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The Great College Bubble

8:33 AM, Jun 21, 2012 • By GEOFFREY NORMAN
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If Governor Romney is embracing Congressman Ryan's budget, that would lead to huge scalebacks ... in access to Pell Grants. We can't cut off our nose to spite our face.  We need a lot more young people having a great start at life. We need a lot more young people having the opportunity to go to college. Anything that takes us in the opposite direction actually hurts our country."—Arne Duncan, secretary of education.

The secretary of education is concerned that the U.S. has fallen from first to sixteenth in world college graduation rates. And, a great start in life is, indeed, a good thing. No argument. 

But how great is it to arrive at adulthood with a degree, heavy debts, and no job? The high price of higher education and the availability of government loan programs have tempted many young people to take on far too much debt, which was predictable and forgivable. The institutions raised their prices which was also predictable and less forgivable. What followed was something troublingly similar to the housing bubble. Easy credit led to excessive borrowing. People took on more education than they could afford and learned that the college degree they'd been sold as empowering was, in fact, enslaving.  

Might Duncan use some of his influence to push solutions that look to reducing the very high – and rising – price of a college degree, instead of simply advocating that the taxpayers and student borrowers continue to pay whatever the schools decide to charge? The means are right at hand. The traditional model for an institution of higher learning was based on bringing students and professors together and providing them with the necessary tools for teaching and learning. Not too long ago, many college freshmen would never have seen a library like the one on their campus. Today, they can access a better library than that with a smart phone. They do not need to be in the same room with their professors in order to hear their lectures. They do not need to go deep in hock to support the infrastructure of buildings and bureaucracy that constitute the modern university.  

The old model isn't going to die outright, but a little competition would impose some price discipline and make it possible for energetic young people to start out without a load of debt heavy enough to buy a house.

The price of higher education does not rise according to some law of nature but because the people who establish the price know that the government will make it possible for everyone to "afford" college.  

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