ANOTHER BURSTING BUBBLE – AT 10:02 A.M. ET:  The high-tech bubble burst in the 90s.  The housing bubble is continuing to burst.  And now Michael Barone, superlative political observer, looks for another bubble to pop.  Frankly, it's long overdue.

It's the education bubble.  Vastly overpriced college "educations," sought after fanatically by a student and parent population whipped up by warnings that you'd better get in, get that degree, and get out, and write the checks, or your life is over.  Not so fast, professor.  From the Washington Examiner:

...some people see signs that another bubble is bursting. They call it the higher education bubble.

For years government has assumed it's a good thing to go to college. College graduates tend to earn more money than non-college graduates.

Politicians of both parties have called for giving everybody a chance to go to college, just as they called for giving everybody a chance to buy a home.

So government has been subsidizing higher education with low-interest college loans, Pell Grants and cheap tuitions at state colleges and universities.

The predictable result is that higher-education costs have risen much faster than inflation, much faster than personal incomes, much faster than the economy over the past 40 years.

Moreover, you can't get out of paying off those college loans, even by going through bankruptcy. At least with a home mortgage you can walk away and let the bank foreclose and not owe any more money.

And...

...what have institutions of higher learning accomplished with their vast increases in revenues? The answer in all too many cases is administrative bloat.

Take the California State University system, the second tier in that state's public higher education. Between 1975 and 2008 the number of faculty rose by 3 percent, to 12,019 positions. During those same years the number of administrators rose 221 percent, to 12,183. That's right: There are more administrators than teachers at Cal State now.

These people get paid to "liaise" and "facilitate" and produce reports on diversity. How that benefits Cal State students or California taxpayers is unclear.

It is often said that American colleges and universities are the best in the world. That's undoubtedly true in the hard sciences.

But in the humanities and to a lesser extent in the social sciences there's a lot of garbage. Is a degree in Religious and Women's Studies worth $100,000 in student loan debt? Probably not.

And...

Now consumers seem to be reading the cues in the marketplace.

An increasing number of students are spending their first two years after high school in low-cost community colleges and then transferring to four-year schools.

A recent New York Times story reported that out-of-staters are flocking to low-tuition North Dakota State in frigid Fargo.

Politicians, including President Obama, still give lip service to the notion that everyone should go to college and can profit from it. And many college and university administrators may assume that the gravy train will go on forever.

But that's what Las Vegas real estate developers and home builders thought in 2006. My sense is that once again, well-intentioned public policy and greedy providers have produced a bubble that is about to burst.

COMMENT:  Excellent and perceptive column.  I spoke last year with a leading educator, someone whose name many of you would know immediately, who was speaking about the same thing.  He described the tuition increase at his alma mater, from his student days to the present, pointing out that it was vastly greater than the rate of inflation.  He told me about a niece who attends a "prestigious" college...who is home more than she's in school. 

Bubble about to burst, but the colleges will fight fiercely, invoking the battle cry, "It's for the children."  Yeah, right.

July 20, 2011