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“HIGHER EDUCATION BUBBLE” MEETS “21ST CENTURY RELATIONSHIPS:” College President ‘Prostitution’ Site Ruled Legal. “A website that authorities say two aging professors used to run a multistate prostitution ring is legal, a state judge has ruled, highlighting the difficulties that prosecutors face in using decades-old laws to combat a modern phenomenon.”

Meanwhile, why not just legalize prostitution. Legal prostitution is safer and healthier, and it’ll provide employment opportunities for some of those unemployed college grads.

SUDDENLY, IT’S A BUYER’S MARKET: Prospective Students Tell Law Schools, “Show us the money.” “Law schools experienced a 25% decline in applicants nationwide during the past two years, due in part to the tight job market for new lawyers and a more widespread understanding of the high costs of attending. Many have responded by accepting a larger percentage of applicants and sweetening their scholarship packages, in hopes of locking in prospective students. For their part, many would-be law students sense opportunity and are aggressively negotiating scholarship offers from competing schools. . . . The trickle-down effect of competition for students may be hitting lower-tier schools the hardest.”

Just as I predicted.

WORKING YOUR WAY THROUGH COLLEGE HAS GOTTEN A LOT HARDER:

We might have reached a natural limit for how many students can realistically find work while in school, at least until the economy rebounds. The two graphs below are adapted from Department of Education data* on student employment covering selected years from 1970 through 2010. They illustrate a point that’s both obvious and easy to overlook: In a bad job market, it’s a lot tougher for an undergraduate land employment.

And, of course, tuition keeps climbing at a rate that vastly exceeds wage growth. This phenomenon calls for more attention.

HOW’S THAT HOPEY-CHANGEY STUFF WORKIN’ OUT FOR YA? (CONT’D): Grim job prospects could scar today’s college graduates.

Social scientists say these young adults are a lot like the Americans who came of age in the early 1930s, both in the economic upheaval they confront and in the attitudes toward success, contentment and risk aversion that they are forming. . . .

A Harvard University Institute of Politics survey in March and April found that more than three out of four college students expect to have a somewhat or very difficult time finding a job. And 45% expect student loans to affect their financial circumstances “a lot” after they graduate.

Their pessimism is based on the experience of the 20-somethings just ahead of them. A Rutgers University study this spring of 444 graduates who received bachelor’s degrees from 2006 to 2011 found that 51% were working full time. The rest were in graduate school, unemployed, working part time or no longer in the job market.

One in four were living with parents. Those who got jobs beginning in 2008, the height of the Great Recession, earned a starting salary, on average, 10% less than those graduates who entered the job market in 2006 and 2007, according to the Rutgers survey. All this has happened as the total amount of student loan debt in the USA surpassed $900 billion.

Gee, you could write a book on this phenomenon.

HERE’S A REVIEW of my The Higher Education Bubble.

THE HIGHER EDUCATION BUBBLE, according to Dilbert. Thanks to reader Matt Andrade for the tip.

HIGHER EDUCATION BUBBLE UPDATE: “E-mail messages were flying among leaders of the Board of Visitors of the University of Virginia in the weeks leading up to the ouster of Teresa A. Sullivan as president of the university. The e-mail messages show that one reason board leaders wanted to move quickly was the belief that UVa needed to get involved in a serious way with online education.”

Isn’t it interesting that these emails came out immediately, while U.Va. fought bitterly to avoid releasing the ClimateGate stuff? . . . .

ITUNES UNIVERSITY GOES INTERACTIVE:

iTunes U has been great at replicating the sit-and-listen part of the college learning experience. It’s been less great, however, at replicating the thing that has traditionally made the university such a great learning environment: class discussion, the lively back-and-forth that can come from the seminar setting. And it’s been less great at that, of course, because it hasn’t tried to be any good: iTunes U has been a clearinghouse for college lectures, and that, so far, has been more than enough.

Until today, that is. Now available on the iTunes platform is a Stanford class, “App Development for the iPhone and iPad,” which allows, for the first time, interactive class discussions. The class — to date, the most popular among Stanford’s many iTunes U offerings — will employ the course discussion infrastructure of Piazza, which Stanford has already been using as an online supplement to its in-person discussions. Students in the class — which is still free to take — will get to interact with each other, asking questions and working through problems.

Where, I wonder, could this be leading?

HIGHER EDUCATION BUBBLE UPDATE: State Loan Agencies May Be Subject to Whistle-Blower Claims, Federal Appeals Court Rules.

In 2009, a former researcher with the U.S. Department of Education filed a lawsuit, charging that several student-loan agencies and companies had defrauded the federal government. But a judge dismissed the charges against four entities, all state-created student-loan authorities which had argued that they were not subject to suit under the federal False Claims Act.

Now, a three-judge panel of the U.S. Court of Appeals for the Fourth Circuit has ruled that the lower court did not properly determine if the state loan authorities were subject to the federal law. . . .

