But higher education isn’t worth what it used to be. A credit rating agency, Moody’s, is now warning student borrowers that college may not be worth the money for some majors. As Reason Magazine notes, a higher education bubble looms:
A growing chorus of economists and educators think that the higher education industry will be America’s next bubble. Easy credit, high tuition, and poor job prospects have resulted in growing delinquency and default rates on nearly $1 trillion worth of private and federally subsidized loans. Now the ratings agency Moody’s has weighed in with a chilling diagnosis: “Unless students limit their debt burdens, choose fields of study that are in demand, and successfully complete their degrees on time, they will find themselves in worse financial positions and unable to earn the projected income that justified taking out their loans in the first place.”
Two law schools are being sued for fraudulent placement data in class-action lawsuits. Law school tuition has gone up 1000 percent since 1960 in real terms, even as law schools teach students few practical skills and little real-world knowledge of the law. A tenured law professor at a well-ranked law school admits that law school is a “scam” and that his faculty colleagues are “overpaid,” “inadequate teachers,” many of whom work just a few hours a day.
Due to market distortions like the proliferation of unnecessary state licensing requirements that require useless paper credentials, and financial aid that directly encourages colleges to raise tuition, colleges can raise tuition year after year, consuming a larger and larger fraction of the increased lifetime earnings students hope to obtain by going to college.
Meanwhile, college students learn less and less with each passing year. “Thirty-six percent” of college students learned little in four years of college, and students now spend “50% less time studying compared with students a few decades ago, the research shows.” Thirty-two percent never take “a course in a typical semester where they read more than 40 pages per week.”
States spend hundreds of millions of dollars operating colleges that are worthless diploma mills, yet manage to graduate almost no one – like Chicago State, “which has just a 12.8 percent six-year graduation rate.” Bush increased federal education spending 58 percent faster than inflation, while Obama seeks to double it. Spending has exploded at the K-12 level: per-pupil spending in the U.S. is among the highest in the world, and “inflation-adjusted K-12 spending tripled over the last 40 years.”