Now replace that asset with education. Imagine if employers, no matter what business they're in, begin believing that college degrees are incredibly valuable. Careers that traditionally favored college degrees now consider them mandatory and some that never sought a degree suddenly begin seeking college grads. That leads young adults to see a college education as more and more vital, as they want to be competitive in the labor market. So as the asset's cost rises, they take on more and more student loan debt to ensure they get a degree, through ultra-cheap government-guaranteed financing.

Of course, the latter story has not yet come to an ugly end, like the housing bubble did. But some people believe there's an education bubble being inflated.

Wasted Education

There's an obvious rebuttal here: but college is different -- education really is very valuable! Maybe, but just like in any bubble scenario, when you begin stretching reason to justify an asset's value, this claim must be questioned.

Do police officers really need a four-year degree to do their job well? How about plumbers? Certainly, that course in Italian literature won't do either much good. Neither will that anthropology class. Heck, even basic high school writing and math skills will probably be more than they'll ever need on-the-job.

But let's push this analysis further. What about more academic-oriented careers? Don't Wall Street bankers need college-level math? Don't journalists need an immersion in college-level writing? Even here, college probably isn't necessary. Few on Wall Street ever use math deeper than what they learned in high school algebra. And if you have adequate high school writing instruction, then news writing style is easily adopted on-the-job as a journalist.

To be sure, there are some trades where a college-level education is necessary. Engineering comes to mind. Some graduate-level degrees are also likely necessary, in careers like law and medicine. But most college majors have little applicability in the workforce.



College: A Very, Very Expensive Shortcut for Lazy Hiring

So why is there demand for education if it's so unnecessary? Because make no mistake: employers do want smart employees. You don't want to hire someone to whom you have to explain something three times before he or she gets it. Or worse, you don't want to hire someone who will never be able to grasp that thing, due to inferior reasoning ability. As a result, a college degree has become a proxy for determining whether a job applicant has a minimum level of intelligence necessary to perform a job. But with many private college educations exceeding $120,000 these days, that's a pretty expensive means for identifying adequate intelligence.

Unfortunately, this may describe all a college degree has become. There was a time when a high school degree served this purpose. But when high school standards declined and college became more popular, some applicants stood out above others as being more educated and potentially smarter than those with only a high school diploma. If the trend keeps up, however, a time will come when a college degree isn't enough either: masters degrees will be commonly sought, as the value of college degrees fall to be worth as little high school degrees are today, since so many applicants will have them. If this trend keeps up forever, perhaps we'll one day have locksmiths with PhD's.