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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?

MORE ON THE HIGHER EDUCATION BUBBLE.

PLUG: Reader Dr. Ken Strumpf writes:

You mentioned that you’re a friend of Prof. Vejas Liulevicius so perhaps you’d like to shamelessly plug his several college level courses available through The Great Courses (formerly The Teaching Company) at http://www.thegreatcourses.com/. I’ve bought them all, most recently his course on Espionage and Covert Activities. His magnum opus remains, however, his magnificent 36 lecture survey on World War I.

My only affiliation with this company is as a satisfied customer of nearly 20 years. If a person wished to obtain a true Liberal Arts education he or she could do far worse than working their way through the Great Courses catalog. Actually, this ties into your Higher Education Bubble theme since this is far cheaper than four years at college, can be done at the student’s own pace and is available to people of all ages. This company has helped me get the education I should have gotten during my own time at college.

He mentioned that he had done something like this. And, yes. What colleges provide that these courses don’t is certification. But (1) people who just want to learn may not care about that; and (2) extra-collegiate certification is coming.

UPDATE: Prof. Stephen Clark writes: “Extra-collegiate certification is the nightmare haunting upper administration of the four-year publics: it represents the greatest threat to their business model.”

HIGHER EDUCATION BUBBLE UPDATE: Senior citizens continue to bear burden of student loans. “New research from the Federal Reserve Bank of New York shows that Americans 60 and older still owe about $36 billion in student loans, providing a rare window into the dynamics of student debt. More than 10 percent of those loans are delinquent. As a result, consumer advocates say, it is not uncommon for Social Security checks to be garnished or for debt collectors to harass borrowers in their 80s over student loans that are decades old. That even seniors remain saddled with student loans highlights what a growing chorus of lawmakers, economists and financial experts say has become a central conflict in the nation’s higher education system: The long-touted benefits of a college degree are being diluted by rising tuition rates and the longevity of debt.”

Do tell.

HIGHER EDUCATION BUBBLE UPDATE: What’s wrong in California? “The huge investment by students, parents and taxpayers made in colleges to provide a foundation of knowledge and critical thought has already or is in process of sinking into the hole of politicized instruction that is one-sided indoctrination. The California Association of Scholars details this in a just published 87-page report, A Crisis Of Competence:The Corrupting Effect of Political Activism in the University of California.”

More here: University Echo Chamber Drowns Out Diverse Voices.

Political activism has drawn the University of California into an academic death spiral. Too many professors believe their job is to “advance social justice” rather than teach the subject they were hired to teach. Groupthink has replaced lively debate. Institutions that were designed to stir intellectual curiosity aren’t challenging young minds. They’re churning out “ignorance.” So argues a new report, “A Crisis of Competence: The Corrupting Effect of Political Activism in the University of California,” from the conservative California Association of Scholars.

The report cites a number of studies that document academia’s political imbalance. In 2004, for example, researchers examined the voter registration of UC Berkeley faculty. They found a ratio of 8 Democrats for each Republican. While the ratio was 4:1 in the professional schools, in more political disciplines, the ratio rose to 17:1 in the humanities and 21:1 in social sciences.

Over the last few decades, the imbalance has grown.

All this might be forgivable if graduates were still emerging with first-rate educations, but not so much.

The analysis begins from a nonpolitical fact: Numerous studies of both the UC system and of higher education nationwide demonstrate that students who graduate from college are increasingly ignorant of history and literature. They are unfamiliar with the principles of American constitutional government. And they are bereft of the skills necessary to comprehend serious books and effectively marshal evidence and argument in written work.

Higher price, lower quality.

HIGHER EDUCATION BUBBLE UPDATE: Middle-aged borrowers piling on student debt. “Everybody believes they will get out school, get a job and pay it back. Few really take the time to do the math and decide how much they could afford to borrow.”

HIGHER EDUCATION BUBBLE? What higher education bubble?

HIGHER EDUCATION BUBBLE UPDATE: No Financial Aid, No Problem. For-Profit University Sets $199-a-Month Tuition for Online Courses.

Students are flocking to Western Governors University, driving growth of 30 to 40 percent each year. You might expect that competitors would be clamoring to copy the nonprofit online institution’s model, which focuses on whether students can show “competencies” rather than on counting how much time they’ve spent in class.

So why haven’t they?

Two reasons, says the education entrepreneur Gene Wade. One, financial-aid regulatory problems that arise with self-paced models that aren’t based on seat time. And two, opposition to how Western Governors changes the role of professor, chopping it into “course mentors” who help students master material, and graders who evaluate homework but do no teaching.

Read the whole thing.

HIGHER EDUCATION BUBBLE UPDATE: Neal McCluskey: Stop Ignoring Higher Ed Reality.

