Few Yale seniors, it turns out, know which American President created the New Deal. Even fewer would know which one said, "If a nation expects to be ignorant and free, in a state of civilization, it expects what never was and never will be." It was Thomas Jefferson, and he and the other founders recognized that our system of ordered liberty would endure only if its citizens understood the nation's guiding principles.

The endurance of American democracy depends upon a broad knowledge of the nation’s history and an understanding of our institutions. Unfortunately, a lack of civic literacy abounds at the k-12 and university levels.

The National Center for Education Statistics administered a grade-level appropriate civics exam to a nationally representative sample of fourth, eighth, and twelfth graders in 2006. The percentage of students "demonstrating solid competency over the subject matter" was 25 percent of fourth graders, 24 percent of eighth graders, and 32 percent of twelfth graders.

The percentage of students scoring below even partial mastery of the material was 27 percent, 30 percent and 34 percent respectively. At every grade level tested, more students failed the exam than demonstrated a solid mastery.

Cue the predictable response: we all know that our k-12 schools under-perform, but luckily, we make up for it with the best system of higher education in the world. Well, not so much these days.

The Intercollegiate Studies Institute recently released The Coming Crisis in Citizenship: Higher Education's Failure to Teach America's History and Institutions. The study surveyed 14,000 randomly selected college freshmen and seniors at 50 colleges and universities to measure their knowledge of four subjects: American history; government; America and the world; and the market economy.

The researchers found unsettling results. The average score, had the survey been an exam, was an F, with only 53 percent of items answered correctly. Worse still, there was little evidence of students having gained any knowledge on these subjects, as the seniors outscored the freshmen by only 1.5 percent. At many of the universities, including elite institutions such as Brown, Georgetown, and Yale, seniors knew less about these subjects than the freshmen. The researchers dubbed this phenomenon "negative learning gains."

Sadly, the news gets worse.

The American Institutes for Research (AIR) recently assessed the literacy of 1,800 graduating seniors from 80 randomly selected two- and four-year colleges and universities. What they found was not pretty.

Twenty percent of U.S. college students completing four-year degrees have only what the researchers describe as basic quantitative literacy skills, meaning they are unable to estimate if their car has enough gas to get to the next gas station or calculate the total cost of ordering office supplies. The study also finds that more than 50 percent of students at four-year colleges have only the most basic literacy skills, meaning they can't do a basic task like summarize the arguments in a newspaper editorial.

The implications of these reports are profound. Universities nationwide have been asking for increased taxpayer subsidies and tuition for decades without anyone seriously questioning their return on investment.

Universities make outlandish claims about spurring economic development and leading the way to a new knowledge economy. Yet somehow in the process, they stopped teaching their students basic civics, or apparently, requiring them to know how to read.

American universities suffer from a deadly combination of an almost complete lack of transparency, massive indirect government subsidies, and inelastic demand. Higher education costs have raced ahead of even health care inflation without any evidence that students are learning more today than they did in the past.

A wise man recently told me that every system is perfectly designed to produce the results it achieves. The higher education system produces a surprisingly high number of semi-literate graduates who know little about their history and government.

A serious reappraisal of higher education policy is long overdue, both at the state and federal levels.