For years government has assumed it’s a good thing to go to college. College graduates tend to earn more money than non-college graduates.
Politicians of both parties have called for giving everybody a chance to go to college, just as they called for giving everybody a chance to buy a home.
So government has been subsidizing higher education with low-interest college loans, Pell Grants and cheap tuitions at state colleges and universities.
The predictable result is that higher-education costs have risen much faster than inflation, much faster than personal incomes, much faster than the economy over the past 40 years.
Moreover, you can’t get out of paying off those college loans, even by going through bankruptcy. At least with a home mortgage you can walk away and let the bank foreclose and not owe any more money.
Peter Thiel, co-founder of PayPal, is adept at spotting bubbles. He cashed out for $500 million in March 2000, at the peak of the tech bubble, when his partners wanted to hold out for more. He refused to buy a house until the housing bubble burst.
“A true bubble is when something is overvalued and intensely believed,” he has said. “Education may still be the only thing people still believe in in the United States.”
But the combination of rising costs and dubious quality may be undermining that belief.
For what have institutions of higher learning accomplished with their vast increases in revenues? The answer in all too many cases is administrative bloat.