Inside the Higher Ed Bubble

Federal and state subsidies for this? Really?

by James A. Bacon

In their book, “Academically Adrift: Limited Learning on College Campuses,” Richard Arum and Josipa Roksa (a University of Virginia sociology professor) documented that large numbers of students were going to college “while experiencing few academic demands, investing limited effort in their academic endeavors and showing disturbingly low gains in academic performance as measured by the Collegiate Learning Assessment.”

Now, joined by two other researchers, Arum and Roksa have published a follow-up report, “Documenting Uncertain Times: Post-graduate Transitions of the Academically Adrift Cohort.” In the report, they track what happens to college students who graduated “on time” (within six years) when they enter the job market. A college degree may be a credential that all employers value, but the study found that students with high College Learning Assessment (CLA) scores fared far better than those with low scores.

Graduates who scored in the bottom quintile of the CLA were three times more likely to be unemployed than those who scored in the top quintile on the CLA (9.6 percent compared to 3.1 percent), twice as likely to be living at home (35 percent compared to 18 percent) and significantly more likely to have amassed credit card debt (51 percent compared to 37 percent).

Graduates who displayed high academic engagement/growth in their undergraduate years were less likely to have credit card debt than graduates who exhibited low academic engagement/growth (38 percent compared to 56 percent).

The report does not even touch upon the tens of thousands who start college and never earn a degree.

What more evidence do we need to question the widely propagated idea that “everybody who wants to go to college should be allowed to,” or that the way to “build human capital” is just to send more kids to college regardless of their inclination or capability to perform college work?

Tens of thousands of students and their parents are paying a very high price for an educational experience that teaches them very little. Not only are they saddling themselves with student loans, they incur an opportunity cost (money not earned) of attending classes when they could earning a paycheck and building skills in a field that doesn’t require a sheepskin.

The college-is-for-everyone mania is a cruel hoax, plunging tens, maybe hundreds, of thousands of young people into indebtedness they may never be able to repay. Meanwhile, it threatens to create the next financial bubble (see “The Next Bubble: College Loans?“) that could lead to yet another bailout that the nation can ill afford. The magnitude of the disaster is only a tenth the size of the housing bubble, but it is no less demoralizing to its victims. How many of these government-spurred calamities must we endure before the politicians learn?

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16 responses to “Inside the Higher Ed Bubble”

  1. Peter, Bacon has clearly infringed your “specialized blogging” style. Figure out a way to get jurisdiction in the District of Columbia and I’ll sue him for you.

  2. TMT, trust me, this was mild. Google “college party,” click on images, and see what I could have chosen from.

  3. Meanwhile the education gap continues to increase between rich and poor.

  4. back in the day as they say…. only rich boys went to college without having to have a job.

    others also went to college but the vernacular was “working you way through school”.

    Unlike Jim – I think many kids can get through college if the apply themselves and that may have to include some remedial work at a community college first.

    but we don’t expect kids to work their way through college much anymore and the most common excuse is that the college work is ‘too demanding” to learn and work at the same time .

    to which I Say:



    do you think many of today’s jobs require multi-tasking… and being nimby enough to quickly switch gears to keep up with rapidly changing conditions?

    sorry guys… many of the kids today have been trained by their parents to be snot-nose fancy pants… who deign to get their hands dirty cuz they so busy partying and “mooning” each other that keeping up with the academics is a real ball buster.

    this country today is all about excuses as to why we ….. CAN’T…do…

    and this is no more apparent than in the discussion about how we deal with college…

    Is it any surprise that very successful folks in technology these days have names like Aneesh Chopra who…is.” the eldest son of Indian immigrants Ram and Neelam Chopra.” while our sons and daughters are running up thousands of dollars in debt and basically have no clue what they are going to do for a living and eschew STEM.

  5. will rett Avatar

    Not sure of the point here. It appears you make the case that students who do well ( gain knowledge and skills ) in college do better post graduation than students who don’t. Is that the same issue as increasing college debt? Granted, if the bottom third never went to college, the total debt would go down and one could assume that the measure of learning assessment would automatically go up as you are eliminating those that don’t learn. So who should tell the bottom 1/3 to get a job rather than going to college?

    It appears to me that declining state support for higher ed puts more of the financial burden and decision on the students and parents, which appears to me to be a private market solution. One would think that the increased cost of college would decrease the number of applicants, but the laws of supply and demand do not appear to work here.

    Do you really want the govt or politicians making the decision of who goes to college?

