That was the name game. Now we’re playing (and have been for quite some time) the blame game. The Occupiers, with some encouragement from Democrats on Capitol Hill and in the White House, have been blaming the financial industry for their woes.
There’s more than enough blame to go around. Consider, for example, Congress’ role in pumping air into the subprime bubble, whose bursting was one of the principal causes of our economic downturn.
But today, I want to talk about higher education, where the long and steep upward climb of tuition offers at least prima facie evidence of yet another bubble. We’ve been willing to pay more and more for our “higher” education because it was supposed to be the guarantee of a good job upon graduation (hence a good investment of time and money) and because the government’s willingness to subsidize it (thorough grants and guaranteed loans) would help insulate us from the real costs.
The Occupiers aren’t the only ones wondering about the former. There are lots of reasons to ask about the value of a college education, not just in terms of the connection between credentials and the marketplace, but even in terms of the more intangible relationship between higher education and a life well-led. That latter relationship is, for me, the central concern, but in terms of the economics of higher education, it’s a luxury good.
Properly understood, of course, it’s a relatively cheap luxury good. You need students, professors, and great (or at least good) books. Unfortunately, however, we’ve lost our focus on that time-honored nexus (the first discussion of it that I can think of is in Xenophon’s Memorabilia). Instead, we have professors who have science envy and need to do ground-breaking research (which means studying things that have in the past, for better or worse, been neglected and inventing new ways of looking at things, as if novelty were always a good thing). And we have students who wish to be entertained and coddled in country club-like surroundings. Finally, although I’m leaping ahead of myself a bit here, the fact that so much of this already bloated enterprise is financed by the federal government means that there are significant costs connected with regulatory compliance.
So a good that ought to be relatively simple–Mark Hopkins on one end of a log and a student on the other–becomes increasingly complex…and expensive.
It has become all too easy to criticize American higher education for both its frivolousness and its expense, but the Obama Administration is fixated on access, which to it means spending more taxpayer money. This, as Instapundit Glenn Reynolds points out, means pumping more air into the bubble:
The real problem is that we’ve been running a higher education bubble, one that — like the real-estate bubble — has been pumped up by cheap government money. Since 1999, student loan debt has increased by 511%, while disposable income has increased by only 73%.
As he points out, ”when the government subsidizes something, producers respond by raising prices to soak up as much of the subsidy as they can. College is no exception.” And when government pays, it wants a return on its investment. Hence the aforementioned regulatory burdens, not to mention the much feared “gainful employment” rule that some are discussing, and the sometimes well-intentioned but often problematical efforts to sell college education as civic education.
With all this money and indebtedness floating around, it is difficult to talk about the real purposes of higher education. On the one hand are those who speak of the marketplace, which makes students consumers. This is a fundamental distortion of the teacher-student relationship and requires the illusion that students know what it is they need. At best, you get more or less sophisticated vocational education out of this. At worst, you get edutainment. On the other hand are those whowould respond to these abuses by regulation, so that we educators give students what those who purport to speak for the taxpayers think they need. Again, the best possible result is more or less sophisticated vocational education. The worst is some sort of standardization and indoctrination.
Perhaps it would be good if the bubble should happen to burst. We might then be able to speak freely about the real and varied purposes of post-secondary education (some “higher,” some more or less vocational). And we might explore simpler ways of recovering Mark Hopkins’s log.
November 1st, 2011 | 2:55 pm
We shouldn’t discount Joe’s evidence of a college bubble. Some of the signs are there. However, I would use caution when comparing it with the housing bubble. To avoid the housing bubble, one could follow prudent advice by avoiding McMansions and living in a house you could afford. This is good advice and only costs you a couple of spare rooms and drywall. On the other hand, if a young man decides to not attend college because he is worried about a college bubble, he could greatly limit his future. Many jobs are only available for those with a college degree, and it can be very difficult to get your foot in the door with only a high school diploma.