In the suit, Mr. Oberg contended that many of the nation’s largest student lenders, both for-profit companies and nonprofit corporations, had improperly received $1-billion dollars in excess federal subsidies. The lawsuit has resulted in several settlements with lenders, including one in which the company Nelnet agreed to pay $55-million.

Things are looking more like the housing bubble all the time. Who knew? The full opinion is here.

HIGHER EDUCATION BUBBLE UPDATE: There’s a Freedom From Student Loans blog.

HIGHER EDUCATION BUBBLE UPDATE: Encouraging professors to retire.

Plus, when university presses shut down.

WISCONSIN HIGHER EDUCATION REFORM: “Competency, not seat time.”

Hmm. What could be going on?

HIGHER EDUCATION BUBBLE UPDATE: A Professor’s Cri de Coeur. “Deans, provosts, and presidents come and go. Many such individuals are building their careers and are often looking to go on to the next, better job. That’s their prerogative. But faculty members tend to stay put. . . . My college has had five deans in the last 10 years. They want to make their mark. . . . Every time there is turnover, there is a new initiative. There is a new strategic plan. So many faculty are just at the point where they say ‘just leave us alone.'”

HIGHER EDUCATION BUBBLE UPDATE: Too Many Biomedical Graduates, Not Enough Jobs.

HIGHER EDUCATION BUBBLE UPDATE: Disruptive Technologies:

Massively open online courses, or MOOCs, are not credit-bearing. But a pathway to college credit for the courses already exists — one that experts say many students may soon take.

That scenario combines the courses with prior learning assessment — a less-hyped potential “disruption” to traditional higher education — which is the granting of credit for college-level learning gained outside the traditional academic setting.

Interesting, but it threatens a lot of rice bowls.

HIGHER EDUCATION BUBBLE UPDATE: Smartphones For All Freshmen At Seton Hall.

HIGHER EDUCATION BUBBLE UPDATE: Grieving Father Struggles to Pay Dead Son’s Student Loans.

Someone should really write a book about this phenomenon.

HIGHER EDUCATION BUBBLE UPDATE: Bloomberg: Law Grads Are Now ‘Indentured Servants’ to the U.S Government.

U.S. NEWS: Why The Higher Education Bubble Will Be Worse Than the Housing Bubble. “Even when homeowners got hopelessly behind on their mortgages, two options helped. First, they could declare bankruptcy and free themselves of their crippling debt; second, they could sell their houses to pay down most of their loans. Students don’t have either of these options. It’s illegal to absolve student loan debt through bankruptcy, and you can’t sell back an education.”

HIGHER EDUCATION BUBBLE UPDATE: ‘A lot of kids in tears’: Higher Fees, Less Aid May K.O. College Plans For Many 2012 Grads.

If only there were a concise explanation of this phenomenon somewhere.

NOW OUT: The Higher Education Bubble is now shipping.

IF YOU MISSED IT OVER THE WEEKEND, The Higher Education Bubble was the topic of a nice column by George Will in the Washington Post.

HIGHER EDUCATION BUBBLE UPDATE: University of Virginia President Makes Sudden Departure.

The statement added that with “no bright lights on the financial horizon,” the board members believe the university must “be able to prioritize and reallocate the resources we do have, and that our best avenue for increasing resources will be through passionate articulation of a vision and effective development efforts to support it. We also believe that higher education is on the brink of a transformation now that online delivery has been legitimized by some of the elite institutions.”

Read the whole thing.

Best missing-the-point comment: “Get ready for more attacks on women across the university.” It’s the War Against Women!

THE HIGHER EDUCATION BUBBLE gets a nice review from Mark Lardas. The publisher, meanwhile, tells me that because of all the interest they’re going to bring it out a couple of weeks early, which is to say today.

HIGHER EDUCATION BUBBLE UPDATE: At UCLA, a defeat for “studies” departments at the hands of “academically conservative liberal” faculty. Good thing it was a secret ballot.

Plus, from the comments: “Groseclose is suggesting that this is the start of a ‘preference cascade’ heralding the rapid decline and fall of the ‘Studies’ empire. Commenters are more cynically viewing it as simple self-interested turf protection. The two views are not entirely inconsistent. Self-interest, in a time of limited resources, will force people to finally acknowledge what everyone knows.”

Is it just me, or are we hearing more about “preference cascades” lately?

HIGHER EDUCATION BUBBLE UPDATE: University of Rochester Ending Free Tuition for Employees’ Children. “University of Rochester students who are the children of UR faculty and staff will no longer get free tuition at the college, beginning in 2013. . . . For the coming school year, tuition at UR will be $42,890, which is a 4.5 percent increase over the past school year.”

SUBPRIME COLLEGE EDUCATIONS: A nice shout-out for the Higher Education Bubble in the Washington Post from George Will. It’s amazing how much denial you see from the WaPo commenters.

HIGHER EDUCATION BUBBLE UPDATE: “For the sixth year in a row, tuition at the University of Wisconsin’s four-year campuses will go up by the state’s legal maximum of 5.5 percent.”