  6. Will Rett, No, I don’t want gov’t and politicians making the decision of who goes to college. But that’s what’s happening now. They’re saying, the more people who go to college the better, and we will subsidize them through low-interest federal loans and state support for higher education — even if an increasing number are getting nothing from the experience and can’t afford to pay off their debt. Government policy has fed the higher-ed bubble, just like it fed the home ownership bubble.

    Ironically, all those subsidies enable colleges/universities to drive up the cost of tuitions and fees, making college more unaffordable and provoking outcries for even more subsidies.

  7. Europe does it right. Those who are not on a college track are on a technical track and that technical track is in many respects just as challenging and requires just as much basic education.

    Europe does not see non-college as a failure much less that kids who don’t go are throw-aways – as we seem to.

    What would happen in this country if we said that kids who are not on a college track could not get a diploma if they could not pass the Armed Forces Aptitude Test and that teachers and schools would be held accountable for that.

    we keep focusing on college and the problems we have with it but when kids graduate with not enough education to get a non-college job.. we’re going to be paying entitlements for them – their whole life.

    No child left behind was and is – all about kids who get left behind and we still have a collective societal attitude that it’s okay to let them fail especially if they have bad parents.

    I keep reminding everyone that YOUR KID is going to pay THEIR ENTITLEMENTS.

  8. Back in the 1990s, I attended a meeting hosted by my then-employer on public policy decision-making. One of the attendees was a former UK Labor Party member of Parliament who was working as a consultant to my company. He talked about the shift in economic power in the private sector from producers to consumers. He had quite a bit of evidence to back up his argument.
    Then he noted a similar change in economic power had not occurred in the public sector, in which I include higher education and health care because of the high levels of government funding involved with both industries. With some exceptions, we’ve seen much higher price increases in the public sector versus the private sector over the years. Producers in the public sector have much more economic power than those in the private sector. We need ways to weaken the power of public sector producers. If this were to occur, we’d have considerable benefits for society.

  9. I see higher ED as similar to other consumer barracudas lusting after money that poor smucks borrow to go to school.

    Higher ED has positioned itself to feed quite excellently at the trough by victimizing the gullible who have been led to believe that they need to go into hock for thousands of dollars to get a “degree”.

    These poor smucks will end up in the job market 20-30K in debt before they work a day in their lives when they should have been getting a job to work themselves through school rather than partying in their spare time.

    We are at fault. We want our kids to have a wonderful experience at college and not have to act like they are “poor”. Easy credit has become the drug of the middle class and instead of parents counseling their kids on the virtue of being frugal and minimal, they are taught to whip out the credit card just like we have by using our homes as ATMs, etc.

    I’ve heard that one of the biggest problems in the US these days is financial illiteracy. Listen to Suze Orman for a few minutes … or actually.. listen to the folks who relate their sad story to Suze.

    You have to wonder what planet these people are on when they make the decisions they do to go into debt 10, 20, 30, 40K worth.

    We often talk about the consequences of ‘bad’ parents for kids in school.

    I think we have “bad” parents even for the “good” kids… when it comes to financial literacy.

  10. First, love the picture, don’t care what anyone says. Now to LarryG –
    “Europe does it right” – Uh, not so fast. In many ways, Europe sucks with what they do regarding higher education (like they do on so many things including health care). Take my brother-in-law as an example. He was born and raised in Germany (West Germany when he was living there). The German (european system) ran it’s tests, saw his grades and whatever other means of devining his future, tagged him as working in horticulture. Hey, nothing wrong with that … unless it’s not REALLY what YOU want to do. So being a good european, he went through the coursework and the apprenticeship and indeed became a horticulturist, and his knowledge cares through to this day. However, he decided that he wanted to be a doctor – sorry the government had already pigeon-holed him and THAT was to be his future case closed … almost. He immigrated to Canada, where he supported himself with his horticulture skills while studying in night school for his undergrad degree and got himself into medical school. He graduated as a MD, but quickly figured out that Canada’s healthcare system leaves much to be desired (as do many things that the government runs); so he applied to immigrate to the USA. Well, we love to have full fledged doctors so he didn’t have too tough a time getting accepted. He has been in the USA for over 35 years, has done well and is quite happy. To do that in Germany (or most any other part of Europe) would have been extremely difficult, boarding on impossible. Gads, I don’t see what you like so well about Europe, they are screwed up in ways that we aren’t (and vice-versa), I don’t like our problems but when I read about problems in Europe, I really don’t like the ones they have.

