If there were a museum of good intentions leading to bad results, the government's longstanding policy of trying to make higher education affordable would be a featured exhibit. Most of the adults I grew up with had no more than a high-school education. But by the 1970s it was becoming axiomatic that college was a virtually unmitigated good, and that government subsidies could put a college degree within every family's reach.
So politicians right and left vied to increase funding for student aid, channeling ever more public dollars into Pell Grants, guaranteed loans, work-study subsidies, and tuition tax breaks. Colleges happily raised their prices to soak up the subsidies -- and to soak up as well all the money being borrowed by parents and students to finance college degrees that grew steadily less, not more, affordable. All the while Americans were assured that a college degree was an excellent investment, a gateway to prosperity tomorrow that justified the sticker shock today.
Many people said the same thing about technology stocks as their share prices shot upward in the 1990s. Even more recently people were saying the same thing about housing prices. In retrospect, the ugly collapse of the dot-com bubble in 2000 -- and the even more calamitous end to the housing bubble in 2007 -- seem inevitable. Is the higher-education bubble going to burst too?
Economic bubbles are sustained by belief, and there are signs everywhere that Americans no longer believe that a college degree is everything it has been cracked up to be. "Potential students are becoming aware of just how bad student debt can be," writes University of Tennessee law professor Glenn Harlan Reynolds in a recent monograph. "That's causing them to change their behavior." More students, he notes, are choosing military service, community college, or vocational training over a traditional university education. Inexpensive web-based learning programs, such as EdX, the online school founded by Harvard and MIT, are drawing lively interest. A growing number of students, The Washington Post has reported, are backing away from college entirely, finding success and satisfaction in the skilled manual trades.
"Is College A Lousy Investment?" asks Newsweek's current cover story. More and more Americans are deciding that the answer to that question is yes. It may not happen tomorrow, but the higher-education bubble is getting ready to burst.