Higher education bubble will pop

June 10, 2012


— Many parents and the children they send to college are paying rapidly rising prices for something of declining quality. This is because “quality” is not synonymous with “value.”

Glenn Harlan Reynolds, University of Tennessee law professor, believes college has become, for many, merely a “status marker” signaling membership in the educated caste, and a place to meet spouses of similar status — “associative mating.” Since 1961, the time students spend reading, writing and otherwise studying has fallen from 24 hours a week to about 15 — enough for a degree often desired only as a signifier of rudimentary qualities (e.g., the ability to follow instructions). Employers value this signifier as an alternative to aptitude tests when evaluating potential employees because such tests can provoke lawsuits by having a “disparate impact” on a racial or ethnic group.

In his Encounter Books Broadside “The Higher Education Bubble,” Reynolds says this bubble exists for the same reasons the housing bubble did. The government decided that too few people owned homes/went to college, so government money was poured into subsidized and sometimes subprime mortgages/student loans, with the predictable result that housing prices/college tuitions soared and many borrowers went bust. Tuitions and fees have risen more than 440 percent in 30 years as schools happily raised prices — and lowered standards — to siphon up federal money. A recent Wall Street Journal headline: “Student Debt Rises by 8% as College Tuitions Climb.”

Richard Vedder, an Ohio University economist, writes in the Chronicle of Higher Education that as many people — perhaps more — have student loan debts as have college degrees. Have you seen those T-shirts that proclaim “College: The Best Seven Years of My Life”? Twenty-nine percent of borrowers never graduate, and many who do graduate take decades to repay their loans.

In 2010, The New York Times reported on Cortney Munna, then 26, a New York University graduate with almost $100,000 in debt. If her repayments were not then being deferred because she was enrolled in night school, she would have been paying $700 monthly from her $2,300 monthly after-tax income as a photographer’s assistant. She says she is toiling “to pay for an education I got for four years and would happily give back.” Her degree is in religious and women’s studies.

The budgets of California’s universities are being cut, so recently Cal State Northridge students conducted an almost-hunger strike (sustained by a blend of kale, apple and celery juices) to protest, as usual, tuition increases and, unusually and properly, administrators’ salaries. For example, in 2009 the base salary of UC Berkeley’s Vice Chancellor for Equity and Inclusion was $194,000, almost four times that of starting assistant professors. And by 2006, academic administrators outnumbered faculty.

The Manhattan Institute’s Heather Mac Donald notes that sinecures in academia’s diversity industry are expanding as academic offerings contract. UC San Diego, while eliminating master’s programs in electrical and computer engineering and comparative literature, and eliminating courses in French, German, Spanish and English literature, added a diversity requirement for graduation to cultivate “a student’s understanding of her or his identity.” So, rather than study computer science and Cervantes, students can study their identities — themselves. Says Mac Donald, “‘Diversity,’ it turns out, is simply a code word for narcissism.”

She reports that UCSD lost three cancer researchers to Rice University, which offered them 40 percent pay increases. But UCSD found money to create a vice chancellorship for equity, diversity and inclusion. UC Davis has a Diversity Trainers Institute under an administrator of diversity education, who presumably coordinates with the Cross-Cultural Center. It also has: a Lesbian, Gay, Bisexual, Transgender Resource Center; a Sexual Harassment Education Program; a diversity program coordinator; an early resolution discrimination coordinator; a Diversity Education Series that awards Understanding Diversity Certificates in “Unpacking Oppression” and Cross-Cultural Competency Certificates in “Understanding Diversity and Social Justice.”

So taxpayers should pay more and parents and students should borrow more to fund administrative sprawl in the service of stale political agendas? Perhaps they will, until “pop!” goes the bubble.

— George Will is a columnist for Washington Post Writers Group.    


FalseHopeNoChange 1 year, 10 months ago

Peeps in government do the 'darndest' things. I can 'hardly wait' for them to run "The First Gay Presidents" mandatory medicalcair.


yourworstnightmare 1 year, 10 months ago

One of the key differences between the housing bubble and a supposed education bubble is this: in the housing bubble, people were given loans that they were demonstrably unable to pay back, mathematically unable to pay back. Loans were for too much for them, at their rate of pay, to ever pay back. Yet they were given, and then the banks bought insurance against the loans in case they failed.

With an education loan, the possibility of repayment is unknown at the time. Also, to my knowledge there is no bundling and credit default swaps going on with educational loans (yet).

So, while there are similarities, there are also key differences between housing and education, and the direct transitive property does not work. There might be an education bubble that will burst, but it is a more nuanced comparison than right wing liberals like to present.


tbaker 1 year, 10 months ago

If you were selling something and I knew that the government was going to give prospective buyers a portion of the money needed to buy it, would you raise your prices?


Richard Heckler 1 year, 10 months ago

Additional evidence:

  1. ENTITLEMENT - TABOR is Coming by Grover Norquist and Koch Bros sells out state governments, public schools,SRS services etc etc to private industry = Grab Your Wallets!

  2. ENTITLEMENT - Bailing out The Reagan/Bush Savings and Loan Heist aka home loan scandal sent the economy out the window costing taxpayers many many $$ trillions (Cost taxpayers $1.4 trillion), Plus millions of jobs, loss of retirement plans and loss of medical insurance.

  3. ENTITLEMENT - Bailing out the Bush/Cheney Home Loan Wall Street Bank Fraud cost consumers $ trillions, millions of jobs, loss of retirement plans and loss of medical insurance. Exactly like the Reagan/Bush home loan scam. Déjà vu can we say. Yep seems to be a pattern.

4.ENTITLEMENT - Bush/Cheney implied many financial institutions were at risk instead of only 3? One of the biggest lies perpetrated to American citizens. Where did this money go? Why were some banks forced to take bail out money?