This kind of thing is happening all over the country. Can this continue when, as Bill Clinton points out, median income is now lower than when he left office?

That’s a question that people are starting to ask.

THE KINDLE EDITION OF THE HIGHER EDUCATION BUBBLE is now online and available for pre-order.

HIGHER EDUCATION BUBBLE UPDATE: House Republicans to Obama: Scrap Vegas speech, work with us on college loans.

If Obama had done his research he’d know why this is so important.

HIGHER EDUCATION BUBBLE UPDATE: UMass board approves 4.9 percent fee increase. “The University of Massachusetts Board of Trustees approved a 4.9 percent increase in student fees today, giving its emphatic blessing to a proposal Governor Deval Patrick had slammed the day before in a last-minute letter and phone call to UMass President Robert Caret. . . . Tuesday morning, Patrick weighed in unexpectedly, telling Caret he believed any rise in fees would put too much pressure on students and families, especially given that student loan interest rates are set to double if a deadlocked Congress does not stop them from doing so. He said he believed UMass first needed to ensure it had cut all possible costs.”

You don’t need a weatherman to see which way the wind is blowing. Or maybe Deval’s been reading up on the subject.

HIGHER EDUCATION BUBBLE UPDATE: Richard Posner: Is Student Debt Excessive?

The change in the financing of college from the 1950s, when I was growing up, is dramatic. In those days your family paid for your tuition and living expenses, or you received a scholarship from the college (and perhaps in partial exchange for it had to work part time for the college, for example by waiting on tables in the college dining room), or you worked your way through college, or college was free—or you didn’t go. But you didn’t borrow, and you didn’t graduate with any debt, and your career choices, and your marital plans, were not influenced by your having to pay off a substantial debt. This system of financing college education was feasible because a much smaller percentage of young people went to college in those days, in part because the financial returns to college were smaller than they are today. Student loans enable many students to go to college who couldn’t afford college without them yet would benefit from a college education, though student loans also enable colleges to jack up tuition, for which the students pay in the end unless they default on their student loans.

A complication for high school students trying to assess the value of a college education is the nation’s current economic situation. True, as in the 1930s, so now, the unemployment rate of college graduates is well below that of other workers. But it is more than 5 percent, which is twice what it was five years ago. And it is about twice that high—10 percent, at least—for young college graduates. If one adds in underemployment, that is, employment in a job for which a college education is not a qualification—for example, a college graduate employed as a waiter—the combined rate of unemployment and underemployment is almost 33 percent for all college graduates under the age of 25. (College graduates who are in graduate or professional school rather than have on average better job prospects than those seeking work with just a B.A. or B.S. under their belt.) Wages for young college graduates in the work force have also fallen.

No guarantees — which is why you don’t want to take on too much debt. If only there were a short, readable book on this subject out there somewhere. . . .

I WAS EXPECTING AN EARTH-SHATTERING KABOOM: The Green Energy Bubble Is Bursting Fast Everywhere.

So the tech bubble burst a decade ago, and the housing bubble five years ago. The higher education bubble is swelling to the bursting point, but it is the green energy bubble that is bursting loudest at the moment, and as usual environmentalists are slow to see that they’re about to get run over by a revival of the hydrocarbon economy. Those old dinosaurs may have been big lumbering animals, but the nimble fossil fuels they threw off are crushing the so-called green “fuels of the future” beloved of fruit-juice drinkers and vegans everywhere.

I’d prefer a space-solar/nuclear/hydrogen economy myself, but the greens don’t seem to favor that and I’m not sure the tech is ready yet anyway.

HIGHER EDUCATION BUBBLE UPDATE: Wesleyan University Abandons Need-Blind Admission.

HIGHER EDUCATION BUBBLE UPDATE: Higher Education’s Online Revolution: The substitution of technology (which is cheap) for labor (which is expensive) can vastly increase access to an elite-caliber education.

At the recent news conference announcing edX, a $60 million Harvard-MIT partnership in online education, university leaders spoke of reaching millions of new students in India, China and around the globe. They talked of the “revolutionary” potential of online learning, hailing it as the “single biggest change in education since the printing press.”

Heady talk indeed, but they are right. The nation, and the world, are in the early stages of a historic transformation in how students learn, teachers teach, and schools and school systems are organized.

If only someone, somewhere, would explain what’s going on in a short, easy-to-read book.

NOT WORTH THE DEBT: In today’s New York Post I talk about responding to the Higher Education Bubble.

UPDATE: Some comments from Donald Sensing. “College payments have to be evaluated the same way as any other spending, by present value and eventual worth. Fewer and fewer top-tier schools can pass that test.”

HIGHER EDUCATION BUBBLE UPDATE: Today’s Grade-Inflated, Lake Wobegon World; Letter Grade of A Now Most Common College Grade.

