Today’s college graduate is “highly unlikely” to “have a solid command of the founding and Civil War eras, core constitutional principles, and market economics,” the report concludes. “After all the time, effort and money spent on college, students emerge no better off in understanding the fundamental features of American self-government.”

Thomas Toch, co-director of the non-profit think tank Education Sector, agrees. In the July issue of The Atlantic he writes, “We need to shed more light on how well colleges are educating their students -- to help prospective students make better decisions and to exert pressure on the whole system to provide better value for money.”

That doesn’t mean we need more federal spending on education. In fact, we ought to have less. Unfortunately, the Obama administration has already agreed to throw money at colleges.

In July the maximum amount for Pell Grants will jump to $5,350, up $500 per year. Obama’s 2010 budget declares it wants to “ensure the Pell Grant continues to grow steadily by making it an entitlement.” And the administration plans to provide $200 billion in scholarships and credits over the next decade.

But the more aid government provides, the higher colleges raise their tuitions. As a recent White House staff report on higher education notes, “schools with the steepest increases in tuition receive the most loan assistance from the federal government, clearly incentivizing higher tuition.”

Instead, parents and elected officials should use their financial leverage to break the downward spiral in higher education. They should demand that colleges teach basic American history, political science and economics. Schools should be graded so those that don’t -- or won’t -- teach these subjects can be punished by losing customers (students).

That’s a lesson in free-market economics that colleges need to learn -- one that can help more Americans understand part of what we celebrate on the Fourth of July.