Peter Thiel, the hedge fund manager and PayPal co-founder, correctly foresaw the dot-com and subprime busts, so when he makes a prediction about the next big bubble that’s likely about to burst, people would be wise to at least listen to what the man has to say.
So where does Thiel think the next spectacular fizzle is apt to occur? Hang onto your hats: It’s that most sancrosanct of American Pie ideas, the notion that puting in your time to earn a four-year college degree will actually land you a decent job.
Thiel draws comparisons between the real estate bubble and higher education, arguing that the same flawed logic which caused people to say housing prices would only rise can be applied to the long-held belief that a four-year college degree is the safest investment one can make to ensure a better future.
The billionaire entrepreneur has created a program called 20 Under 20 that seeks to award 20 bright people under 20 years old a $100,000 cash grant to drop out of school and start a business. So far more than 100 college students have applied, several of them from Thiel’s alma mater Stanford.
“A true bubble is when something is overvalued and intensely believed,” he said in a recent interview with TechCrunch. “Education may be the only thing people still believe in in the United States. To question education is really dangerous. It is the absolute taboo. It’s like telling the world there’s no Santa Claus.”
There are signs that the higher education bubble may have burst already, however, as recent college graduates face a difficult task of finding any job much less a well paying one, even as four or more years’ worth of student loan debt starts coming due and tuittions keep rising.
Thiel’s predictions got me thinking about the future pilot population and whether the cost of an airline transport pilot certificate still provides a sufficient payoff to entice young people to consider flying as an occupation worth pursuing.
Mostly I thought about a couple I met awhile back who told me about the $75,000 in loans their son still owed for his flight training at Silver State Helicopters, the high-profile national flight school that famously went belly up in 2008. After taking money from its students, the company left many with nothing but a crushing mountain of loan debt. The couple said their son never got the chance to take even one lesson before the school filed for bankruptcy.
Senator Bill Nelson of Florida has said he believes the company was nothing more than a ponzi scheme designed to draw in a steady flow of students who would take out more loans, money that would go straight into the pockets of Silver State’s owner. Thanks to lawsuits and intervention by several state attorneys general, most of the unused debt has been forgiven.
Thankfully the vast majority of flight schools are honest operations run by good people, and the Silver States of this world are few and far between. But that doesn’t change the fact that a newly minted ATP can make more money working behind a cash register at McDonalds than he or she often can flying in the right seat of a commuter airliner.
The situation being what it is, and market forces being what they are, I’m wondering whether the professional pilot bubble has finally burst, too.
Of course, the good thing about bubbles, whether they’ve burst or not, is that they’re cyclical and temporary. The Internet bubble of a decade ago is a distant memory, and the Web is a great place to start a business today. Choosing a career as a professional pilot right now is a tough call, but once the next pilot shortage hits, everybody will have forgotten about this current down cycle.
I bet the price of my house even goes back up one day.
