Higher Education In America – A Problem At Best

Higher Education

Higher Education: America’s Problem That Isn’t Being Solved 

Once we accredit the student, not the institution, existing universities will compete directly with Nearly Free Universities not in issuing diplomas but in how much students actually learned and mastered.

One of the key insights from recent work in psychology is that humans tend to substitute easier problems rather than solve difficult problems. Daniel Kahneman explained this dynamic in his recent book Thinking, Fast and Slow.

To “solve” a difficult problem we are unfamiliar with, we substitute a lesser problem we already know the answer to, and then declare we’ve “solved” the original (often knotty, complex) problem.

The real problem then festers, unsolved and addressed, while the misguided “solution” only drains resources and exacerbates the real problem.

An excellent example of this dynamic is higher education: the real problems are soaring costs and sharply declining yields in actual learning and in the real-world value of a diploma.

Consider the study Academically Adrift: Limited Learning on College Campuses which concluded that “American higher education is characterized by limited or no learning for a large proportion of students.”

These charts illustrate the costs and diminishing returns:

The yield (in earnings) on the increasingly unaffordable college degree is declining sharply:

The Status Quo has substituted two false “solutions” that completely ignore the real problems of soaring costs and diminishing returns: increasing student loans and hiring hundreds of thousands of non-teaching administrators.

While student loans have soared to over $1 trillion, with direct Federal loans ballooning from $115 billion to over $700 billion in a few short years, only 37% of freshmen at four-year colleges graduate in four years (58% finally graduate in six years), and 53% of recent college graduates under the age of 25 are unemployed or doing work they could have done without going to college.

New Analysis Shows Problematic Boom In Higher Ed Administrators:

In all, from 1987 until 2011-12–the most recent academic year for which comparable figures are available—universities and colleges collectively added 517,636 administrators and professional employees, according to the analysis by the New England Center for Investigative Reporting.“There’s just a mind-boggling amount of money per student that’s being spent on administration,” said Andrew Gillen, a senior researcher at the institutes. “It raises a question of priorities.”

The ratio of nonacademic employees to faculty has also doubled. There are now two nonacademic employees at public and two and a half at private universities and colleges for every one full-time, tenure-track member of the faculty.

The number of employees in central system offices has increased six-fold since 1987, and the number of administrators in them by a factor of more than 34.

I have demonstrated in my book The Nearly Free University and The Emerging Economy: The Revolution in Higher Education that the tuition for a four-year bachelor’s degree could (and should) cost $5,000, not $100,000 or $200,000.

The technology and tools already exist to accredit the student, not the institution and provide distributed courses, adaptive learning and real-world, workplace-based workshops for a tiny fraction of the ineffective, unaffordable system of higher education we are currently burdened with.

Once costs decline 95%, there is no need for student loans or the bloated bureaucracies currently overseeing the parasitic student-loan system.

Once we accredit the student, not the institution, existing universities will compete directly with Nearly Free Universities not in issuing diplomas but in how much students actually learned and mastered. If students can learn as much or more for $5,000 (including workshops in real-world workplaces) than they do for $160,000 in conventional universities, then the sectors of higher education that charge $160,000 for a 4-year degree will vanish.

In essence, technology has leapfrogged the existing higher education Status Quo, just as it has leapfrogged the banking sector.

Gordon T. Long and I discuss these issues in this 25-minute program:


YouTube link to the program

Here is a taste of what we discuss:


  • Media and knowledge are no longer scarce—both are essentially free
  • Students no longer need to be congregated in classrooms to hear oral lectures; the lectures can be distributed at almost no cost via the Internet
  • The factory model of teaching the same texts and curriculum no longer makes sense; every digital device is a library and a display for oral lectures
  • Lessons and methodologies of learning can now be tailored to individual students (adaptive learning) via interactive software
  • The need for live oral lectures as the primary (and presumed to be best) mode of teaching has vanished
  • Students learn mastery in workshops held in real-world workplaces, not classrooms


  • Colleges must separate Research and Educational funding
  • Education versus Occupational Training
  • Internships versus Apprenticeships; why corporations are no longer training
  • “Time is the New Competitive Dimension;” the educational systems needs to understand what this means
  • The New Economy requires Soft Skills such as Collaboration, Lifetime Learning, Continual Innovation and the full spectrum of Entrepreneurial Skills

Charles Hugh Smith – Of Two Minds


Firewood? (“Higher” Education)

One wonders how you’d actually accomplish this….

Once we accredit the student, not the institution, existing universities will compete directly with Nearly Free Universities not in issuing diplomas but in how much students actually learned and mastered.

Well, yes.

Now try accomplishing that without finding a way to get rid of 90% of University “administrators.”

See, the problem with people who are unaccountable is that they they will accumulate power up until someone stops them.  Asking nicely that they stop is ineffective, as they simply laugh at you and go on their way, as they have no reason to accede to your request.

Make no mistake, it is a mere request, and what you’re requesting is that they relinquish not only power but the ability to force you to pay them.  The expected response to such a request is this:


And that’s exactly what you get.

Not only is the cost of so-called “education” rising, the results are sinking.  The real income of people with said “degrees” is falling because there are too many of them and the requirements to obtain one have sunk through the floor.  They no longer represent good value in most professions even for those who succeed; on a simple discounted cash-flow analysis they come up short.

In the professions where the analysis still works, even at 5 or 10x the previous cost, the marginal utility, while positive, is nowhere near what it was 10, 20 or 30 years ago.  Those funds were stolen from the student; every dollar that has gone into a self-protective administrative hegemony is one that has been effectively extracted by force.

There is utterly no reason that you should not be able to work nights and weekends to put yourself through college at a Bachelor’s level — with zero debt or “contribution” from your parents, who factually owe you exactly nothing as of your 18th birthday.  If the point of an education is to learn something, then how you learn it is not material; that you learn it is.

This entire “industry” is set up as a means to extort funds from both you and, for young people, your parents.  From government “mandated” forms to the so-called “financial aid” (which is really nothing of the sort; at best it is stealing from one student to give to another, and at its worst and most-common it is nothing more than demanding that you take out loans at 10, 20 or even 30 times the cost of providing the material and knowledge you are trying to acquire.)

What would you call a system designed to effectively force upward the price of something in an alleged market economy and preclude those who wish to offer it at a cheaper price from being able to do so?

That would be called price-fixing and a violation of the Sherman and Clayton Acts, would it not?

So where are the handcuffs?

And if government will not enforce the law in this regard, but instead conspires with the educational lobby to enforce its monopoly, what redress remains available to the public for that behavior?

The Market Ticker

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