ONLINE EDUCATION: Bigger Than Facebook? “Let’s put it this way: if you can build a $100 billion company by using the Internet to replace the college yearbook–imagine what you can do if you use the Internet to replace college.”

Plus this: “I just came across an argument that it’s immoral to offer unpaid internships, which actually prepare young people for a career. Yet somehow it’s considered perfectly normal to charge someone $100,000 or more for a degree from a college that has deliberately neglected to ensure that its service has any marketable value.” If only someone addressed this problem at more length.

HIGHER EDUCATION BUBBLE UPDATE: Educational Quality: The Next Great Frontier? What a concept!

As I say, the problem with higher education isn’t a shortage of money, but a shortage of value.

HIGHER EDUCATION BUBBLE UPDATE: Students Don’t Need Cheaper Loans, They Need Better Educations.

IN RESPONSE TO MANY READER QUESTIONS: Yes, there will be a Kindle version of my The Higher Education Bubble. There will also be an iBook version. I just tested out the Kindle version today using the Kindle App on my iPad — it looked great, and the included videos played fine. I’ll post a link when it’s on Amazon.

HIGHER EDUCATION BUBBLE UPDATE: Another college in trouble. More here.

HIGHER EDUCATION BUBBLE UPDATE: A College Bubble So Big Even The New York Times And 60 Minutes Can See It…Sort Of.

Key bit: “Wadhwa argues that U.S. colleges and universities are the best in the world. Maybe that’s true, but so what? U.S. homes were probably the best in the world too, but that doesn’t mean that we had no bubble. U.S. tech firms in the late 90s were the best in the world, but that didn’t mean they were reasonably valued. Bubble-ness is a factor of quality AND PRICE. The point is that there is no asset of such great quality that it is a good buy no matter how high the price goes. A college diploma is no exception to that rule.”

Yes. I make that very point myself.

LAW SCHOOL TUITION, MONOPOLY RENTS, AND LAW PROFESSOR MORAL RESPONSIBILITY.

I’m reading an advance copy of Brian Tamanaha’s Failing Law Schools, and he’s got a pretty solid critique. In many ways it’s a much more focused and detailed (and much longer) version of my own Higher Education Bubble book, centering around law schools. I’m happy to see that he mentions Tennessee as one of the schools that are still providing a decent value, but he’s right about the systemic problems.

Some related thoughts here.

HIGHER EDUCATION BUBBLE UPDATE: The Rise of the Machines:

Without diminishing learning outcomes, automated teaching software can reduce the amount of time professors spend with students and could substantially reduce the cost of instruction, according to new research.

In experiments at six public universities, students assigned randomly to statistics courses that relied heavily on “machine-guided learning” software — with reduced face time with instructors — did just as well, in less time, as their counterparts in traditional, instructor-centric versions of the courses. This largely held true regardless of the race, gender, age, enrollment status and family background of the students.

The study comes at a time when “smart” teaching software is being increasingly included in conversations about redrawing the economics of higher education. Recent investments by high-profile universities in “massively open online courses,” or MOOCs, has elevated the notion that technology has reached a tipping point: with the right design, an online education platform, under the direction of a single professor, might be capable of delivering meaningful education to hundreds of thousands of students at once.

This is going to bring about massive change. If only there were somewhere you could go for an analysis of what’s going on.

INSTAVISION ON THE HIGHER EDUCATION BUBBLE: I talk with Naomi Schaefer Riley, author of The Faculty Lounges, And Other Reasons Why You Won’t Get The College Education You Paid For. (Bumped).

More on this topic here.

HIGHER EDUCATION BUBBLE UPDATE: Bankruptcy Court Finds Undue Hardship, Discharges $340,000 Student Loan Debt of Former Law Student With Asperger Syndrome.

As I’ve already predicted, I think we’ll see a growth in law practices aimed at finding ways for people to escape student loan debt via disability, etc.

HIGHER EDUCATION BUBBLE UPDATE: Are We Subsidizing Student Debt Too Generously? “Why am I subsidizing student loans for Harvard kids? . . . I have no idea why. It never made sense to me even when I was at Harvard. Harvard has a huge endowment, and just hoards it. It’s not mostly for the students. As the Dean of Harvard Law School publicly said then, students are merely ‘incidental.'”

HIGHER EDUCATION BUBBLE UPDATE: Median Compensation for Public College Heads Grew 3% in 2010-11. “The median total compensation of the 199 public college presidents surveyed was $421,395, up 2.9 percent from 2009-10, the survey found, while the median base pay, $383,800, increased 1.3 percent. As in the past, E. Gordon Gee of Ohio State University was the highest-paid president, earning $1,992,221 in total compensation — 12.3 times the compensation for the average full professor at Ohio State. His base pay was $814,156, with the rest coming as a bonus and deferred compensation.”