November 1st, 2011 | 3:15 pm
I’m afraid that, like the house bubble it is going to burst one way or the other. Broke ex-students (*not* necessarily graduates, by the way) will be unable to pay off their monster loans, and the feds will end up getting soaked in their guarantees to the lenders — or getting soaked directly by those who borrowed directly from the feds.
But I have no idea what the consequences will be. A lot less students going to college? A lot of bankrupt colleges? Maybe, except the students don’t owe money to the colleges mostly, but to the lenders (unless I’m mistaken).
Cheaper tuition? A divide between vocational training, scientific research, and humanities-instruction into separate institutions? I’m just throwing out possibilities.
At the same time that higher education is more expensive than ever, it also seems easier than ever to be self-taught, or perhaps to develop completely new types of organizations that aren’t colleges or universities.
Maybe some type of low-cost DIY alternative will develop out of the home schooling movement, maybe centered around the public library? That could be really cool…
November 1st, 2011 | 3:24 pm
That’s quite true, Michael, but I think there are ways to limit one’s exposure to the bubble, as it were.
Pick a college based primarily on cost, not on anything else. That would include looking at ones close to your home so you can live with your parents rent-free, keep connected to your high school friends, and maybe keep your high school job.
Also, freeload off the government while you can. Get those grants and subsidies, and make sure you take only the free ones, not the loans masquerading as aid.
And work really hard at your academics. Good grades are worth money in scholarships.
Whatever you do, don’t drop out unless you actually do the math and decide that finishing the degree is worth the additional debt load.
The *real* victims of the bubble are not underemployed graduates, but dropouts who have a bunch of debt and not even any degree to show for it. It can be awfully hard to feel sorry for them considering how easy it generally is to get through college nowadays, but a whole lot of them really shouldn’t have been encouraged to go to college in the first place, at least not without learning some real-world self control skills first.
November 1st, 2011 | 4:00 pm
My daughter will be starting college next year. No. 1 priority: Graduating with minimal (I’m hoping zero) student loan debt. This will probably mean in-state school with lower tuition. Not interested in the “prestige” schools. In the present economy, we are way beyond that. Big scam, just like the credit card companies. Not gonna let them play me or my family for saps.
November 1st, 2011 | 4:49 pm
When I taught at a university (1970s through the 1990s) I was told, in my first year, “Don’t fail anyone til after Christmas” because by then the grant for the body was permanent. And then I realized that at least 50% of the students didn’t belong in higher education; they hadn’t the minds nor the interest, and they should have been in trades or commerce. Shrink the universities and encourage the trades.
November 1st, 2011 | 5:45 pm
Another route is via community colleges for the first two years. Some states (Virginia and California) have programs that offer guaranteed admission to state 4 year colleges as long as the student follows the prescribed program of study (core education requirements) and attain a specified GPA. Some private universities also participate in this program. In CA, this is how many students—including many at the top of their high school classes—get their degrees without incurring huge debts.
A concern now, though, is that budget cuts have limited the number of sections and even required courses. My son hopes to graduate on schedule this Spring, but has had a terrible time getting into courses that count toward his major. He worries that he will have to continue one or two or three extra quarters just to get the credits. And we will have to continue paying tuition to keep him in full time status. It smacks of fraud, or a lack of truth in advertising (non-existent courses are listed in the catalog). I don’t think anyone has figured out the solution yet.
November 1st, 2011 | 8:28 pm
“Perhaps it would be good if the bubble should happen to burst.”
How can this bubble not burst? Many students are carrying tens of thousands of dollars of student loan debt, colleges and universities keep raising tuition to keep up with each other (and yes, to do their best to soak up those subsidies), and these institutions are feeling increasing strain due to new competition from cheaper, more convenient educational choices, like for-profit schools like Phoenix U. (Full disclosure: I teach at a for-profit college, so I like some of the for-profit alternatives.)
It all seems like a fait accompli to me. In my mind, the question isn’t IF but WHEN, and what will happen in the aftermath of this inevitable collapse.
