Talk of the—and I mean the—education bubble is everywhere. But nowhere is it more succinctly or beautifully demonstrated than in a picture created by Mark Perry of the American Enterprise Institute.
It has been shown in many places, but for ease, it is re-pictured here (I wish I would have thought of this).
What first hits you is the red bump—i.e. the bubble—in housing prices compared to the “consumer” price index (in blue). Everybody knows what happened when this bubble was pricked and burst. But just look at the tuition line (in brown)! It’s been called a bubble, but that’s clearly too weak a word. This is Weimar Republic-style inflation and it cannot last.
An anecdote: The place I am teaching has increased its tuition over 300% in something less than a decade. This is, as the chart shows, typical. Glenn Reynolds (a.k.a. the Instapundit) quoted from a Money magazine story which said, “After adjusting for financial aid, the amount families pay for college has skyrocketed 439 percent since 1982…Normal supply and demand can’t begin to explain cost increases of this magnitude. [ellipsis original]”
If you have any sense of the value of money, you should be agog. Over 400 percent since 1982! Over 300 percent in just the last ten years! (Look at the “kink” in the brown line in 2001.) Again, this cannot last. But why is this trend here and when will it end?
Reason number one: too many kids are going to college. This is usually expressed as “a greater percentage of high school graduates are attending college”, the tone suggesting that this is a good thing. This means that more professors must be provided to teach the influx. And more buildings must be created in which to teach and house them.
And, best of all, more administrators must be hired to strengthen and enlarge the educational bureaucracy. Why, at the place in which I am visiting, there are no fewer than four separate offices devoted to “diversity.” This is natural: the larger a bureaucracy becomes, the larger is seem to need to be.
At least the kids are benefiting, right? Wrong. According to Barone:
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.
Reason number two: too much cheap government-provided—meaning out-of-your-pocket-provided—money. Michael Baron agrees: “Government-subsidized loans have injected money into higher education, as they did into housing, causing prices to balloon.”
Reynolds quotes a New York Times profile of “Courtney Munna, a 26-year-old graduate of New York University with nearly $100,000 in student loan debt.” Her “degree”? Religious and Women’s Studies. Does it make sense to you that a bank would make Munna these loans?
Remember Obamacare? To pass it, Congress had to invent a screwy legal maneuver that would make it appear that Obamacare would be “cost free” in terms of the federal budget. To do this, the government took over all student loans. Make sense? Congresspersons reasoned that if the government issued loans, the process would be more efficient and cheaper than if private businesses did so. I hope you weren’t drinking when you read that.
Anyway, the result will be: look for more loans and more money pumped into the system. This will be supported by university bureaucrats (they get bigger offices) and teaching unions (they get bigger offices, too). Nobody will have the guts to turn down what appears to be “free money.”
Reason three: Businesses are lazy and growing dimmer. In some sense, people like Munna are being rational. They are told by unthinking businesses that “You need a ‘degree’ to work here.” The specifications of the “degree” don’t matter, just that you have one: a “degree” functions more like an amulet than as a marker of ability. Since any old “degree” will work, why not one that is easy and content-free like Women’s Studies?
This system feeds back on itself. Perhaps Munna will be awarded a job in a business that requires a “degree”. Our Munna will then likely be involved in selecting future new employees at her organization. Using the skills instilled into her from her Women’s Studies studies, the first question Munna will ask is, “Does the prospective employee have a ‘degree’?”
And so the great cycle of college education returns to the beginning.