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What do tulip bulbs and U.S. colleges have in common? More than you may think

What do tulips in 1630s Holland and the U.S. higher education system have in common? Ask some economists and they'll tell you they both represent speculative financial bubbles.

The tulip bulb craze that overtook Holland in 1636 and popped the next year is regarded as the first recorded instance of a financial bubble, with bulb prices skyrocketing and subsequently plummeting. While it is basically impossible to predict a speculative bubble with absolute certainty, there are portents brewing that may indicate U.S. universities are in the midst of such an economic phenomenon.

U.S. private four-year colleges have hiked tuition rates for the past decade, with many schools charging more than $50,000 per academic year . Among other consequences, this has catapulted U.S. student loan debt ahead of credit card debt, with this year's graduating class of college seniors holding the record for the biggest average debt thus far. In fact, the total amount of currently held student loan debt is expected to hit more than $1 trillion by the end of this year.

What, though, is the return on investment? Ask a member of the class of 2011 and he will likely tell you not much. Though the labor market has improved since 2009, college graduates are finding it exceedingly difficult to get jobs. Recent graduates are moving back home with their parents to save money as they pay back their substantial student loans and when they are offered jobs, they usually have to settle for low-paying positions. Studies have shown that starting at a lower salary often translates into lower total earnings over the course of a career.

Moreover, while so-called "top-tier" universities still excel at helping their students find employment, a myriad of other colleges are failing to do so.

College is a time for people to grow intellectually, but with the cloudy jobs outlook and an even bleaker long-term earning potential, recent graduates may want to just read a book instead.

Then again, finding a rich benefactor to fund a college education is always an option.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.