HIGHER EDUCATION BUBBLE UPDATE: Student Loan Bubble Putting Hundreds of Colleges at Risk. “207 colleges and universities—31% of the 678 institutions in the database— have, under at least some circumstances, more debts than cash and marketable investments. In the model these 207 inadequate-capital institutions have projected net financial asset balances ranging from a negative few hundred thousand dollars to nearly a negative $400,000,000. More than half of the 205 had negative projections from ($10,000,000) to ($100,000,000).”

Related: Chester College Will Close. “The economic downturn that started in 2008 has been particularly tough on very small private colleges that lack much in endowment income or national name recognition. Dana College shut down in 2010. Mississippi’s Wesley College closed that same year. Lambuth University, in Tennessee, closed last year after losing accreditation.”

All I can say is, I told you so. I also have some thoughts on what comes next.

HIGHER EDUCATION BUBBLE UPDATE: Sixty Minutes asks: Is College Worth The Cost?

If only there were a place to go for more information.

HIGHER EDUCATION BUBBLE UPDATE: 11 Public Universities With The Worst Graduation Rates.

UPDATE: Reader Clay Nielsen writes:

The collection of 11 worst public university graduation rates is a little misleading – at least as far as the Kent State University branch campuses are concerned. A majority of the students leaving these campuses early are simply using them as a low-cost way to get college prerequisites out of the way close to home. They spend a year of two there, to get a lot of the early classes out of the way, then transfer to their more expensive school of choice for specialty classes and eventual graduation.

It is a very common tactic here – I did it in the late 1970s and my son is pursuing the same strategy now. My daughter, who will graduate next year, plans a four-year private college course (ouch!).

Ouch, indeed.

PROF. MARK PERRY: The Unsustainable Higher Education Bubble; It’s Showing Signs Of Stress, Has The Deflation Started? Hey, my book doesn’t come out until next month.

HIGHER EDUCATION BUBBLE UPDATE: Tuition War in Texas: UT Faculty Wants More. “You can always make a case for more revenue, and even with the higher tuition proposed under the plan, UT remains one of the great bargains in American education, but American universities need to lead by redesigning themselves to deliver a better product at a lower cost. Faculty senates know what faculties want—and it is almost always more resources to go on doing things the same way but in more comfort. But faculty senates are generally focused on protecting the rights and the privileges of the academic guild. Sometimes guild interests align with the public interest; often, they do not. . . . UT faculty by and large think that what Texas needs is a flagship public university which is a first class research university—as that concept was developed in the second half of the twentieth century. What the state actually needs is a first class twenty-first century university, and that is almost certainly something that delivers more education to more students at less cost per head than the universities of the last century.”

Then there’s the whole “I support Bill Powers” astroturfing.

Somebody should write a book on this phenomenon.

HIGHER EDUCATION BUBBLE UPDATE: What We Don’t Know About Student Loan Debt. “The lack of readily accessible, accurate information about borrowing at specific colleges means that prospective students can’t use the information in their decisions about whether or not to apply. It also makes it more difficult for colleges to compare their own students’ indebtedness with that of students at other institutions — a process that some say might lead to changes in financial aid policy at colleges where students carry an abnormally high debt load.” Or, dare I say it, lowered tuition?

HIGHER EDUCATION BUBBLE UPDATE: Cheaper Student Loans–A Bad Idea Whose Time Has Come.

HIGHER EDUCATION BUBBLE UPDATE: Astroturfing in Texas? “Bottom line: the widely reported ‘I stand with Bill Powers’ Facebook effort was not an organic display of support. It was, however, publicly held out by the organizers as organic.”

THIS IS THE WAY the Higher Education Bubble ends. “The higher education bubble ends with inevitable disaggregation of classes from the universities that offer them, and soon.”

Someone should write a book on this subject.

HIGHER EDUCATION BUBBLE UPDATE: These days, a law degree comes with $150,000 of debt — and no guarantee of a job after graduation. “I know that I am better off than a lot of these younger lawyers. I get job interviews. I can afford the apartment I share with my friend. I have a great resume. I am an excellent researcher and writer. I rarely go to bed hungry anymore.”

Plus: “Approximately half of the 45,000 people who will graduate this year from ABA-accredited law schools will never find jobs as lawyers. . . . All this adds up to a completely unsustainable system.” And yet most of those law schools are on campuses with sustainability centers.

If only there were something that explained this phenomenon.

HIGHER EDUCATION BUBBLE UPDATE: Colleges funnel fees to stave off reforms.

HIGHER EDUCATION BUBBLE UPDATE: Ithaca College Drops SAT/ACT Requirement. This will make it easier to hide a decline in the quality of admitted students, and make affirmative action less transparent. Win-win!

HIGHER EDUCATION BUBBLE UPDATE: Mark Cuban: The Coming Meltdown In College Education and Why The Economy Won’t Get Better Any Time Soon. “The point of the numbers is that getting a student loan is easy. Too easy. You know who knows that the money is easy better than anyone? The schools that are taking that student loan money in tuition. Which is exactly why they have no problems raising costs for tuition each and every year.”

