A college degree is no longer a risk-free investment

My unifying theory of finance is that everything goes seriously wrong when people start seeing something - a bond, a mortgage-backed security, a crypto exchange as risk-free when it isn't.

- Allison Schrager, Tribune News Service

Look at any financial crisis or minor blowup, and that's always where it starts. Lately I have been wondering if my hypothesis applies to areas outside of finance specifically, to education. For years, a college degree was seen as a risk-free asset. It took money and time, but it was near certain it would pay off in the form of increased lifetime earnings. No wonder that we are now in an education bubble: Lots of people went to college, studied things that aren't useful, and found themselves overwhelmed with debt. Many more can pay their debt, but work in jobs that don't require a degree anyhow.

In the postwar era, college was a bet that couldn't fail. Not many people went to college in the first place, and those who did were rewarded with much higher earnings. And as technology evolved, it made college-educated workers even more productive. This trend has started to turn. Not only does technological knowledge now command less of a premium, but many more Americans now have a degree, making it less valuable. There has also been a proliferation of for-profit schools that offer less great education, and more college dropouts.