Higher Ed Bubble

[Annie]

Going to pop? Over on a political thread regarding budgetary moves by Coburn, I commented that cutting back on loans, grants would go a long way towards lowering education costs that have been spiraling out of control for a good 15-20 years. Modbert thought that might hold true for private, but not state schools. Not so and those paying attention recognize it:

Will college bubble burst from public subsidies? | Michael Barone | Politics | Washington Examiner

Will college bubble burst from public subsidies?
By: Michael Barone | Senior Political Analyst Follow Him @MichaelBarone | 07/19/11 8:05 PM

When governments want to encourage what they believe is beneficial behavior, they subsidize it. Sounds like good public policy.

But there can be problems. Behavior that is beneficial for most people may not be so for everybody. And government subsidies can go too far...

Now some people see signs that another bubble is bursting. They call it the higher education bubble.

For years government has assumed it's a good thing to go to college. College graduates tend to earn more money than non-college graduates.

Politicians of both parties have called for giving everybody a chance to go to college, just as they called for giving everybody a chance to buy a home.

So government has been subsidizing higher education with low-interest college loans, Pell Grants and cheap tuitions at state colleges and universities.

The predictable result is that higher-education costs have risen much faster than inflation, much faster than personal incomes, much faster than the economy over the past 40 years...

Take the California State University system, the second tier in that state's public higher education. Between 1975 and 2008 the number of faculty rose by 3 percent, to 12,019 positions. During those same years the number of administrators rose 221 percent, to 12,183. That's right: There are more administrators than teachers at Cal State now.

These people get paid to "liaise" and "facilitate" and produce reports on diversity. How that benefits Cal State students or California taxpayers is unclear.

It is often said that American colleges and universities are the best in the world. That's undoubtedly true in the hard sciences.

But in the humanities and to a lesser extent in the social sciences there's a lot of garbage. Is a degree in Religious and Women's Studies worth $100,000 in student loan debt? Probably not.

As economist Richard Vedder points out, 45 percent of those who enter four-year colleges don't get a degree within six years. Given the low achievement level of most high school graduates, it's hard to avoid the conclusion that many of them shouldn't have bothered in the first place.

Now consumers seem to be reading the cues in the marketplace.

An increasing number of students are spending their first two years after high school in low-cost community colleges and then transferring to four-year schools.

A recent New York Times story reported that out-of-staters are flocking to low-tuition North Dakota State in frigid Fargo...

Read more at the Washington Examiner: Will college bubble burst from public subsidies? | Michael Barone | Politics | Washington Examiner