assume that all you need to do is "live your life a certain way" for the diploma to pay off, and when you want to ignore the eventuality that the education market collapse will cause tremendous damage. Both the housing and education market collapses depend on promises made to homeowner and students that cannot possibly be kept for everyone involved.
Of course, limiting loans based on merit is a great solution, but it's not a politically palatable one. On one hand, politicians love to say that everyone will get an education and it will be paid for no matter what. On the other hand, what happens when students from well-off community meet merit-based standards for loans while students from poor communities don't? Banks and universities will be slammed for practicing discrimination. Sort of like how banks were slammed for discrimination when they were lending less to minorities and accused of discrimination based on race, when in reality they were limiting loans only to those who could pay for them, but banks were ultimately forced to give out subprime loans through legislation and we ended up with the housing market collapse.
Common sense solutions are not adopted when you have politicians involved who only appeal to the emotion of voters and seduce voters with promises of cheap housing and education, and slam politicians who are fiscally responsible and want to limit mortgages and student loans to those who have the ability to pay for them.
Education would be a big investment even if it were free. You still have to go to classes. You still have to expend effort. And if you want to get your money's worth out of your education you still have build a career. So you cannot buy 20 diplomas on credit and flip them in a month for profit (as some people used to do with houses). Which means that education is a completely different beast. Every housing analogy is utterly idiotic.
Now that is not to say that there are no problems with education. Of course there are. But they are different type of problems.
Personally I think too many loans are being given out because of the recent proliferation of for profit schools with dubious teaching abilities and academic standards. I think we need some kind of merit based system that will limit the number of loans being given out. The merit based system may test either the students or the schools or both, and only give out loans to those that pass the test. Thus, we can limit the loans to only those that can beneficially use them.