WHEN THE HIGHER EDUCATION BUBBLE MEETS THE CHICAGO WAY: Audit Finds Chicago State U. Lost Track of 950 Computers.

Chicago State has previously been noted for its “abysmal” graduation rate.

HOW’S THAT HOPEY-CHANGEY STUFF WORKIN’ OUT FOR YA? (CONT’D): $270 Billion In Student Loans Are At Least 30 Days Delinquent.

UPDATE: Reader Jim Mullis writes:

The parallels between this and the housing crisis 4 years ago are too significant to ignore. Consider this thought experiment. The Student Loan Bubble comes to a crisis point, with or without a Black Swan Event. This happens just before the November election, making it a really big October Surprise. Which political party is better positioned to capitalize on this crisis? Which political Party can count on the narrative being shaped to its liking by major media? If promises of major government “help” or loan forgiveness are made by this political party, how do you suppose those several million student borrowers and their families are likely to vote?

And to take this a bit further, how likely is there to be a groundswell of support for “free” higher education as a result of all this? Any politician who opposes the above does so at his own risk.

Hmm.

HIGHER EDUCATION BUBBLE UPDATE Burying Our Future Under A Mountain of Debt: The Real Meaning of $1 Trillion in Student Loans.

The CFPB is currently trying to estimate the size of the private student loan market. It’s breadth, and its current rate of growth, will tell us just how onerous America’s education debt load has become. Federal student loans come with certain protections, such as low interest rates and income-based repayment plans that can cushion the impact on a borrower’s finances. Private loans don’t have that. If a college freshman naively takes out too much money from a bank, they’re stuck paying on the bank’s terms. Between 1999-2000 and 2007-2008, private borrowing grew fourfold, from $4.5 billion to $21.8 billion. One study found that one third of the class of 2008 graduated with such debt, averaging $12,800 each. The CFPB says it will have a more complete picture by this summer, but if private borrowing has continued on its dramatic upswing, it will spell more trouble ahead. Certainly, we should expect more delinquencies and defaults.**

In any event, all signs point to this situation getting worse before it gets better.

Yep.

HIGHER EDUCATION BUBBLE UPDATE: ABC News catches up with InstaPundit: Is College Tuition The Next Bubble?

HIGHER EDUCATION BUBBLE UPDATE: Senator Seeks Support for Bill to Allow Discharge of Private Student Loan Debt in Bankruptcy. “The student debt crisis in this country is largely ignored by Congress.”

I’ve made a related proposal myself. “Student loans, if they are to continue, should be made dischargeable in bankruptcy after five years — but with the school that received the money on the hook for all or part of the unpaid balance.”

WALTER RUSSELL MEAD: Higher Education Bubble Hits Housing Market:

Don’t think you’re off the hook if you aren’t one of these students who owes money. Many economists now believe that we may be approaching a crisis point at which the crushing debt burden faced by twenty and thirty somethings will forestall important life steps like buying a car, getting married, or owning a home. This last item in particular could be a serious blow for the still-shaky housing market. For Boomers looking to retire and supplement their savings with house equity, this is going to hurt: if the rising generation is too burdened by debt to pay top dollar for housing, retiring Boomers are going to get less of a windfall than they were hoping.

Yep. As I’ve said before, it’s hard to buy a house when you’ve basically already got a mortgage.

HIGHER EDUCATION BUBBLE UPDATE, LEGAL EDUCATION EDITION: For A Second Year, Sharp Drop in LSAT Popularity. “The organization behind the Law School Admission Test reported that the number of tests it administered this year dropped by more than 16 percent, the largest decline in more than a decade. The Law School Admission Council reported that the LSAT was given 129,925 times in the 2011-12 academic year. That was well off the 155,050 of the year before and far from the peak of 171,514 in the year before that. In all, the number of test takers has fallen by nearly 25 percent in the last two years.”

For a lot of people, the return on investment doesn’t justify the debt. And many are realizing that.

Related: Decline in LSAT Test-Takers Portends ‘Death Spiral’ for Low-Ranked Law Schools. I did a panel at the SEALS conference last summer and they asked us to predict how many law schools will close in the next five years. I said 25.

HIGHER EDUCATION BUBBLE — BURSTING? State and Local Spending on Higher Education Reached a New 25-Year Low in 2011. Tuition revenue per student, meanwhile, reached an all-time high as schools made up the difference by raising costs to students.

HOW’S THAT HOPEY-CHANGEY STUFF WORKIN’ OUT FOR YA? (CONT’D): Three Out of Ten Young Adults Are Living With Their Parents.

Maybe I should have tagged this “Higher Education Bubble Update,” though: “After graduating from Brown University in 2009 with a bachelor’s degree in comparative literature and completing a Fulbright scholarship in Brazil, Cassie Owens was left with a few dollars on her stipend and no job in sight. So, Ms. Owens returned home to her mother in Philadelphia.”

