The Right Opinion

The Higher Education Bubble: Ready to Burst?

By Michael Barone · Sep. 6, 2010

Imagine that you have a product whose price tag for decades rises faster than inflation. But people keep buying it because they’re told that it will make them wealthier in the long run. Then, suddenly, they find it doesn’t. Prices fall sharply, bankruptcies ensue, great institutions disappear.

Sound like the housing market? Yes, but it also sounds like what Glenn Reynolds, creator of instapundit.com, writing in The Washington Examiner, has called “the higher education bubble.”

Government-subsidized loans have injected money into higher education, as they did into housing, causing prices to balloon. But at some point people figure out they’re not getting their money’s worth, and the bubble bursts.

Some think this would be a good thing. My American Enterprise Institute colleague Charles Murray has called for the abolition of college for almost all students. Save it for genuine scholars, he says, and let others qualify for jobs by standardized national tests, as accountants already do.

“Is our students learning?” George W. Bush once asked, and the evidence for colleges points to no. The National Center for Education Statistics found that most college graduates are below proficiency in verbal and quantitative literacy. University of California scholars Philip Babcock and Mindy Marks report that students these days study an average of 14 hours a week, down from 24 hours in 1961.

The American Council of Alumni and Trustees concluded, after a survey of 714 colleges and universities, “by and large, higher education has abandoned a coherent content-rich general education curriculum.”

They aren’t taught the basics of literature, history or science. ACTA reports that most schools don’t require a foreign language, hardly any require economics, American history and government “are badly neglected,” and schools “have much to do” on math and science.

ACTA’s whatwilltheylearn.com Website provides the grisly details for each school, together with the amount of tuition. Students and parents can see if they will get their money’s worth.

That’s also a goal of Strive for College, which encourages young people of minority backgrounds to go to college. Its Website lets students look up the percentage of similarly situated applicants admitted to each college – and, perhaps more important, the percentage who graduate.

Transparency could also undermine the numerous dropout factories, public and private, described and listed by the liberal Washington Monthly. More than 90 percent of students there never graduate, but most end up with student loan debt.

Increasing transparency is hitting higher education at the same time it is getting squeezed financially. Universities have seen their endowments plunge as the stock market fell and they got stuck with illiquid investments. State governments have raised tuition at public schools, but budgets have declined. Competition from for-profit universities, with curricula oriented to job opportunities, has been increasing.

People are beginning to note that administrative bloat, so common in government, seems especially egregious in colleges and universities. Somehow previous generations got by and even prospered without these legions of counselors, liaison officers and facilitators. Perhaps we can do so again.

Presidents and politicians of both parties have promised for years to provide college opportunities for everyone and measure progress by the percentage of students enrolled. But it’s becoming increasingly clear that college doesn’t make sense for everyone. Some simply lack the necessary verbal and math capacity. Others are interested in worthy non-college careers like carpentry.

Still others wonder whether the four-year residential college model is worth the investment when you can spend much less on two years in community college and then transfer to a four-year school.

A century ago, only about 2 percent of American adults graduated from college; in 1910, the number of college graduates nationally was 39,755 – smaller than the student bodies at many campuses today.

Higher education expanded when the G.I. Bill financed veterans' education after World War II and then expanded further with postwar growth. Government’s student loan subsidies have enabled institutions to grow faster over the last three decades than the economy on whose productivity they ultimately depend.

As often happens, success leads to excess. America leads the world in higher education, yet there is much in our colleges and universities that is amiss and, more to the point, suddenly not sustainable. The people running America’s colleges and universities have long thought they were exempt from the laws of supply and demand and unaffected by the business cycle. Turns out that’s wrong.

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10 Comments

Bruce said:

Every government injection of money - whether into housing, financial institutions, and now "higher" education - inflates prices, distorts cots, and destroys the free market. The end result is indebtedness and enslavement of our citizens to ever-tighter government control (which government is now in turn enslaved to our debt-holders in communist China and elsewhere) while we taxpayers are again left footing the bill. It is the legal way to transfer as much money/wealth as possible from the public to whomever the government favors. Of course that is the real goal. WAKE UP, AMERICA. Before you find out you discover you no longer have an American left!

Monday, September 6, 2010 at 6:35 AM

RedBaker in Florida said:

Bravo, great column. Another example of massive government interference screwing up a previously great system. There is also a bubble in government schools K-12. They cost about $12,000 per year, national average. They produce an inferior product. It is time to create vouchers for everyone, of about $7,000, and simply do away with government schools. Government run programs, where they are not absolutely essential, are a disaster and an affront to freedom.