  11. As for our present education system – my wife (and I, to some degree) thinks that kids need to be out of school at about age 14 or 15. By then they need to have been taught to write, read and do enough math to function easily. At that age then then need to start experiencing life a bit, yes, still live at home, but start working in a grocery store, or a parts counter, or fast food, or some other starter jobs. For most of them several things will occur, first and foremost, they will learn a work ethic (something that is SO SADLY lacking in today’s youth that you want to cry). Second, they will learn (most of them) that they really DON’T want to do whatever this crappy little job is for the rest of thier life. Third, they will start learning about money, what it feels like to earn it, what it feels like to pay taxes, what it feels like to pay for something that you’ve spent months earning and how much pride you have in it and how much more you care about it (versus how little care there is when it’s just given freely to you). Fourth, they will get a taste for things and find out what they like and don’t like, maybe something looked good, but when you’re doing it day after day and dealing with the ‘other side of things’ it’s not as an attractive occupation as you’d thought; so you move on to some other line of work that you think is interesting.

    Example, my wife’s son – yes, he did graduate from high school, but it was kicking and screaming all the way. His last couple of years in high school he worked in a tire shop, learned a LOT about cars, thought he wanted to be a mechanic … till he had to start dealing with customers, that killed that idea, so he moved on, but to this day is a competent mechanic on his own vehicles and those of his friends. He spent a couple years installing tile, flooring and countertops, again, he learned ALOT, among them that he really didn’t want to depend upon THAT line of work to make a living. He moved on to being a plumber, everything from septic systems (installing an fixing them) to commecial high rise construction. Did it for almost three years, decided that crawling around in crawl spaces and dealing with plugged up pipes just didn’t do it for him; again he walks away with a boatload of skills. Even ran his own ‘hot-shot trucking/delivery’ business, learned a lot about the ins and outs of running a business and the hassles/issues of waiting for payments, etc. So he moved to welding and iron work, he’s been doing that for over 15 years (with a break for his delivery service), he’s worked his way up to superintendent and his reputation is high in his area of the country. He hasn’t gone back to school, doesn’t really see a need for it. He argues/discusses issues with engineers and architects because he is up on the steel looking at it and they (typically) are on the ground working strictly with pencil and paper (as it were). His discussions are fruitful and he is respected because he knows what he knows.

    When I was a kid (in the stoneage) came summer, we rarely went to ‘camp’ or if we did it was only for a week or two and was considered a treat. No, my summers were spent in the berry and bean fields learning the meaning of work, the more you picked, the more you earned. We learned that we had to get up early in the morning to catch the bus that took us to the fields and if we missed it, there was hell to pay from our folks. I worked two paper routes to make money. Around the house I was taught and expected to mow the lawn, weed the flower beds, do basic painting of the back porch the way my dad taught me; and I hired myself out to neighbors to work for them. That whole learning experience is pretty much lost on this generation; and yes, I blame much of that on the liberals who insist on ‘minimum wage’ and insist on a whole list of rules that make teaching some of those lessons difficult to impossible. Liberalism is a mental disorder.

  12. actually Accurate , we’re not that far apart on education. I too believe that kids should learn the work ethic.

    I still take the European, Asian, Australian, etc systems because they consider ALL kids, not just the college-bound to need a good enough education to earn a living while we are more than willing to watch 1/3 to 1/2 end up functionally illiterate and on entitlements their entire lives.

  13. Public Schools demonstrate the severe problems when producers have control over the market. If the student who is not college-bound and his/her parents had a check/voucher/coupon that was worth a year’s education (K-12), would a public school system be more responsive to the student’s needs? Could the principals be spending all their time listening to those parents who believe only their college-bound children were valuable if these parents have no more financial sway than those of other children?

  14. TMT – you got your eye on the issue. Vouchers without controls will not help the kids who are not college-bound… the money will get siphoned off and the kids will end up as bad or worse than they do in the public school system.

  15. But if we could develop a voucher system that gave the parents of the non-college-bound students similar clout as the parents of college-bound students, we would see more emphasis on the former. I have a number of nieces and nephews, most of whom have gone, are going, will go to college. But one of my nephews went to a junior college and floundered. He quit and had a number of bad jobs. Finally, he was accepted as an apprentice butcher in a grocery store chain. He loves his work and is now an assistant meat manager at one of the biggest stores in the chain. I call this a success story.

  16. indeed it is TMT! but the problem with Vouchers is a lack of academic standards for the alternative schools.

    the state requires public schools to provide certified resources in terms of staffing and curriculum and to test the students for performance.

    giving public funds to non-public schools with no requirements is going to attract all manner of “schools” who will promise what it takes to get the vouchers and who knows what they will actually provide or what happens if they don’t perform as well as public schools.

    I’m ALL FOR competition for the public schools but the playing field needs to be the same for all providers or we’ll just be throwing money away.

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