HIGHER EDUCATION BUBBLE UPDATE: Student Loans and Dating.

HIGHER EDUCATION BUBBLE UPDATE: Cutbacks in Enrollment Redefine Graduate Education and Faculty Jobs.

Related: Student Loans: America’s Next Debt Bomb?

HIGHER EDUCATION BUBBLE UPDATE: Career Lies My Graduate School Told Me. It’s not just law schools that have to worry: “Although the lawsuits seem somewhat quixotic right now, if they succeed in pressuring schools to provide more detailed information about how their graduates perform in the job market (and maybe even prompt some schools to issue tuition rebates as part of broader settlements), the legal action could reverberate well beyond law. The next target could well be university graduate programs that for years have been producing Master’s and PhD grads for whom there is little or no gainful employment. Programs in fields like the humanities, where some professors claim schools have been misleading students for 40 years about job prospects, or grad schools in disappearing fields like journalism, might suddenly find themselves ripe for similar suits.”

HIGHER EDUCATION BUBBLE UPDATE: Another White House Event Planned on College Costs. “Another group of college presidents and chancellors has been invited to the White House for a meeting on college affordability and productivity. Details about the meeting, scheduled for March 23, are scant, including whether President Obama will attend (as he did when another group of college presidents was invited to White House in December). . . . The White House has focused increasingly on college costs and productivity as Obama ramps up his re-election campaign, including proposals to tie some forms of financial aid to measures of ‘value’ in higher education.”

HIGHER EDUCATION BUBBLE UPDATE: Mapping The College Culture Gap. “When Britain still had an Empire, what mattered most was to get your daughters married and your sons into a good regiment. In Homeland America, all that matters to middle-class and affluent parents is getting their children into the best colleges that money can buy or that the [Scholastic] Aptitude Test will allow.”

HANS BADER: Higher Education Bubble May Explode In Taxpayers’ Faces. May?

HIGHER EDUCATION BUBBLE UPDATE: Narrowing The New Class Divide.

HIGHER EDUCATION BUBBLE UPDATE: “A professor at one of the most expensive universities in America comes out in favor of more government support for higher education. Waddy expect from a former Enron adviser? But the innumeracy here is troubling.”

I doubt that Krugman will seize on this argument, but if you price college tuition in gold things don’t look nearly so bad . . . .

HIGHER EDUCATION BUBBLE UPDATE: The Student Loan Debacle.

HIGHER EDUCATION BUBBLE UPDATE: Tuning In To Dropping Out.

In 2009 the United States graduated 89,140 students in the visual and performing arts, more than in computer science, math, and chemical engineering combined and more than double the number of visual-and-performing-arts graduates in 1985.

There is nothing wrong with the arts, psychology, and journalism, but graduates in these fields have lower wages and are less likely to find work in their fields than graduates in science and math. Moreover, more than half of all humanities graduates end up in jobs that don’t require college degrees, and those graduates don’t get a big income boost from having gone to college. . . .

The obsessive focus on a college degree has served neither taxpayers nor students well. Only 35 percent of students starting a four-year degree program will graduate within four years, and less than 60 percent will graduate within six years. Students who haven’t graduated within six years probably never will. The U.S. college dropout rate is about 40 percent, the highest college dropout rate in the industrialized world. That’s a lot of wasted resources. Students with two years of college education may get something for those two years, but it’s less than half of the wage gains from completing a four-year degree. No degree, few skills, and a lot of debt is not an ideal way to begin a career.

Nope. Under my proposal, of course, colleges would be on the hook for defaulted student loans, which would provide an incentive not to produce dropouts.

Plus this: “Our obsessive focus on college schooling has blinded us to basic truths. College is a place, not a magic formula. It matters what subjects students study, and subsidies should focus on the subjects that matter the most—not to the students but to everyone else.”

Related: Statistics on college completion.

HIGHER EDUCATION BUBBLE UPDATE: The Coming Crash in Legal Education: How We Got Here, and Where We Go Now.

UPDATE: Reader Joseph Ferry writes: “Glenn, what we need is a College Equivalency Diploma.” Yes.

HIGHER EDUCATION BUBBLE UPDATE: “The total outstanding student-loan balance in the U.S. being greater than total outstanding credit-card debt — old news. But total outstanding student loans are now also greater than total outstanding auto loans ($870 billion vs. $730 billion).”

HIGHER EDUCATION BUBBLE UPDATE: January Consumer Credit Surges As Government Blows Student Debt Bubble To Epic Proportions.

HIGHER EDUCATION BUBBLE UPDATE: Law Grad’s Ballooning Student Debt Will Exceed $1.5M by the Time He Retires.