HIGHER EDUCATION BUBBLE DEBT-SERFDOM UPDATE: Student Loans: A Generation Hobbled by the Soaring Cost of College.

Kelsey Griffith graduates on Sunday from Ohio Northern University. To start paying off her $120,000 in student debt, she is already working two restaurant jobs and will soon give up her apartment here to live with her parents. Her mother, who co-signed on the loans, is taking out a life insurance policy on her daughter. “If anything ever happened, God forbid, that is my debt also,” said Ms. Griffith’s mother, Marlene Griffith.

As I’ve said before, any other industry that did this to its customers would be regarded as predatory in the extreme. And, in a related note, my The Higher Education Bubble, soon to be published by Encounter Broadsides, is now available for pre-order. Just sayin’ . . .

MY SUNDAY WASHINGTON EXAMINER COLUMN: What Comes After The Higher Education Bubble?

RISK-BASED PRICING: Should student loans be priced differently according to major? “Without risk-based pricing of student loans, there may be no reliable price signal about the long-term financial risks inherent in different courses of study. This lack of price signals undermines students’ ability to make informed decisions about the course of study that will best balance their innate abilities and individual preferences with postgraduate economic opportunities. Similarly, the lack of price signals may undermine post-secondary educational institutions’ ability to adjust their programs to improve their students’ postgraduate prospects. Misallocation of educational resources is not only harmful to individual students and their families — it could threaten to undermine the productivity and competitiveness of the U.S. labor force and the U.S.’s ability to continue to invest in education and research.”

If we’d priced student loans this way, we probably wouldn’t have had a higher education bubble.

HIGHER EDUCATION BUBBLE UPDATE: Government Prosecution of Student Loan Defaults Rose 25.7% Last Month. Feel the hope and change!

HIGHER EDUCATION BUBBLE UPDATE: More Colleges Report Still Having Space For Students This Fall.

HIGHER EDUCATION BUBBLE UPDATE: Average Cost of Law School for Entering 1L Class: $195,000.

HIGHER EDUCATION BUBBLE UPDATE: Harvard, MIT partner on major $60M online learning venture.

MIT OFFERS AN ONLINE ELECTRICAL ENGINEERING CLASS, 120,000 students sign up.

UPDATE: Bill Quick thinks that this could change everything. Yes. I talk more about this stuff in my forthcoming book on the Higher Education Bubble from Encounter Broadsides. Should be out next month.

NICK GILLESPIE COMMENTS ON MY NEW YORK POST OPED ON STUDENT LOANS:

My one objection to Reynold’s op-ed – and it’s an objection to a lot of college talk – is the need to constantly bash supposedly non-utilitarian majors such as English, gender studies, and the like. You know, “the humanities,” as in, oh what a waste of time. As a proud English major (surrounded by a bunch of them at Reason, by the way), I’ll save a full-throated defense of my major for another post. Let me just suggest that majoring in literary and cultural studies wasn’t just interesting in and of itself, it helped equip me with a series of analytic and expressive tools that have helped me support myself since I was 18. And as my older son gets ready to start college in the fall, I’m hoping he picks a course of study that is first and foremost interesting to him.

He’s right, of course. You can learn a lot — even substantive stuff that’s useful — in any course, potentially. I was mocking “gender studies” classes, but even those can potentially be valuable. I took a Law And Sexuality course in law school and it was actually very substantive, and was one of three courses that let me give a detailed off-the-top-of-my-head black letter law answer to a question my judge asked when I was clerking after law school. (The other two classes, underscoring this point, were Law, Science & Technology and International Human Rights Law). It’s also true that there’s a massive shortage of people with the traditional liberal arts skills of reading, writing, and thinking analytically.

But the problem with the humanities isn’t an inherent one — you could even teach a stimulating and intellectually rich course on the Occupy Movement — but has to do with execution, and here’s where the comparison with STEM comes in. Very few people complete a math or engineering major without learning a lot of math and engineering, but it’s entirely possible to major in the humanities and never learn to read, write, or reason with any rigor. The problem isn’t inherent to the subject matter, it’s a symptom of professorial self-indulgence and laziness, together with the lack of external scrutiny, a problem that is much, much worse in humanities than in STEM.

As the higher education bubble bursts, we’ll see a lot more of that scrutiny, and I expect things will improve — though not without a lot of squawking from those whose rice bowls get dinged along the way.

OBAMA’S COLLEGE COP-OUT: I talk about student loans and the Higher Education Bubble in the New York Post.

JERRY POURNELLE ON the Higher Education Bubble. “But the real question is, why does all this cost so much? My wife and I both worked our way through college, and all four of our boys got through without lifetime debts. In those days college tuition was high for prestige private colleges, but most people could afford state college or even state university tuition. . . . Tuition costs are going up. Even as we discover that for about half the college grads the education is useless.”

INVESTOR’S BUSINESS DAILY: Congress Is Making The Higher Education Bubble Worse.