Monday, September 6, 2010 at 11:50 AM

Margerie said:

As noted in the Constitution, and more importantly what isn't, government has no place in education. And, least of all, its place is NOT to bribe states with federal funds into surrendering their Constitutional rights and responsibilities. What we have now is a totally corrupt system that squanders our wealth, deconstructs our nation, and sacrifices our youth. If I didn't know better, I'd swear to God that the enemies of America were in charge. Had enough, yet, people?

Monday, September 6, 2010 at 12:25 PM

sunforester said:

As with all things, when you create distorted expectations, you get the guaranteed result of terrible performance. With every child believing from television that: a good education is for losers or nerds; that money from hard work is evil or has to be given away before it can become virtuous; that a six-figure salary is theirs by right when they are 25 years old, no matter what their skills; that it is OK to play everyone else for suckers in order to get the money one deserves; that the only ones getting ahead are those with influence or an inside scoop; that any other opinion outside that spouted by the television, teachers or professors is to be shunned or derided, then you have a solid recipe for the failure of a whole generation.Most college graduates now are finding that the only place still available to them after graduation is the same home where all these beliefs and convictions were instilled. The parents who thoughtlessly allowed their children to be raised by the television and excessively lazy educators are belatedly wondering where it all went wrong. The excuse of two parents working so the kids have no supervision after school is completely bogus, especially when so many other possible personal arrangements could be made to accomodate the critical needs of children. The television's scare tactics that promote shunning other resources than television as the best caretaker of children when the parents are not home have been too effective and too devastating on our children. It is fitting that the children return to the scene of the crime, but the sentence being served is far too steep for our society to bear when a large number of working-age Americans don't know how to work.It is time for parents and their grown children to reassess and cure these twisted expectations. The teachers and professors who collected paychecks for decades without any accountability or responsibility for their actions need to be held accountable now and in the future. The free ride for our educators is over, but it is the parents' ever-present responsibility to make that happen. Turn off the television, throw the unions out, let all those after-school programs and sports leagues thrive, and tell the children in no uncertain terms that they will need hard work, dedication and skills to live well when they grow up.

Monday, September 6, 2010 at 12:40 PM

mkalexander said:

As an eye-opener regarding academe, I recommend the August 23 issue of The Weekly Standard's article about the academic ultra-elites' goals for their subject expressed in The Norton Anthology of Literature: They are troubled by America's "national heterosexuality" and they speak up for "the community of men who love underage youth," ruing the stigmatizing of "boy-lovers." (page 36).

Monday, September 6, 2010 at 4:27 PM

Ruth Ann Wilson said:

I think that would be wonderful if all the "Public" Higher Education "closed down". The only way anybody goes to "Higher Education" would be if they paid for it out of there own pocket and go to a "PRIVATE School".No more Communist professors to corrupt the young people, no more excuses we need "lottery" ie gambling witch bring the curses of God, no more "wasting tax dollars" on educating and educating folks, over and over and then they get classified as "over educated". Atheism will be "in check" for who would pay to have such destroying "nonsense" spewed out, day in and day out, destroying the soul and spirit of the "hearers". It's a "balloon" alright and the sooner it breaks, the better. We will have a "new birth of Freedom".Common, God-fearing sense will return to America. The "Citadels of Corruption" will be gone, O, Happy Day.For God & CountryThe American

Monday, September 6, 2010 at 4:36 PM

David said:

Consider that the Dept. of Education has a budget of approximately 40 billion dollars. But doesn't have any schools. Reminds me of the definition of a consultant as someone who knows 200 different ways to make love, but doesn't have any women.If the budget of the DOE is deleted, and the money allowed to remain in the state and local districts from wince it came, education might achieve higher levels than those measured by bureaucrats.

Monday, September 6, 2010 at 5:38 PM

Tom said:

If you are attending a higher education school without future goals(i.e. future employment plans) you don't need future income. That means party time at the higher education time. If your family has enough money for your future, that is fine,but most of us were or are not that lucky. I feel many professors are idealists who could care less about your future as long as they can control your thoughts toward they're liberal agenda.

Tuesday, September 7, 2010 at 11:44 AM

pete said:

The GI bill assists those who have served get an advanced education. A reward for their service.Liberals found a way to endow everybody and anybody with this blessing by forming special interests, such as "economically depressed," "disabled," and "minority" classifications. To insure everybody got a "fair shot" liberals also instilled a quota system. Many veterans were unable to get their benefits because seats were filled with "quota students." In the final analysis, those who gave so much for their country and countrymen got screwed by those same countrymen and country they'd given so much to.I'll save my comments regarding "professional students" for another post as most reading this already know what I'm referring to.

Tuesday, September 7, 2010 at 12:27 PM

Byron said:

Pete - what liberals did for your education they are doing for every other aspect of our lives: leveling the playing field. What that means is giving to the have-nots by taking from the haves. It's the American nightmare, the Union of Soviet Socialist Americans.

Tuesday, September 7, 2010 at 3:46 PM