A Touro law graduate who financed his education with a $69,000 loan in 1996 says he’ll owe more than $1.5 million by the time he retires in 23 years.

John Koch, now 46, was unable to pass the New York bar exam, despite three tries. . . . When Koch defaulted on his loan, penalties added $40,000 to $50,000 to the balance, he tells the television station. He currently owes more than $300,000. Now he is deferring loan payments under a federal program, which adds $2,000 in interest to his balance each month. As a result, he will be charged interest on interest, a debt expert tells Cable News Channel 12.

This is why heavy, non-bankruptable debt to finance education is a bad idea.

THE END OF OWNERSHIP: Why Aren’t Young People Buying More Houses?

When older generations wonder what’s the matter with Millennials, they often judge their younger cohorts against such financial and social benchmarks as finding a job, getting married, and buying a home. These observations often come wrapped in weak science — “blame Facebook for their indolence” — or dripping with judgment — “blame their parents for making them weak.” The science is weak, but the observations are true. Fewer young people are finding jobs. Fewer young people are getting married. Fewer young people are buying homes.

Between 1980 and 2000, the share of late-twenty-somethings owning homes had declined from 43% to 38%. The share of early-thirty-something home owners slipped from 61% to 55% in that time. After the boom and bust were over, both rates kept falling. The rate of young people getting their first mortgage between 2009 and 2011 was chopped in half from just 10 years ago, according to a recent study from the Federal Reserve.

One headwind is student debt.

Yes, as I’ve noted in my higher education bubble update posts, it’s hard to take on a mortgage when you basically already have one.

HIGHER EDUCATION BUBBLE UPDATE: What is the college graduation rate in this country? Correct answer: nobody knows.

All the statistics you’ve read about are at best partial truths. We basically track graduation only for “traditional” students. The problem is that these “traditional” students are no longer representative – most college students are now “non-traditional”: 38 percent of students enroll part time; some full-time students start again after some earlier post-secondary work; and a good many students who transfer to another institution are counted as dropouts. In fact some important news arrived today–one third of all college students transfer before graduating, so our statistics on college completion are even more unreliable than we thought.

The fact that we spend hundreds of billions of taxpayer dollars on higher education and can’t determine something as basic as a national graduation rate is a dereliction of duty.

There’s a lot of that.

HIGHER EDUCATION BUBBLE UPDATE: Howard University Pays Big Bonuses To Administrators, Then Announces Austerity Measures.

HIGHER EDUCATION BUBBLE UPDATE: More colleges freezing tuition as parents balk at higher prices.

HIGHER EDUCATION BUBBLE UPDATE: Obama Admin Further Confuses Their Own Higher Ed Policy.

JAMES TARANTO: Unthinkable Thoughts: How feminism deforms intellectual culture.

When a decent young man professes a desire to marry an old-fashioned girl and take financial responsibility for his family, Yoffe treats him as a deviant. She denounces him as “sexist” even though he is careful to affirm that women have every right to work outside the home if they choose to do so. He mentions nothing about politics, yet she feels compelled to bring Santorum, the feminists’ Emmanuel Goldstein, into the mix.

Yoffe’s hostility to this young man tells us more about elite culture than it does about her personally. (We’ve met her, and she’s perfectly pleasant.) By his account, his female classmates have been indoctrinated with the same rigid ideas about “sexism” that Yoffe expresses in her response.

There’s probably a higher education bubble angle to this, too, somewhere. . . .

HIGHER EDUCATION BUBBLE UPDATE: A Third of Students Transfer Before Graduating, and Many Head Toward Community Colleges.

HIGHER EDUCATION BUBBLE UPDATE: College At Risk.

HIGHER EDUCATION BUBBLE UPDATE: “[T]oday’s college degree is the equivalent of the 1950′s high school diploma…”

UPDATE: Ann Althouse on the education debate:

Obama is the university professor, promoting the product/process that lifted him up and that he bestowed on others. His vanity/self-esteem are all wrapped up in the ideology of education. But Santorum’s self-image is that of the student. He was oppressed and bullied. He still feels angry and ripped off. Which attitude resonates more with the American people today? That is, do Americans identify with the professor or the student?

We’re supposed to be against bullying now, right?

HIGHER EDUCATION BUBBLE UPDATE: U execs are paid handsomely on their way out.

Since retiring 18 months ago as chancellor at the University of Minnesota Duluth, Kathryn Martin has collected more money from the U than she did in her last two years on the job.

One of nearly a dozen university executives to step down in the past two years, Martin was granted a two-month sabbatical, a 15-month “administrative transitional leave,” a final deposit to her retirement fund, and a severance check. Total: $535,700.

