April 25, 2019

College: An Overpriced Scam

Mike Rowe argues Americans are “obsessed with credentialing,” and it’s costing kids big time.

“You don’t have to be rich or famous to believe that your kid is doomed to fail if they don’t get a four-year degree. There are millions of parents in the country right now … who genuinely feel that if they don’t do everything they can to get their kid into a good school, they will fail the kid.” —Mike Rowe

Rowe appeared on Tucker Carlson’s Fox News show to address the college-admissions scandal. Yet far better, he explained that college has become the most over-priced scam in the nation, saddling thousands of young Americans with decades of student-loan repayments. Repayments that have forced them to postpone activities like buying a house, getting married, or having children.

Postponements that are now impacting the entire U.S. economy.

“Where’s the outrage for the pressure that we’ve put on a 17-year-old to borrow $100,000?” Rowe asks. “So much of that pressure comes from their mom and dad. It’s well-intended, but it’s kinda tragic.”

Rowe further notes that parental pressure is amplified by high-school guidance counselors, politicians, lobbyists, and employers.

The results? Rowe says, “We promoted the one thing at the expense of all of the others and the one thing just happened to be the most expensive thing.”

Expensive is an understatement. As measured by the Consumer Price Index, the cost of college since 1985 has increased at nearly quadruple the rate of inflation. In a single decade from 2007 to 2017, college tuition skyrocketed 63%, school housing 51%, and textbooks 88%.

As a result, total student-loan debt — now more than $1.5 trillion and counting — is the second-highest segment of consumer debt, trailing only mortgage obligations. Moreover, default rates are now more than 10%, making them the highest segment of household debt in the nation.

In the meantime, Americans trapped by this increasingly onerous dynamic never get around to asking an essential question: Why do most employers require a college degree, even when one is not necessary to perform job-related actives?

One of the main reasons has to do with a 1971 Supreme Court decision in Griggs v. Duke Power Co.. Prior to the ruling, Duke Power restricted workers without a high-school diploma to menial jobs, unless they could pass an aptitude test. Griggs and other black American employees filed suit, claiming that the company’s requirements were discriminatory under the 1964 Civil Rights Act.

SCOTUS unanimously agreed, ruling that employers could only require educational credentials that were reasonably job-related. Furthermore, any company’s educational or testing qualifications that engendered “disparate impact” were in violation of the law.

The implication? In a 2008 paper, “Griggs v. Duke Power: Implications for College Credentialing,” authors Bryan O'Keefe and Richard Vedder explained that many employers, knowing that aptitude testing and high-school diplomas had become legally hazardous, began using college degrees to screen out applicants they didn’t want to hire. “Griggs turned the college degree into a ‘credential,’” the authors explained. “The content of the education did not change, but the degree — the sheepskin — became a necessary first step for a decent job.”

Is it? As columnist (and Yale graduate) Kyle Smith asserts, “An elite-college degree isn’t an instrument or a tool; it doesn’t have to lead to anything. It’s a status symbol in itself.”

More troubling, colleges are also the places where “a single orthodoxy about the origins of man, about American history, and about how America should be governed” is now imparted to the nation’s Ruling Class, as Boston University professor emeritus Angelo Codevilla explains.

Yet the most salient aspect of this ongoing scam is revealed by columnist Mark Hemingway. “Credentialism creates the illusion of knowledge and capability where none exists,” he explains.

Rowe heartily agrees. “Seven million jobs are available now; most of them don’t require a four-year degree,” he states. “They require training. And yet we’re obsessed, not really with education, you know. What we are obsessed with is credentialing. And so people are buying diplomas. And they’re buying their degrees. It’s a diploma dilemma, honestly. It’s expensive. It is getting worse. It’s not just the kids holding the note. It is us.”

“Us” is the American taxpayer who bears the ultimate burden for any and all student-loan defaults. Thus, colleges themselves, which bear no burden whatsoever, can raise costs with impunity.

Enter Democrat presidential candidate Elizabeth Warren, who promises to “fix” the problem — from exactly the wrong end of the equation. Rather than take on the entire government-backed, taxpayer-underwritten student-loan program that fuels the cost spiral, she proposes what amounts to rank vote-buying: Warren pledges to cancel almost all student-loan debt for 42 million students, which would cost taxpayers a staggering one time payment of $642 billion.

Following that shakedown, she proposes “universal free college,” paid for by her “Ultra-Millionaire Tax — a 2% annual tax on the 75,000 families with $50 million or more in wealth.”

That Warren is comfortable promoting the idea of borrowing money and not honoring one’s commitment to pay it back is bad enough. Yet the utter failure to control costs — and the nerve to use to the word “free” as it relates to those costs — is astounding. Americans might ask themselves how a Harvard professor can be as morally bankrupt and economically ignorant as Warren appears to be.

In 2016, University of Tennessee law professor Glenn Harlan Reynolds addressed the credentialing dilemma, stating, “If you want equality, the best thing to do is to ban employers from asking students where they went to school and, perhaps, even if they went to college at all.”

The quality dilemma? Require colleges to publish data on student graduation rates, the level of debt they’ve accumulated, and what they earn after graduating, so potential enrollees know exactly what they’re getting before they go into debt.

The pricing dilemma? Make colleges partially liable for all student-loan defaults, incentivizing them to offer students the marketable skills that would prevent such defaults. Despite what people like Warren believe, “skin in the game” is the best cost controller there is.

Most important, a national conversation must be engendered to disabuse Americans of the long-orchestrated fear that the only choices they have are college or eternal mediocrity. Eternal indebtedness is closer to the truth — which might even be tolerable if it were a genuine education one was receiving in return.

Far too often, it’s not. “Since the 1970s, it has been virtually impossible to flunk out of American colleges,” Codevilla explains. “And it is an open secret that ‘the best’ colleges require the least work and give out the highest grade point averages.” Why? Because “our ruling class recruits and renews itself not through meritocracy but rather by taking into itself people whose most prominent feature is their commitment to fit in.”

And what has that “commitment to fit in” precipitated? An arrogant, “credentialed” Ruling Class that has given America a $22 trillion national debt, manufactured tribalism, un-winnable wars, and defenseless borders, all while holding “deplorable” Americans in utter contempt.

If college is the “answer,” Americans are asking the wrong questions.

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