Editor’s note: Happy Labor Day. Markets are closed, but we wanted to address the big news out of the White House...
As you surely heard, President Biden announced his intention to cancel student loans for millions of borrowers.
But Chief Analyst Stephen McBride says there’s a lot more to this story—one the mainstream media aren’t talking about...
Read on to see the important question everyone should be asking... as well as a stock to play the real disruption taking place.
President Biden wants to cancel student loan debt!
That means every American’s college loans are about to be wiped clean, right?
Well, not so fast…
After all, we’re talking about a $1.7 trillion tab.
But Biden recently announced a plan to relieve some of the burden.
He plans to cancel $10,000 in federal student loan debt for most borrowers.
Which could eliminate student loans for some 15 million people—about a third of current debtors.
The question isn’t, who’s going to pay for all of this?
That one’s easy. US taxpayers.
The more important question is: Why are we even talking about canceling student loans in the first place?
Nobody is looking to write off mortgages.
You don’t hear the media talking about canceling car loans…
If millions of students have to be “bailed out,” maybe college isn’t a good investment?
Sure, some professions require a college degree.
If you want to be a doctor, going to school is a must. But the vast majority of teenagers aren’t training to be surgeons.
Hundreds of thousands of American kids sign up to get “business” degrees each college semester. Yet… there is no skill called “business.”
The four-year degree saddles kids with mountains of debt…
And a lot of these kids don’t even end up using it!
In fact, according to the Federal Reserve Bank of New York, 41% of recent grads work in jobs that don’t require a degree.
I stopped believing in the magic of college when I discovered free YouTube lectures that were better than the ones I paid thousands of dollars for in college.
College was being disrupted long before Uncle Sam swooped in.
Teenagers have come around to the idea that most degrees aren’t worth much.
Now they’re turning their backs on college. Did you know college enrollment peaked back in 2010? In fact, freshman signups have declined by 12% in the past five years.
Last spring, college enrollments plunged by 750,000. That was the largest decline ever.
Here’s the thing… top schools like Harvard and Yale will always attract elite kids and command huge tuitions.
I predict at least half of the 4,000 middle-of-the-road US colleges will go bust in the next decade.
You can already see this playing out. Since COVID hit, universities have shed more than 300,000 jobs. And many of these schools are cutting tuitions in an effort to attract students.
For the 2021–2022 academic year, Rider University cut tuition for new students by 22%. Fairleigh Dickinson University slashed tuition by 25%. And Gordon College cut tuition by 33%.
In 2019, ratings agency Moody’s found that roughly one-third of US colleges “were already running deficits.” The recent plunge in enrollment is a tidal wave that will likely crush many of them.
“If I don’t go to college, then what should I do?”
College critics could never answer this question… until now.
Professionals like mechanics and chefs don’t typically get degrees. Instead, they learn through apprenticeships, a few years of on-the-job training.
“Vocational training” for engineers or coders never existed.
Google is changing that.
Google Career Certificates is a series of courses that helps students get qualifications in high-paying jobs… without attending college.
For example, Google will train you to become a data analyst. A job with a median yearly wage of $66,000. You can also learn all the skills to be a user experience (UX) designer. These folks get paid over $80,000 a year.
And here’s the kicker… these courses take roughly six months to finish and only cost a few hundred bucks. Best of all, Google “will consider our new career certificates as the equivalent of a four-year degree.”
In other words, you don’t have to bury yourself in student debt to get a job at Google. Now you can “qualify” for a high-paying job in less than a year!
Several of America’s top companies like Walmart… Intel… Sprint… and Bank of America have jumped on board too. They recognize a Google Career Certificate to be the same as a college degree.
Mark my words—this is the future of education.
Big, successful brands like Google will disrupt the four-year degree by offering their own certification.
Think about why folks pay so much for college: It’s the piece of paper.
But Google is a household name. Its certificates can be recognized across the world. In fact, they are often worth more than a degree from some middle-of-the-road college.
I guarantee Google is only the first of many big firms to launch their own certification programs.
Nothing is stopping Disney, for example, from launching an educational product for kids in grades K–12.
Here’s how you can profit from the disruption of college.
Despite all the stats I just showed you…
Students unenrolling from traditional colleges at a record pace…
Colleges all across America slashing tuitions…
The disruption of college is still in its early innings.
As learning moves from dusty lecture halls into the real world, many companies will continue to eat away at colleges’ monopoly on formal education.
One stock I really like today to play this trend is Duolingo (DUOL).
If you’ve never heard of Duolingo, it’s the world’s best way to learn a language. You can download its app for free and learn Spanish, French, Japanese, and dozens of other languages.
It turns learning a language into a fun game where you answer questions, speak into the phone, and translate sentences.
I used it to learn Spanish when I lived in Argentina, and I loved it. My wife recently started learning Italian with Duolingo and already knows over 100 words.
Picture this: a free app on your phone that can teach you 19 languages… or paying thousands of dollars to sit in a stuffy classroom. Which would you prefer?
Colleges used to have a monopoly on education—they don’t anymore.
Duolingo is one of the companies leading the shift away from traditional college… and one to consider buying today.
Editor — Disruption Investor
P.S. While many folks are debating whether canceling student debt is good or bad for America...
I’m much more interested in what Biden put into motion earlier this year. This is something that’s set to disrupt the American financial system... and bring the biggest change to the investing landscape in the last 88 years:
Fortune calls this a “watershed event.” Wharton School of Business says it’s “a turning point.” While Time magazine warns that Americans everywhere should “take Biden's executive order seriously.”
I break it all down in plain English in my recent presentation.