In 2006, just before leaving Goldman Sachs for my hedge fund job, I bought this shirt.  I loved that shirt so much, not only because it was hilarious to me, but also because I was so convinced that my view – of a housing market debacle like the world had never seen – was dead on.  I even shorted the hell out of Pulte Homes, Beazer Homes and a basket of other housing-related companies.  As 2007 rolled into 2008, the story played out just as I had envisioned – and those trades made me a small fortune.

The reason I bring this up is not to brag about a few great trades.  I bring this up because I read a post today that perfectly synthesized my thoughts about college:

COLLEGE IS A BUBBLE.

You see, yet another bubble is brewing on the horizon.  One that will cause massive disruption to the providers of higher education.  Much like the now infamous housing bubble, I am so convinced that this view is right that I LEFT A HIGH-PAYING HEDGE FUND JOB AND BET MY FUTURE ON IT.  In poker parlance, I went “all in”.

Why am I so convinced that I’m making the right bet – again?  Well, in hedge-fund speak, it’s because the economics no longer make sense.  In housing, the economics no longer made sense when traditional affordability measures flipped upside down.  You could no longer buy a home, rent it out and expect a positive return.  Similarly, college affordability measures are starting to get way out of whack [translation: trouble is brewing].

Students across the country are beginning to face the same cold reality: the cost of college tuition is simply too great to provide a positive return on their investment.

FOR PROVIDERS OF HIGHER EDUCATION, YOUR BUBBLE IS ABOUT TO GET POPPED.

I’m not suggesting that all schools are f’d.  But I am warning certain schools like the University of Miami:

IF YOU CONTINUE TO RAISE TUITION,
IF YOU CONTINUE TO DO A PISS-POOR JOB OF HELPING STUDENTS GET JOBS,
IF YOU CONTINUE TO NEGLECT THE MOST IMPORTANT THING,
YOU WILL FIND YOURSELF IN YOUR OWN VICIOUS CYCLE OF:

1. Dwindling enrollment numbers, which leads to…
2. Reduction in Professors and other key staff, and…
3. Lower Business Week Rankings, and…
4. Greater awareness of your school’s deficiencies, and finally…
5. A self-reinforcing perception that no one wants to attend your school

Want to know how to prevent this vicious cycle from happening – and avoid the next great debacle?  Ensure a positive ROI for your students.

TAG CAN HELP.