November 1st, 2011 | 8:32 pm
Ethan C: “Maybe some type of low-cost DIY alternative will develop out of the home schooling movement, maybe centered around the public library? That could be really cool…”
You’re already seeing some of this. Just look at the proliferation of online degree programs popping up like mushrooms all over the place. A significant portion of large and small institutions are working on online programs right now–it’s convenient, it can help with enrollment, it can help cut costs, and frankly, it’s the future. For my second Master’s degree, I did eight of my twelve classes online through a major state university. Now, there are entire institutions basing themselves around an online educational model. They’re not perfect, they can’t offer everything, but they’re growing.
November 2nd, 2011 | 10:14 am
wish id skipped college and become a train engineer like i really wanted to
no b.s.
November 2nd, 2011 | 10:27 am
When the education bubble bursts, the “Occupy the Quadrangle” crowd will be something to watch!
November 2nd, 2011 | 10:30 am
Regarding your introductory comments about the housing bubble and credit crisis, you might want to look at the assortment of facts (N.B.: facts) at the following link: http://rortybomb.wordpress.com/2011/11/01/bloombergs-awful-comment-what-can-we-say-for-certain-regarding-the-gses/. It is evident to any honest man with two eyes who will look coldly at the evidence (perhaps that excludes most contemporary “conservatives”) that the finance crisis was a market-run-amok phenomenon. Government’s role was nugatory. (I speak as someone who depends on the finanacial markets for my own bread and butter.)
November 2nd, 2011 | 10:41 am
Our obsession with credentials is doing great harm. Not only are people going deep into debt for their degrees, but they are spending many precious years of their lives in the process. Far too many of these “educations” are of questionable worth, and the high cost in terms of time (as well as money) should not be overlooked.
Graduate programs can be particularly costly and disappointing. The comment threads on the “100 reasons NOT to go to grad school” blog offer a sense of the great disappointment and frustration experienced by current graduate students: http://100rsns.blogspot.com/
How did we create a higher education system that requires so much of students and offers so little in return?
November 2nd, 2011 | 10:43 am
For me the college bubble has already burst. My oldest child went through the UC system leaving me with barely manageable debts. The quality of the education was not measurable and I hated the leftist campus groupthink.
My youngest child will leave high school in a couple of years and she will not attend a UC campus. We cannot afford it, it isn’t worth it and surprisingly, it is not safe.
November 2nd, 2011 | 11:00 am
[...] ON the higher education bubble. “Perhaps it would be good if the bubble should happen to burst. We might then be able to [...]
November 2nd, 2011 | 11:08 am
An implication of this article may be that, deliberately or in recovery from a crash, the higher-ed market will split into two: professional vocational training and the higher liberal arts – which have very different cost-benefit rationales. The vocations need credentials – which can be provided independently of the academy, more efficiently in many cases. Higher liberal arts, except as vocational credentials for teachers of the same, have little measurable direct value but will likely survive as luxury/status goods for people who have other sources of income. Basket-weaving and navel-gazing equivalency courses will likely go away.. at least for several generations. Or so it seems likely to me; YMMV.
November 2nd, 2011 | 11:51 am
Pick a college based primarily on cost, not on anything else.
Prestige colleges are selling social class status, not “education”.
November 2nd, 2011 | 11:58 am
Cheaper tuition? A divide between vocational training, scientific research, and humanities-instruction into separate institutions? I’m just throwing out possibilities.
Community colleges work well, but have become remedial training grounds – making up the gap between high school and college entry level. Colleges prioritize research etc., high schools are focused on sports and extracurricular. So I’d suggest a radical reform: make a community college-style system that goes down to the earliest possible grades, and let the students who are serious about education go there as soon as they want to. Let junior high kids go there if they want. Let them take whatever level course they’re ready for, instead of whatever the junior high says kids “ought” to be taking at this stage (most junior high schools have very limited offerings). Let them be taking French VIII and advanced courses in French literature alongside remedial math if they have to.
Then: link the sports and extracurricular activities to the geographical neighborhood, not the school. There’s no reason why academics needs to compete with popular sports.