By keeping the price of loans artificially low, Congress will make the value of getting a college degree appear to be worth more than it really is, thereby encouraging more students and their families to take out more loans. That means more demand for college, resulting in higher tuition. So Congress is putting more air into the higher-ed bubble.

So why are lawmakers doing it? The simple answer is the election is six months away, college loans are, in effect, a middle-class subsidy, and neither political party wants to upset loads of middle-class voters. And with all the emphasis both sides are putting on attracting young voters, they especially don’t want to anger them by increasing the price of college.

The somewhat more complicated answer is that politicians know that they are not likely to be blamed if the bubble does eventually burst. The economist Thomas Sowell once told me, “People ask me, after something like the housing bubble, don’t members of Congress ever learn? And I reply, ‘Of course they learn. They learn they can get away with it!’”

Indeed.

HIGHER EDUCATION BUBBLE UPDATE, LEGAL EDITION: UC-Hastings Reduces Incoming Class by 20%, Cuts 27 Staff Positions.

HELPING THE HIGHER EDUCATION BUBBLE ALONG: Millenials’ Financial Illiteracy.

HIGHER EDUCATION BUBBLE UPDATE:

Today, a good private college costs between $40 and $50K a year; many state universities will run you over $20K a year. Total cost for four year now: $150K or more. That’s not even close to a starting professional salary, except for the handful of top students who go to Wall Street. I’ve run this shift by some college administrators and get the same answer: “Well, very few people actually pay those full tuition rates. Most students get some amount of financial aid, so the real cost is much lower.” To which I respond: “Determining what college is going to cost you ought not to be like haggling with a used car dealer.” (Memo to parents by the way: if you have a child admitted to several colleges, you should treat the financial aid offices exactly like used car dealers, and beat the hell out of them for the best deal. Apologies here to used car dealers; you are actually more scrupulous than college financial aid departments.)

What other industry forces you to give them detailed financial statements before they’ll decide on your price?

Related: Rigor, please.

HIGHER EDUCATION BUBBLE UPDATE: Jeff Carter: Crippling Student Loan Debt Kills Economies.

HIGHER EDUCATION BUBBLE UPDATE: “Severe Shortage of Skilled Factory Workers As Government Encourages Students to Pursue White Collar Jobs.”

HIGHER EDUCATION BUBBLE UPDATE: To Pay Off Loans, Grads Put Off Marriage, Children.

Between the ages of 18 and 22, Jodi Romine took out $74,000 in student loans to help finance her business-management degree at Kent State University in Ohio. What seemed like a good investment will delay her career, her marriage and decision to have children.

Ms. Romine’s $900-a-month loan payments eat up 60% of the paycheck she earns as a bank teller in Beaufort, S.C., the best job she could get after graduating in 2008. Her fiancé Dean Hawkins, 31, spends 40% of his paycheck on student loans. They each work more than 60 hours a week. He teaches as well as coaches high-school baseball and football teams, studies in a full-time master’s degree program, and moonlights weekends as a server at a restaurant. Ms. Romine, now 26, also works a second job, as a waitress. She is making all her loan payments on time.

They can’t buy a house, visit their families in Ohio as often as they would like or spend money on dates. Plans to marry or have children are on hold, says Ms. Romine. “I’m just looking for some way to manage my finances.”

One of the main functions of higher education has been to facilitate marriage among the middle- to upper-middle class. If instead it results in debt that makes one unmarriageable, I suspect its appeal will decline significantly.

And note this:

Both private and government loans, however, lack “the most fundamental protections we take for granted with every other type of loan,” says Alan Collinge, founder of StudentLoanJustice.org, an advocacy group. When borrowers default, collection agencies can hound them for life, because unlike other kinds of debt, there is no statute of limitations on collections. And while other kinds of debt can be discharged in bankruptcy, student loans must still be paid barring “undue hardship,” a legal test that most courts have interpreted very narrowly.

Deferring payments to avoid default is costly, too. Danielle Jokela of Chicago earned a two-year degree and worked for a while to build savings before deciding to pursue a dream by enrolling at age 25 at a private, for-profit college in Chicago to study interior design. The college’s staff helped her fill out applications for $79,000 in government and private loans. “I had no clue” about likely future earnings or the size of future payments, which ballooned by her 2008 graduation to more than $100,000 after interest and fees.

She couldn’t find a job as an interior designer and twice had to ask lenders to defer payments for a few months. After interest plus forbearance fees that were added to the loans, she still owes $98,000, even after making payments for most of five years, says Ms. Jokela, 32, who is working as an independent contractor doing administrative tasks for a construction company.

By the time she pays off the loans 25 years from now, she will have paid $211,000.

Any other industry that did this sort of thing would be denounced as predatory, but government and higher education get a pass.

HIGHER EDUCATION BUBBLE UPDATE: Don Surber: Underemployed college grads is a good thing. “Underemployment rocks because it knocks out that sense of entitlement. People also learn what real work is.”

