According to a piece by Daniel Smith in New York magazine, the idea that higher education is another economic bubble has become increasingly popular. Are we focusing on the wrong part of this bubble matter, however? Smith writes that:

As long as there have been colleges, there’s been an individualist, anti-college strain in American culture—an affinity for the bootstrap. But it is hard to think of a time when skepticism of the value of higher education has been more prominent than it is right now. Over the past several months, the same sharp and distressing arguments have been popping up in the Times, cable news, the blogosphere, even The Chronicle of Higher Education. The cost of college, as these arguments typically go, has grown far too high, the return far too uncertain, the education far too lax.

Peter Thiel is a venture capitalist with strong misgivings about college. Unlike Altucher, he’s a billionaire and Silicon Valley royalty. In 1998, Thiel co-founded PayPal, and six years later, he made the first angel investment in Facebook. In higher education, he believes he has identified a third bubble, with all the hallmarks of a classic speculative frenzy: hyperinflated prices, investments by ignorant consumers funded largely by debt, and widespread faith in increasing returns.

Thiel created a program, called the Thiel Fellowship, to award $100,000 each to college students to become entrepreneurs, and to drop out of college.

The goal of this is to change the notion of how we think of college “to reset the values all the way down the system.” If less people demand college, the world will be better off. College isn’t necessary; many entrepreneurs do just fine without a college degree. And forcing people into a lifetime of white color slavery due to student loans isn’t just unfair, it’s unjust.

Well okay. Go ahead with that. But maybe trying to lure people away from college is the wrong way to think about this bubble.

Shai Reshef writes in the Huffington Post that the problem isn’t that too many people are going to college; it’s that college is too expensive:

Higher education includes benefits that go beyond the financial opportunities it may provide down the road — such as individual benefits attained in relation to self improvement, friendships, empowerment, global awareness, access to diversity, exposure to different ways of thinking or topics of interest and more. Additionally, education is crucial to efforts to promote equality and world peace as it not only impacts the lives of individuals but also the societies and communities in which they live. Crime rates, social awareness and economic stability are directly tied to the accessibility of post-secondary education. Taking into account the additional benefits of higher education on both individual levels and also global levels, one can conclude that Peter Thiel should not encourage drop outs, but instead to challenge the cost of higher education to decrease.

A bubble isn’t just about demand. It’s also about cost. The problem isn’t that too many people are going to college; it’s that they’re paying too much money to do it.

Daniel Luzer

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer