Students are paying high prices for a terrible service

By Schumpeter

YET another fascinating article on the higher-education bubble. Malcolm Harris argues, in N+1, a politics and culture magazine, that the bubble is huge, that students are paying ever-higher prices for ever-shoddier education, and that the main culprits are administrators, pestilential creatures who pursue goals that have little to do with education (fancy new buildings, attention-grabbing victory in sporting events, etc), and who, according to official statistics, will be as numerous as actual teachers on America's campuses by 2014. Here are two extracts:

Since 1978, the price of tuition at US colleges has increased over 900 percent, 650 points above inflation. To put that number in perspective, housing prices, the bubble that nearly burst the US economy, then the global one, increased only fifty points above the Consumer Price Index during those years. But while college applicants' faith in the value of higher education has only increased, employers' has declined. According to Richard Rothstein at The Economic Policy Institute, wages for college-educated workers outside of the inflated finance industry have stagnated or diminished. Unemployment has hit recent graduates especially hard, nearly doubling in the post-2007 recession. The result is that the most indebted generation in history is without the dependable jobs it needs to escape debt....

Today, student debt is an exceptionally punishing kind to have. Not only is it inescapable through bankruptcy, but student loans have no expiration date and collectors can garnish wages, social security payments, and even unemployment benefits. When a borrower defaults and the guaranty agency collects from the federal government, the agency gets a cut of whatever it's able to recover from then on (even though they have already been compensated for the losses), giving agencies a financial incentive to dog former students to the grave.