The cost of a four-year university education continues to climb while the earning potential of many popular degrees is declining. This has created an education bubble in which “the cost of higher education has far outpaced its actual value.”
The High Cost of the Bubble
This poor return on investment is leaving many university graduates saddled with debt combined with poor prospects for paying it off through profitable employment. In the U.S. alone, total student loan debt exceeds $1.3 trillion, a figure ten times higher than just a decade ago. As it continues to rise, the rate of loan delinquency, now at 11.1%, is expected to climb too. These numbers mirror what’s happening in many other industrialized countries where higher education is not heavily subsidized by the government.
What Financial Experts Say About the Education Bubble
The dynamics producing this bubble are unsustainable, as a cadre of experts point out:
- “Making matters worse, the return on investment in [university] education is falling.” – Allianz chief economic adviser Mohamed A. El-Erian
- “Historically, there’s been a tremendous amount of weight that’s been given to four-year university degrees and not nearly enough weight…given to vocational training facilities and vocational training certifications.” – LinkedIn CEO Jeff Weiner
- “There is no way that loans can continue at that rate since, if they did, eventually everyone would be spending every dime they make on debt service to pay the loans.”—Ryan McMaken of the Mises Institute of Austrian economics
Tips for Staying Out of the Bubble
You don’t have to get trapped in the bubble with high student loan debt, few marketable skills and poor prospects for a good-paying career. Instead, you have the option to avoid it by acquiring skills and experience employers are looking for without going deep into debt in the process.
- Choose Education that Meets the Demand for Useful Skills
“Find a need and fill it” is a classic principle for starting a business. The adage translates very well to the pursuit of a career.
Demand is down for communications, theatre arts, psychology, sociology, liberal arts, fine arts and similar fields of study. Note that none of those degrees have any tangible skill directly associated with them. Employers recognize that a person with one of these degrees must be put through significant additional training to be a useful employee, and that is costly in time and money.
Businesses in all sectors are hiring employees that can be an asset to the company from day one because they have education and/or training with demonstrable skills attached. The old interview question was, “What do you know?” The new question is, “What can you do?”
- Obtain Certified Skills
What does a fine arts degree tell a school about a prospective art teacher? Very little, in truth. However, their art portfolio says, “Look what I can do!” A certificate in refrigeration, IT, computer repair, software, x-ray or a thousand other practical skills shouts, “Look what I can do!” The cost of certification is small compared with the cost of university education, and the value can be immediate. That combination produces outstanding value for the money and time spent.
Note again what Jeff Weiner said in the quote above about the value of certification. As the story on Recode went on to say, “Weiner…believes that specific skills, not diplomas, need to be valued more in today’s workforce.” This is pretty much self-evident in today’s job market where people simply aren’t that impressed with your grades anymore. However, having a certificate in a highly demanded skill (anything from simple plumbing to Salesforce) is a whole other story.
- Acquire Skills by Giving Back
Volunteering is a wonderful way to:
- Learn from those with experience
- Gain new skills
- Make networking contacts
- Build your resume
- Impress employers with your ambition
Ask business owners and personnel managers in your preferred industry if they have or would create an unpaid position for you for eight to 20 hours per week, depending on the time you have available. Explain why you’d like to volunteer and show your eagerness to be productive. In short, make them an offer they can’t refuse, and you’ll likely land a volunteer gig with tremendous ROI.
- Join Professional Associations
Rubbing shoulders with those already working in your field of choice is a good way to find mentors and to make contacts that will prove useful in your career.
- Attend Seminars, Workshops and Job Fairs
These are opportunities to learn, grow your skills, make contacts and sell others on your abilities. Be outgoing; initiate contacts. Take along business cards and copies of your resume.
It might be at a seminar or workshop that you find a business owner who would jump at your offer to volunteer or who might be looking to hire someone with just your skills and experiences.
Getting Value from Education and Experience
We increasingly live in a value-driven world as companies double down on cost cutting and on getting maximum return on their hiring investment. In short, employers want to hire assets not liabilities. An asset is an employee who is productive immediately. These tips will help you become that employee and will greatly enhance your prospects for starting a career that is fulfilling financially, professionally and personally.