Hers was the biggest in a series of compensation packages signed by former university President Robert Bruininks worth more than $2.8 million. The deals routinely granted top administrators lengthy paid leaves, then allowed them to return to faculty positions or depart the U’s payroll. . . . Many of the agreements rival in size the recent employment extension given to retiring U Athletic Director Joel Maturi, which caused several legislators to ask if the university is spending money wisely at a time when many Minnesota students and families are struggling to pay college costs.

Read the whole thing.

HIGHER EDUCATION BUBBLE UPDATE: 62 Colleges Meet 100% of Students’ Financial Need. So if you’re paying full-price there, you’re a sucker.

HIGHER EDUCATION BUBBLE UPDATE: Supersizing Higher Education Is Not The Answer:

Wood demonstrates that there is no connection between where a nation stands in that regard and its economic success; some countries with higher percentages than ours are economically feeble (e.g. Russia) and others with lower percentages than ours are strong (e.g. Switzerland).

What truly correlates with economic success is not how many people get college credentials, but the degree of economic freedom in a country. Hong Kong isn’t prosperous because a large percentage of its citizens get college degrees. It’s prosperous because the government doesn’t meddle in the economy. In the Index of Economic Freedom, Hong Kong has been No. 1 for a long time. In that same index, the U.S. has been falling for years, and is now No. 10.

Too bad that Obama isn’t determined to elevate the U.S. to No. 1 in that respect.

The trouble with economic freedom is that it yields insufficient graft.

SHOULD I FILE THIS UNDER “HIGHER EDUCATION BUBBLE UPDATE?” These Are The Insanely Expensive Cars That GWU Students Drive. “Students at George Washington University in Washington, D.C. don’t just complain about easy grades, they also drive cars so nice you’d think their campus was the parking lot of the Mall of the Emirates in Dubai. In the photo composite above is about $1.2 million worth of automobiles allegedly belonging to college students. Do your best not to hate them.”

HIGHER EDUCATION BUBBLE UPDATE: Why They Seem to Rise Together: Federal Aid and College Tuition.

Long before I knew it was called the “Bennett Hypothesis” I knew that colleges and universities increase tuition to capture increases in federal and state financial aid. I attended numerous meetings of university administrators where the topic of setting next year’s tuition was discussed.

The regnant phrase was “Don’t leave money sitting on the table.” The metaphoric table in question was the one on which the government had laid out a sumptuous banquet of increases of financial aid. Our job was to figure out how to consume as much of it as possible in tuition increases. This didn’t necessarily mean we were insensitive to the needs of financially less well-off students. A substantial portion of the money we captured would be reallocated as “tuition discounts” or “institutional aid.” That is to say, just as Andrew Gillen observes, we combined Bennett Hypothesis-style capture of external student financial aid with “price discrimination.”

And we did all this in the pursuit of educational excellence. It was a large private university in the shadow of world-ranked neighbors and it was attempting to pull itself up in the world of prestige and influence by its bootstraps. There were townhouses that needed buying; laboratories that needed building; faculty stars that needed hiring; classrooms and residence halls that needed refurbishing; symphonies that needed performing; grotesque modern sculptures that needed displaying; and administrators that needed chauffeuring.

Increasingly that last.

DAN MITCHELL: The Higher-Education Bubble and Third-Party Payer.

HIGHER EDUCATION BUBBLE UPDATE: Student Debt Hinders Housing. “As outstanding student debt approaches $1 trillion, it’s one more reason record-low interest rates aren’t doing more to boost housing. The tighter lending standards that have emerged in the wake of the recession weigh particularly on younger, first-time home buyers, according to a Federal Reserve study sent to Congress on Jan. 4. These households tend to be younger and often have relatively new credit profiles, lower-than-average credit scores and fewer economic resources to make a large down payment, the report said.”

Yep. It’s harder to qualify for a mortgage when you basically already have one.

HIGHER EDUCATION BUBBLE UPDATE: Personal assistants with impressive credentials are more available due to the tough job market for college graduates. For $35 an hour you can get a cum laude graduate of Harvard with a degree in Folklore & Mythology to do your calendar management and travel planning.

HIGHER EDUCATION BUBBLE UPDATE: Florida Co-Eds Seek “Sugar Daddy” to Pay for College Degree. “So what is the ratio for these consenting adults? Well, most dating websites have more men than women. But at seekingarrangement.com, it’s the opposite. The ratio is 20 sugar babies to every one sugar daddy.”

HIGHER EDUCATION BUBBLE UPDATE: Business Leaders See Higher Education as Hampering Economic Growth. “The rising cost of higher education, its indifferent quality, its resistance to change, and its lack of accountability are endangering the nation’s prospects for future economic growth, according to a report on the views of business executives that was released today by Public Agenda and the Committee for Economic Development. The report, which draws on focus groups last year with 27 executives in Ohio and Texas, and on telephone interviews with 12 others, echoes the concerns that business leaders have expressed in two other recent reports that cover similar terrain.”

