Is a higher education bubble coming?

Public universities like the University of Minnesota strike me as hugh bureaucracies impervious to efficient and wise use of resources. With faculty tenure, taxpayer subsidies, and a semi-autonomous political status, they seem to demonstrate all the tendencies of government bureaucracies -- extravagant use of resources and unresponsive to market forces and consumers. The same can be said of some of the larger private higher education institutions which are sitting on massive endowments.

Well, that may change. We've already experienced a financial bubble in the housing market. Our economic woes may do the same thing with higher education according to some observers.

Michael Barone has picked up on a column by Glenn Reynolds to suggest the that skyrocketing prices for a college education maybe soon changing. Barone writes:

Imagine that you have a product whose price tag for decades rises faster than inflation. But people keep buying it because they're told that it will make them wealthier in the long run. Then suddenly they find it doesn't. Prices fall sharply, bankruptcies ensue, great institutions disappear.

Sound like the housing market? Yes, but it also sounds like what Glenn Reynolds, creator of instapundit.com, writing in The Examiner, has called "the higher education bubble."

Government-subsidized loans have injected money into higher education, as they did into housing, causing prices to balloon. But at some point people figure out they're not getting their money's worth, and the bubble bursts.

He points out that the quality of our college graduates has declined as have the standards of higher education in general.

"Is our students learning?" George W. Bush once asked, and the evidence for colleges points to no. The National Center for Education Statistics found that most college graduates are below proficiency in verbal and quantitative literacy. University of California scholars Philip Babcock and Mindy Marks report that students these days study an average of 14 hours a week, down from 24 hours in 1961.

The American Council of Alumni and Trustees concluded, after a survey of 714 colleges and universities, "by and large, higher education has abandoned a coherent content-rich general education curriculum."

Of course, this isn't solely the fault of colleges; the product they're receiving from our public education system is declining as well. Yet what they are doing isn't helping.

They aren't taught the basics of literature, history or science. ACTA reports that most schools don't require a foreign language, hardly any require economics, American history and government "are badly neglected" and schools "have much to do" on math and science.

ACTA's whatwilltheylearn.com Web site provides the grisly details for each school, together with the amount of tuition. Students and parents can see if they will get their money's worth.

The public is starting to see the problems with universities.

Transparency could also undermine the numerous dropout factories, public and private, described and listed by the liberal Washington Monthly. More than 90 percent of students there never graduate, but most end up with student loan debt.

Increasing transparency is hitting higher education at the same time it is getting squeezed financially. Universities have seen their endowments plunge as the stock market fell and they got stuck with illiquid investments. State governments have raised tuition at public schools but budgets have declined. Competition from for-profit universities, with curricula oriented to job opportunities, has been increasing.

People are beginning to note that administrative bloat, so common in government, seems especially egregious in colleges and universities. Somehow previous generations got by and even prospered without these legions of counselors, liaison officers and facilitators. Perhaps we can do so again...

As often happens, success leads to excess. America leads the world in higher education, yet there is much in our colleges and universities that is amiss and, more to the point, suddenly not sustainable. The people running America's colleges and universities have long thought they were exempt from the laws of supply and demand and unaffected by the business cycle. Turns out that's wrong.