As far as colleges go, what is evolving (whether we like it or not) is a new form of credentialing – as people lose faith in college degrees, they are searching for new ‘gatekeepers’ (new ways of documenting relevant knowledge), and attaching new value to forms of learning. There is simply no reason to value a degree from a school that spends too much time on “women’s studies” without actually preparing the student for a job.
November 2nd, 2011 | 12:09 pm
HT: I don’t think I am in the minority when I say that I do not follow links from discussion threads if there is nothing posted of substance by the poster. Write out your original ideas and add the link as support for those interested in learning more. No doubt the bubble is not government alone but then again, the article does not claim that is so; it goes into detail about cultural stigmas and what is expected of people, and what they expect of their education. The government is certainly the biggest and most enthusiastic enabler of these people who are, at root, the cause of the bubble.
November 2nd, 2011 | 12:11 pm
Sooner or later restrictions placed on employers over hiring will be loosened. A college degree is a way around those restrictions. Since employers can’t give a “test” to determine suitability for employment, they need to use other measures. Affirmative action is part of the problem. Employers who can hire qualified, but non-credentialed employees would prefer them to credentialed but unqualified employees. Requiring a college degree, or a Masters, reduces the chances the prospective employer will be accused of being a discriminating racist.
Once upon a time a degree in English, or History, was fine, as it represented the student had taken a course of study and learned something about reasoning and communicating. Not so much any more. But in those days only dummies were Business majors. What is there to know? Buy low, sell high; treat employees, customers and competitors with respect and dignity; obey the law; act competently and have a passion. There. Just saved y’all thousands you would have spent for an undergraduate business degree. Unfortunately, so many now have business degrees that a MBA is necessary. As degree and grade inflation come in, more is required, hence the need for the MBA. Again, there was a time when people got “normal” degrees, went to work in a business, and then pursued an MBA.
November 2nd, 2011 | 2:09 pm
HT: I had to consult the dictionary for “nugatory”. Good one, that. However, consider this link: http://news.investors.com/Article/589858/201110311638/Housing-Crisis-Obama-Clinton-Subprime.htm The article claims that under President Clinton a number of Federal agencies joined forces to require lending institutions to make loans to under-represented groups based on racial grounds, not on sound business practices. Given all the bad loans then created, a lot of the mess was banks unloading bad loans forced on them by the government. “Nugatory” is hardly the word for such government intervention.
In the same manner the Federal Government has strenuously “encouraged” colleges and universities to move forward with diversity being more important than quality. The admission of under-qualified students knows no racial boundaries. About 70% of our high school students go to college. About half of them never finish, and of the ones who do too many are in programs of dubious worth.
November 2nd, 2011 | 2:29 pm
As someone who worked at a research university (the University of Alabama in Huntsville), in the 1990′s we saw this develop. In the early 1990′s recession the state government, due to the constitutional requirement to balance the state budget, cut funding to higher education and increased tuition. The federal government responded by automatically increasing the grant and loan amounts.
The state and other states figured out pretty quickly that this was a great means to get the federal government to fund higher education and move it off of the state’s budget. This has continued now for about 20 years.
To address the bubble, I am hearing and seeing in unrelated news items across the country that University enrollment is shrinking. Someone needs to actually look at this and see the statistics as I have seen enough of this (UAH enrollment down over 14% since the late 90′s for example, that it is showing up in budget discussions at universities.
What happens if more and more young students simply quit going to school? This is the first indication of the popping of the bubble and it is my prediction that you will see more and more of this happening. There will be another round of tuition increases, which will suppress enrollment even more. We are at the peak of the bubble and it is popping and the enrollment figures (as well as retention figures after the first year or two) are the canaries in the coal mine.
What happens when this ponzi scheme becomes no longer tenable? I have no idea.
November 2nd, 2011 | 2:33 pm
Not touched on in the article is the problem of social networks and texting as the primary means of communication for today’s students. Professors will have a hard time getting students to read and write. Employers may not care as they will achieve high productivity through systematic processes connected to these very same social networks. Makes the replacement of “bricks and mortar” colleges by “point and click” on-line educational programs more likely. I hope so and am very open to avoiding greedy colleges all together.
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