The Last Bubble to Pop? The Education Bubble

From the video above:

From the 1950s until 1991, the University of Pennsylvania, Harvard, MIT, Princeton, Brown, Columbia, Cornell, Dartmouth, and Yale formed the Overlap Group, through which they shared data on applicants. This allowed them to artificially inflate tuition and eliminate merit-based financial aid by circumventing competition. A Dartmouth official said that had it not followed the Overlap Group, "we would effectively be out of the Ivy League, and this would have a serious impact on our applicant pool."

Thus, tuition rises.
Forty-seven universities have built billion-dollar endowments, while doubling their average tuition from 1995 to 2005. The average US public college tuition rose 35% between 2001 and 2006, while private college tuition rose 11%. Instruction has only received 21% of inflation-adjusted college spending per student since 1976. Overall, only Switzerland spends more per student from elementary school through college than the US. Although 97% of Americans with children expect their eldest to attend college, 26% have less than $5000 saved for this. Hence, half of college graduates spend 8% of their income on student loans. Those with graduate degrees spend 13.5%. To make matters worse, college graduates' real incomes fell 5.2% from 2000 to 2004, as high school graduates' incomes rose 1.6%. Now, only 44% of parents think the value of a college education is worth the cost. As a matter of fact, a 1999 study found no income difference between graduates of selective universities and those who won acceptance to comparable schools but chose less-selective ones.

In 1973, the US Supreme Court ruled in Griggs versus Duke Power Co. to forbid general intelligence tests in employment because they create racial "disparate impact." So, educational credentials have served as a mark of intellectual competence. However, employers have reason to doubt this conceit.

SAT scores peaked in 1964. Twenty-two percent of college freshmen need high school-level math. From 1995 to 2005, reading proficiency among Americans with graduate degrees declined from 51% to 41%. A 2006 study found that 20% of students pursuing 4-year degrees had only basic quantitative skills, and half could not perform complex literacy tasks. In the early 1960s, the average college student completed 60 hours of schoolwork per week. In 2003, only 33% of freshman reported 6 or more hours per week. Those doing less than one hour per week doubled over 16 years to 16%. Meanwhile, 47% receive A average grades, compared to 18% in 1968.

Such dubious currency at such a steep cost has yet to impact the plentiful supply. In 1950, 6% of Americans had a college degree. In 2005, 28% had one. The masters degree is the fastest growing, with a 19% increase from 1996 to 2002.

In the words of Dr. Mark Edmundson of the University of Virginia, "It is probably time now to offer a spate of inspiring solutions. . . . Perhaps it would be a good idea to try firing the counselors and sending half the deans back into their classrooms, dismantling the football team and making the stadium into a playground for local kids, emptying the fraternities, and boarding up the student-activities office. Such measures would convey the message that American colleges are not the northern outposts of Club Med."

Al Fin comments:

But American colleges are indeed the temperate clime outposts of Club Med. More famous for binge parties, hooking up, athletic stars who are flunking with criminal records, grade inflation, and a punitive indoctrination into inquisitorial pre-scientific political correctness.

If you are a parent, spending hard earned, hard saved income to send your child to one of these play pens for psychological neotenates, you may wish to consider the mismatch between your good intentions and your actions.