Richard Heckler 1 year, 10 months ago

Did Republicans Deliberately Crash the US Economy?

Published on Sunday, June 10, 2012 by The Guardian/UK

Be it ideology or stratagem, the GOP has blocked pro-growth policy and backed job-killing austerity – all while blaming Obama

Increasingly, Democrats are making the argument that the real culprit for the country's economic woes lies in a more discrete location: with the Republican Party.

In recent days, Democrats have started coming out and saying publicly what many have been mumbling privately for years – Republicans are so intent on defeating President Obama for re-election that they are purposely sabotaging the country's economic recovery. These charges are now being levied by Democrats such as Senate majority leader Harry Reid and Obama's key political adviser, David Axelrod.

For Democrats, perhaps the most obvious piece of evidence of GOP premeditated malice is the 2010 quote from Senate minority leader, Mitch McConnell:

Whether you believe the Republicans are engaging in purposely destructive fiscal behavior or are simply fiscally incompetent, it almost doesn't matter. It most certainly is bad economic policy and that should be part of any national debate not only on who is to blame for the current economic mess, but also what steps should be taken to get out from underneath it.

"The single most important thing we want to achieve is for President Obama to be a one-term president."

Such words lead some to the conclusion that Republicans will do anything, including short-circuiting the economy, in order to hurt Obama politically. Considering that presidents – and rarely opposition parties – are held electorally responsible for economic calamity, it's not a bad political strategy.

Then again, it's a hard accusation to prove: after all, one person's economic sabotage is another person's principled anti-government conservatism.

Beyond McConnell's words, though, there is circumstantial evidence to make the case.



yourworstnightmare 1 year, 10 months ago

Oh, and just because there are easy loans doesn't make a bubble, and just because there might be a bubble doesn't mean it will necessarily pop.

Plausible, but there are key differences between housing and education. We shall see if the putative education bubble does pop, leaving thousands of students saddled with loans and the inability to pay them back.


yourworstnightmare 1 year, 10 months ago

I am not disputing Will's thesis, but much of the government subsidized student loan debt comes from private, for profit "universities", such as University of Phoenix and others.

Below par private, mostly religious, universities are the next biggest part of the problem (e.g. Ohio Northern, which downplays student loan debt and promises big incomes). Most top notch private universities provide scholarships for much of the costs.

Public universities, with their low tuition, are still problematic because they accept students who must pay full tuition and often work and take out loans.

I agree that there is an education bubble created by easy student loan programs. This has been necessitated by decreasing state subsidy for education at public universities.

A university education is not free. Someone must pay for it. Loans are one way, and they have been freely available.

The other option is to greatly restrict university education to those who can garner scholarships or those who can afford it. The ownership society.


tomatogrower 1 year, 10 months ago

This is frustrating. Conservatives rail at people who didn't further their education so they could get ahead, and now are poor, because conservatives thought it was ok to move all the factory jobs out of the country. "It's your own fault you are poor. Go to school and help yourself out of poverty. Don't be so lazy." They blame these people for not getting an education. Now they are whining "Really, is a college education necessary". Did too many people decide to better themselves with more education, and you're still having a problem finding good American born maids, nannies, and gardeners? Why not be honest with everyone. You conservatives really hate upward mobility. You would rather all be hereditary lords and ladies. Let the riff raft eat cake. Don't look down your noses too long, you will become permanently cross-eyed.


Bill Staples 1 year, 10 months ago

Typical Will drivel. For decades, the States subsidized the cost of higher education as a public good that paid dividends in an educated public/workforce and helped many climb out of the working-class. Now, those same middle-class folks are the ones electing right-wing state legislators all over the country who are slashing state support for higher education into the single digits. It's now turning into a privatized-like "pay-as-you-go" system and soon be "public" colleges and universities in name only and will leave millions in serious debt or without access. The US higher education system was the envy of the world but it is being destroyed by the wing-nuts who don't believe in science, are ignorant of the liberal arts, and see education as a threat to their religious dogma. We are an empire in decline and headed back to the Middle Ages.


Richard Heckler 1 year, 10 months ago

The higher ed bubble was put together by the same administration that brought us the second nationwide housing bubble.

The same folks are ripping off students across the nation aka the financial institutions.

The reason 4 year degrees are worth less is because millions upon millions upon millions upon millions of blue and white collar jobs went to China,Pakistan,India,Viet Nam etc etc etc.

The jobs are not available = the jobs are gone.

  1. Mergers
  2. Hostile Takeovers
  3. Leveraged Buyouts
  4. Free Trade Agreements
  5. Reagan/Bush Savings and Loan home loan scandal which killed the economy and cost the USA millions of jobs.
  6. Bush/Cheney Home Loan scandal killed the economy and cost the USA millions of jobs

All of above ultimately translated into millions upon millions upon millions of USA job losses. Big time layoffs were the end result. These jobs go abroad with supporting tax codes that prevent taxation on profits made abroad by USA big name corporations.

After a 4 year degree one might consider a Vocational-Technical Institute to become a highly skilled technician in some field.This will make any college grad more marketable and perhaps open doors to self employment. Or if one has the dollars becoming a career student is as respectable as any other job.

College degrees are still of great value it's just that one may need a skill to support that great college opportunity.


cato_the_elder 1 year, 10 months ago

"In his Encounter Books Broadside 'The Higher Education Bubble,' Reynolds says this bubble exists for the same reasons the housing bubble did. The government decided that too few people owned homes/went to college, so government money was poured into subsidized and sometimes subprime mortgages/student loans, with the predictable result that housing prices/college tuitions soared and many borrowers went bust. Tuitions and fees have risen more than 440 percent in 30 years as schools happily raised prices — and lowered standards — to siphon up federal money."

Truer words were never spoken.


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