HIGHER EDUCATION BUBBLE UPDATE: Envisioning a Post-Campus America. “I can see all sorts of factors that might combine to preserve the status quo, from signaling and status and networking, to the desire of college students for a four-year debt-financed semi-vacation. On the other hand, disruption never looks inevitable until it suddenly is–if you’d told someone in 1955 that GM was going to have its lunch eaten by some Japanese upstart, they would have laughed until the tears came. So it’s interesting and maybe even useful to contemplate what the college system would look like if this sort of distance learning becomes the norm.”

HIGHER EDUCATION BUBBLE UPDATE: Are Liberal Arts Colleges Becoming Finishing Schools For Women?

WHEN EVERYTHING BECOMES A COFFEESHOP: Stephen Gordon’s blog post became a piece in the Boston Globe. Some serious higher education bubble implications.

Now, imagine a personnel manager at a mid-sized corporation who’s looking for an employee with some particular knowledge. There are two candidates: one with an appropriate college degree from the local state school, a second with relevant MITx certificates. Let’s say all other things between the candidates are equal. Which should the manager choose?

Given the caliber of professor at MIT, the online student may have learned just as much. The candidate who went to college probably enjoyed his experience more, but the potential employer is unlikely to care about that. Finally, there’s the financial reality: To some extent, the student debt of the job candidate dictates his salary requirements. If the MITx candidate has the knowledge required and far less student debt, he probably can be hired more cheaply. Ultimately, the cheaper option will win.

Phil Bowermaster has some additional thoughts.

IN A TRULY UNCHARACTERISTIC FAILURE OF SELF-PROMOTION, I somehow forgot to post on my New York Post column earlier this week: Obama’s Flawed Fix For the College Cost Crisis. I don’t think he really understands the higher education bubble.

PUTTING THE BUBBLE INTO THE HIGHER EDUCATION BUBBLE: Moody’s May Downgrade Law Schools’ Credit Rating.

GEORGE LEEF: After College, What?

What the study found is not the least bit surprising. Students who learned little in college (as evidenced by scoring in the bottom quintile on the College Learning Assessment) were three times as likely to be unemployed as students who scored in the top quintile, twice as likely to be living at home, and somewhat more likely to have run up credit card debts.

Those findings throw cold water on the smiley face idea that going to college is necessarily a good “investment.” Even some of the top graduates were unemployed and living with their parents and a much higher number of low-performing graduates were. Unfortunately, the study did not seek to find out how many of those graduates were “underemployed” in jobs that high schoolers can do. (Perhaps no further evidence on that is necessary, though, in view of this study.)

Read the whole thing. More grist for the bursting of the higher education bubble.

HIGHER EDUCATION BUBBLE UPDATE: PayPal Founder Talks Technology.

Thiel argued that innovation in fields such as agriculture and transportation has become dangerously slow, leading to economic stagnation around the world.

“I think that we’ve seen progress in the virtual world, but not in the world of stuff,” Thiel said. “The U.S. has produced a ton of innovation in computers and finance over the past 30 years, but we have to ask if that implicitly twisted innovation in other areas.”

Thiel attributed this lack of innovation to structural defects in politics and education today.

Read the whole thing. My next Popular Mechanics column addresses a related theme.

UPDATE: Farmer-reader Bart Hall objects strenuously:

No innovation in agriculture? In my three decades as a farmer and agronomist the changes have been utterly remarkable and nearly all for the better. Take just a few examples … thirty years ago most agricultural pesticides persisted many years in the soil and required something like 3 or 4 pounds of the active material per acre. New pesticides are often effective at rates of an ounce per acre or less and are non-persistent. A number of new insecticides aren’t even poisons at all but hormones which disrupt the target pest’s life cycle.

Precision-guidance systems have led to a 6% increase in vegetable yields, simply by eliminating space previously wasted when growers worked just a bit wide to avoid overlaps. Other guidance systems allow close mechanical cultivation of vegetable rows, mostly eliminating the need for herbicides. Many new vegetable varieties have much more disease resistance, producing better yields with fewer pesticides. The Japanese developped greenhouse coverings which exclude the specific wavelengths of light needed by mildews to infect the crop.

Breeders produced high-Vitamin-A rice to reduce blindness in the developping world. They’re working on incorporating oral vaccines into specially-colored bananas; no refrigeration necessary. We’re now able to evaluate grassland health and productivity from space. New, tastier, and more nutritious varieties of fruit are being developped regularly around the world — remember the old pineapples? New machinery for no-stoop harvest of salad mixes at an affordable price.

The list could go on for a long time, but this ought to be enough to illustrate Thiel’s egregious ignorance of agriculture. Unfortunately I could do the same for at least three other important domains of “stuff” — minerals, energy, and forestry. What’s especially clear is that Thiel has almost no understanding of “stuff” except helping people pay for it.

