Rip-Off: College Tuition Bubble and Debt Burdens Grow Worse
Forbes magazine recently blew the whistle on how skyrocketing college tuition is ripping off the public. Thanks to some colleges’ greed, and the federal and state financial aid subsidies that reward tuition increases, “Higher education’s price-earnings ratio looks like Nevada housing circa 2007″ at the height of the real estate bubble. “The financial data are making a college education tougher and tougher to defend.” And “a college education contains a risk factor that no stock or bond does: zero liquidity. For good or for ill, you’re stuck with it. You can sell a security back to the market, but you can’t sell your degree back. . . . No Refunds. And things are only going to get worse.”
An increasing number of Americans have gone to college in recent years, at enormous expense to taxpayers, students’ families, and the students themselves. But most of the increase has ended up in unskilled jobs that require no more than a high school diploma to perform competently. For example, 5,057 janitors have Ph.D’s or other advanced degrees. By one estimate, 17 million Americans have economically useless college degrees, a number that the Obama administration’s policies would increase further.
America is in the midst of a college debt bubble that dwarfs the recent housing bubble. As we noted earlier, 100 colleges now charge $50,000 or more a year, compared to just 5 in 2008-09. College tuition has surged along with federal financial-aid spending, which effectively rewards colleges for increasing tuition. College financial-aid policies punish thrifty families, so that “parents who scrimp and save to come up with the tuition are in effect subsidizing the others.”
Rather than fixing these policies, defenders of academia have sought to divert blame by demonizing a small number of for-profit colleges, often for practices engaged in every bit as much by the far more numerous “non-profit” colleges (who use their wealth to enrich ever-growing numbers of college administrators rather than shareholders). This scapegoating took the form of a recent government report that has now been thoroughly discredited, but not before being trumpeted for months by liberal media organs.
Image credit: Honeywell-Nobel Initiative’s flickr photostream.