Thursday, September 1, 2011

Education Bubble Going Critical

This post is an update to a post on the education bubble that was put up several months ago, when only a small number of people and groups had awareness of the bubble. We are now seeing evidence that the education bubble is going critical -- either the bubble has burst or it is on the verge of doing so.

Exactly as I predicted several months ago, the collapsing job market played a central role in causing the education bubble to burst. With a collapsing job market, it was only a matter of time before a sufficiently large constituent of people start rethinking whether it is actually worth taking on a large amount of student loan debt.

Given that the collapse of the job market has barely started, it is very likely that the education bubble will unravel in the same way that credit bubble has -- slowly at first, then unraveling with increasing momentum over time. We are likely to see massive damage inflicted on the education system by 2016 as a direct result of the bursting of the education bubble. The nation's education system may not be recognizable in 2021 as most colleges and universities are expected to close their doors forever. Many universities and colleges will be abandoned in 2021, looking a lot like the city scenes from the movie I Am Legend.

The education bubble is falling apart from the top down, as Ivy League and law schools are getting hit the hardest early on, with attendance falling in law schools.

It isn't just the bursting of the education bubble that is significant. We are also seeing an epidemic of scandals associated with the education system. The most significant of the scandals is the Atlanta Public School cheating scandal that broke out in July 2011. Bear markets are when the skeletons come out of the closet as the mainstream media is more likely to look for scandals during that time. It isn't just public schools that have been involved in scandals, but a large number of charter schools have been involved in scandals as well. There is a large list of charter school scandals titled "Charter School Scandals".

The collapsing job market has also created "buyer's remorse" as some college and university graduates have been turning to litigation against their alma maters. Many of such people are those who graduated with a massive amount of student loan debt and unable to land a job.

The education bubble is going critical. Over the next 10 years, the education bubble will implode with increasing momentum, with devastating consequences for those whose livelihoods are tied to the education industry. The education bubble is falling apart from the top down. Ivy league and law schools are being affected now. Expect the implosion of the education bubble to affect public universities and colleges by 2013. By the time the implosion of the education bubble is completed in 2021, even K - 12 schools will have been dramatically affected. Many schools, colleges, and universities will close their doors forever.

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