Well, I hope it’s a good thing, because it’s vastly more prevalent: “Taking underemployment into consideration, the job prospects for bachelor’s degree holders fell last year to the lowest level in more than a decade.”

IN MY SOON-TO-APPEAR HIGHER EDUCATION BUBBLE BOOK, I note that the bubble’s bursting will force administrators to realign priorities. So far, that doesn’t seem to be happening in Florida: University of Florida Eliminates Computer Science Department, Increases Athletic Budgets.

UPDATE: Tyler Cowen comments: “I see this as illustrating how university incentives are not always aligned with those of the Governor or with the social interest. As Governor, Scott can more easily direct new funds towards STEM than tell entrenched university bureaucracies how to reallocate funds among existing programs. In particular Scott wants to promote STEM and computer science graduates for the externalities they produce but universities don’t get paid for producing externalities.” Though the externalities are what they point to when they want money.

Or maybe it’s just the old Washington Monument strategy.

HIGHER EDUCATION BUBBLE UPDATE: What’s Your College Degree Worth?

HIGHER EDUCATION BUBBLE UPDATE: Skin In The Game: Texas technical colleges want to link state funding and employment outcomes. I’ll bet this is sending a shiver down the spines of humanities faculty everywhere.

UPDATE: By the way, lest anyone think I’m dissing the humanities in principle, I’m not. I spoke just today with a friend from law school, though, who despairs of finding people who can write clearly, even with fancy degrees. If humanities programs — or, for that matter, high schools — actually taught writing and critical thinking effectively, it would be great. Too many of them don’t.

HIGHER EDUCATION BUBBLE UPDATE: 10 Faces Behind The Incredible Law School Underemployment Crisis.

HIGHER EDUCATION BUBBLE UPDATE: Elite Universities’ Online Play. “Princeton University, the University of Pennsylvania and the University of Michigan at Ann Arbor have teamed up with a for-profit company to offer free versions of their coveted courses this year to online audiences. By doing so, they join a growing group of top-tier universities that are embracing massively open online courses, or MOOCs, as the logical extension of elite higher education in an increasingly online, global landscape.”

HIGHER EDUCATION BUBBLE UPDATE: From J.D. to Food Stamps: The Personal Cost of Going to Law School.

HIGHER EDUCATION BUBBLE UPDATE: California State University may pull cash grants to half its grad students. “Graduate students across the 23-campus system began receiving financial aid notices this week and were astonished to see that the State University Grant that takes care of tuition for low-income students was missing. In its place was the offer of a federal loan at 6.8 percent interest.”

HIGHER EDUCATION BUBBLE UPDATE: Higher-Ed Accountability: Has Its Time Come?

HIGHER EDUCATION BUBBLE UPDATE: Why Skipping College Was One of the Smartest Decisions of My Life.

HIGHER EDUCATION BUBBLE UPDATE: Everybody’s Worried Now. “A year ago, the notion that Smith College — with a $1 billion endowment, high student demand, and frequently cited educational quality — was raising existential questions, particularly about its economic model, seemed a fairly radical notion. But an idea that seemed striking in the past — that elite liberal arts colleges might have to make significant changes in the next few years if they are to remain relevant (or present) in the current educational market — is now the hottest topic in the sector.”

HIGHER EDUCATION BUBBLE UPDATE: Hans Bader: Staggering Law School Debts Will Lead to Exploding Debt Disaster for Graduates and Taxpayers.

HIGHER EDUCATION BUBBLE UPDATE: Law Students Reluctant To Talk About Their Student Loan Debt.

HIGHER EDUCATION BUBBLE UPDATE: With less state support, public universities turn to debt market to finance new buildings, acquire crippling financial burdens.

HIGHER EDUCATION BUBBLE UPDATE: The Higher Education Money Pit.

THIS SUGGESTS THAT ALL THAT “DIVERSITY” MONEY COULD BE BETTER SPENT ELSEWHERE: The longer students are in college, the less they care about racial understanding. I’m not sure that this fits under “higher education bubble” exactly, but it does suggest that spending priorities are out of whack, given that even in times of budget cuts many universities are actually increasing spending on diversity offices and diversity studies programs.

HIGHER EDUCATION BUBBLE UPDATE: More Instances of Selective SAT Score Submission for Rankings. “Ramapo College has been excluding about 22 percent of its new students (generally the most disadvantaged students) when reporting average SAT scores to U.S. News & World Report. As a result, the SAT average reported by Ramapo was more than 50 points higher than it should have been. New Jersey City University has also been inflating its SAT scores.”

HIGHER EDUCATION BUBBLE UPDATE: There Are as Many Student-Loan Debtors as College Graduates. “That’s right: as many debtors as degree holders! How can that be? First, huge numbers of those borrowing money never graduate from college. Second, many who borrow are not in baccalaureate degree programs. Three, people take forever to pay their loans back.”

HIGHER EDUCATION BUBBLE UPDATE: Can This ‘Online Ivy’ University Change the Face of Higher Education?