Note: My forthcoming column says nothing about farms.

HIGHER EDUCATION BUBBLE UPDATE: If You’re Going to Accept Direct Loans and Pell Grants, You Should Tell Us If Students Are Actually Learning Something.

HIGHER EDUCATION BUBBLE UPDATE: Richard Vedder on the Failings of Higher Education. “The big problem is that higher education consumes a huge amount of resources and provides inadequate value.” Indeed.

HIGHER EDUCATION BUBBLE UPDATE: No Money Down!

With public university administrators continually arguing for tuition increases to counter state appropriations cuts, it seems far-fetched that their budget problems could be solved by eliminating student tuition and fees altogether.

But that’s the idea put forth by a group of students from the University of California at Riverside, who in January proposed a new funding model for the University of California system that seeks to solve two of the system’s biggest problems: unpredictable and large decreases in state appropriations, and the steady increase in tuition costs.

Under the students’ plan, called the UC Student Investment Proposal, students in the system would pay no upfront costs for their education but would agree to pay 5 percent of their income to the system for 20 years after graduating and entering the workforce.

Well, this would give universities some skin in the game.

HIGHER EDUCATION BUBBLE UPDATE: Inflated SAT Scores Reveal ‘Elasticity of Admissions Data’. “In the Wild West of college admissions, there is no Data Sheriff.”

HIGHER EDUCATION BUBBLE UPDATE: Claremont McKenna Inflated SAT Scores for Rankings.

HIGHER EDUCATION BUBBLE UPDATE: Rutgers law students protest merger plan. “The proposal to merge Rutgers University in Camden with Rowan University under Rowan’s name has been met with skepticism, bordering on disbelief, by alumni, faculty members and students at the Rutgers campus.”

HIGHER EDUCATION BUBBLE UPDATE: Why You Should Postpone College.

HIGHER EDUCATION BUBBLE UPDATE: Has the Higher-Ed Revolution Begun?

HIGHER EDUCATION BUBBLE UPDATE: Fixing Student Loans: Let’s Give Colleges Some ‘Skin in the Game’. I’ve made a similar proposal myself.

HIGHER EDUCATION BUBBLE UPDATE: Free Courses, Elite Colleges.

Udemy, a company that allows anyone to create and sell courses through its online platform, has announced a new area of its site, called The Faculty Project, devoted to courses by professors at a number of top institutions, such as Colgate, Duke University, Stanford University, Northwestern University, Vanderbilt University, the University of Virginia, Dartmouth College and Vassar College. While Udemy is a for-profit enterprise, the Faculty Project courses will be free.

The goal is to “elevate the brand,” according to Gagan Biyani, Udemy’s president and co-founder. The company says it has no immediate plans to monetize the Faculty Project, and would never do so without the input and permission of its faculty contributors.

Read the whole thing.

HIGHER EDUCATION BUBBLE UPDATE: A “Disrupted” Higher Education System?

The “disruption” of the higher-ed market is a popular refrain these days. Rising tuition prices and student debt have left many wondering if the current model is indeed broken and whether those like Harvard’s Clay Christensen are right when they say that innovations in course delivery will eventually displace established players.

What exactly those innovations will look like remains a matter of debate. One view from Sheryl Sandberg, chief operating officer of Facebook, envisions a future in which every industry will be disrupted and “rebuilt with people at the center.” . . . While amenities and services on campuses have been redesigned in the last decade with students clearly at the center, the core of the academic experience for students today is almost exactly the same as it was for their parents decades ago. While other industries have been able to find productivity gains without sacrificing quality, on most college campuses we still have professors at the front of a room or at a table with an average of 16 students in front of them.

The biggest — and fastest — savings, however, are to be found in reforming administration. Those will be politically more difficult, however, as higher education administration provides a lot of jobs for people who reliably vote Democratic, and who have a lot of free time for politics.

JAMES TARANTO: Alternative Certification and ‘Colorblind Racism’ — The sooner the higher-education bubble bursts, the better.

The higher education industry’s credential cartel is under financial threat owing to the necessity of state and local (and eventually federal) budget cuts and the increasing sense that a degree isn’t worth incurring a mountain of debt. It is under legal threat, too. There is a strong likelihood that the Supreme Court will abolish or severely curtail the use of racial preferences in college admissions sometime in the next few years, a possibility that led to gnashing of teeth at the New York Times editorial board. Thanks to the senescence of white guilt, explicated here Monday, it is also under cultural threat.

Now, as Vedder reports, there is a competitive threat as well. We can expect that the higher-ed industry will do whatever it can to crush this threat. The obvious point of attack would be to claim that the new skills tests have a racially disparate impact.

No industry loses market share without a fight.

HIGHER EDUCATION BUBBLE UPDATE: The Coming Crash In Legal Education.

HIGHER EDUCATION BUBBLE UPDATE: Tenured Professor Departs Stanford U., Hoping to Teach 500,000 Students at Online Start-Up.

UPDATE: Related story here.

ANOTHER UPDATE: A clarification: “I did on my own volition resign from my full tenured position, effective April 1, 2011. However, this was primarily to continue my employment with Google, and it predates my online class. Stanford has generously appointed me as a research professor without tenure, which means I remain a voting member of the Academic Council. I continue to advise students and help the department with administrative issues. And in all clarity: Stanford is an amazing place!!! I love Stanford.”

HIGHER EDUCATION BUBBLE UPDATE: Obama Attacks High Tuition. Couple this with Biden’s comments about faculty being overpaid — which don’t seem so incidental now — and this seems to be a major turning point. Higher Ed is a major Democratic constituency and a huge source of donations, so I don’t expect them to actually do a whole lot (at least before the election) but that Obama feels he has to make this sort of statement indicates which way the wind is blowing.

HIGHER EDUCATION BUBBLE UPDATE: Beware: Alternative Certification Is Coming.

The announcement of agreements between Burck Smith’s StraighterLine and the Education Testing Service (ETS) and the Council on Aid to Education (CAE) to provide competency test materials to students online is potentially very important, along with several other recent developments. A little economics explains why this is so.

In the first week of beginning economics courses, professors usually make this fundamental point: If the price of something rises a lot, people look for substitutes. Resources (dollars) are scarce, and individuals want to make the best use of them. They “maximize their utility” by shifting away from high-priced good or service A to lower-priced good B.

With regards to colleges, consumers typically have believed that there are no good substitutes–the only way a person can certify to potential employers that she/he is pretty bright, well educated, good at communicating, disciplined, etc., is by presenting a bachelor’s degree diploma. College graduates typically have these positive attributes more than others, so degrees serve as an important signaling device to employers, lowering the costs of learning about the traits of the applicant. Because of the lack of good substitutes, colleges face little outside competition and can raise prices more, given their quasi-monopoly status.

As college costs rise, however, people are asking: Aren’t there cheaper ways of certifying competence and skills to employers? Employers like the current system, because the huge (often over $100,000) cost of demonstrating competency is borne by the student, not by them. Employers seemingly have little incentive to look for alternative certification. That is why reformers like me cannot get employer organizations like the U.S. Chamber of Commerce to take alternative certification seriously. But if companies can find good employees with high-school diplomas who have demonstrated necessary skills and competency via some cheaper (to society) means, they might be able to hire workers more cheaply than before–paying wages that are high by high-school-graduate standards, but low relative to college-graduate norms. Employers can capture the huge savings of reduced certification costs. And students avoid huge debt, get four years more time in the labor force, and do not face the risks of not getting through college. Since millions of college grads have jobs which really do not use skills developed in college anyhow, alternative certification is more attractive than ever.

All is proceeding as I have foreseen.

HIGHER EDUCATION BUBBLE UPDATE: Law School Applications Fall 15%. Number of applicants falls even more.

THE FUTURE: A Free College Education For All? That’ll bust the higher education bubble. . . .

HIGHER EDUCATION BUBBLE UPDATE: The Coming Higher Ed Revolution:

In recent decades, key sectors of the American economy have experienced huge and disruptive transformations — shifts that have ultimately yielded beneficial changes to the way producers and customers do business together. From the deregulation that brought about the end of AT&T’s “Ma Bell” system, to the way entrepreneurs like Steve Jobs forever changed the computer world once dominated by IBM, to the way the internet and bloggers have upended the business model of traditional newspapers, we have seen industries completely remade — often in wholly unexpected ways. In hindsight, such transformations seem to have been inevitable; at the time, however, most leaders in these fields never saw the changes coming.

The higher-education industry is on the verge of such a transformative re-alignment. Many Americans agree that a four-year degree is vastly overpriced — keeping many people out of the market — and are increasingly questioning the value of what many colleges teach. Nevertheless, for those who seek a certain level of economic security or advancement, a four-year degree is absolutely necessary. Clearly, this is a situation primed for change. In as little as a decade, most colleges and universities could look very different from their present forms — with the cost of a college credential plummeting even as the quality of instruction rises.

If this transformation does come to pass, it could have profound and beneficial implications. It could significantly increase the international competitiveness of American workers in a world in which we need higher skills and productivity to compete. It could sharply improve the employability of those on the bottom rungs of America’s income ladder, giving them the tools they need to move up. And it could do much to restore the American Dream for those who have begun to believe that opportunity in this country is disappearing. In other words, such a change could hardly come too soon.

Indeed.