The Problem Isn’t Student Loans–It’s Higher Education

Everyone understands soaring student debt is a problem: burdened with $1.3 trillion in student loans, young people are unable to start businesses, buy homes and start families. The high cost of housing and meeting regulations to launch businesses add additional burdens, but the weight of $1.3 trillion in debt right out of the starting gate is crushing.

The “solution” being pursued by the federal government is obvious: take over most of the student debt and then eventually bury it in the zombie-loan graveyard (i.e. defaults are ignored but the debt isn’t officially written off), write it down via forgiveness programs, or some other mechanism to reduce the burden.

If this wasn’t the plan, then why has federal ownership of student loan debt skyrocketed from zero to $900 billion in a few short years?

This is a decades-old problem that’s finally reaching critical mass: student debt has leaped from less than $500 billion in 2006 to $1.3 trillion today, a mere 9 years later:

The problem isn’t student loans–it’s the explosive rise in the costs of higher education. This chart depicts the exponential rise of higher education costs:

Apologists claim the student-loan crisis is the result of underfunding of colleges by states. While it’s true that some of the cost burden has been shifted from taxpayers to students, the real problem is soaring costs of the higher education cartel, which fixes prices via the artifical scarcity of accreditation.

The extraordinary rise in administrative staffing and costs and the boom in building costly temples of higher education are well-known. This chart depicts the rise of the educrat class, at the expense of teachers/professors:

I cover the rise in costs and the the equally extraordinary failure of the higher education cartel to prepare students for work in the emerging economy in my book The Nearly Free University and the Emerging Economy: The Revolution in Higher Education.

So the problem is two-fold: it isn’t just the insane cost of higher education that’s the issue; the cartel is failing to prepare students for an economy that requires the 8 essential skills in addition to whatever technical skills are needed in a particular field.

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.”

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.

Paying a bloated institution for the privilege of sitting through four years of lectures, online courses and a few labs no longer makes sense for the vast majority of students. What makes sense is dispensing with the entire bureaucracy of the cartel and costly campuses altogether, and designing directed apprenticeships which combine the best of online coursework with on-the-job training in workplaces.

The top research universities (numbering around 125 out of thousands of colleges and universities) can continue to train the relatively small cadre of academics and researchers the economy can support. (Just issuing STEM (science, technology, engineering, math) degrees doesn’t magically create jobs for the graduates.)

The vast majority of student are better served by mastering the 8 essential skills required in the emerging economy–skills that students can acquire on their own, a process of accrediting yourself that I address in detail in Get a Job, Build a Real Career and Defy a Bewildering Economy.

Forgiving skyrocketing student debt won’t solve the real problem which is the soaring costs imposed by a cartel that is failing to prepare students for the economy of tomorrow.

Of related interest:

Jobs data cannot prove that college is a “good investment”

Student Debt Grows Faster at Universities With Highest-Paid Leaders, Study Finds

Even the Most Educated Workers Have Declining Wages

Everything I’ve Written On Education Comes Down To Cultural Capital And Skills


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  • CB1138

    The problem is definitely higher education administrators, and of these the biggest problem is in certain state schools. It is a great career. An extremely mediocre intellect can be paid $70-$120k to be a hindrance to students trying to earn their degrees.

  • diogenes

    The second graph DRASTICALLY UNDERSTATES the character of the problem by contrasting only “management” with faculty, and leaving out “staff”. This statistical deceit is a stock in trade of the academic administrative fraudsters. Fifteen years ago Stanford had NINE staff and administrative employees for every ONE academic employee. The situation at UC Berkeley is similar and at some colleges is is much worse. I spoke with a retired — very comfortably — administrative bureaucrat a few months ago. Her contempt, her scorn, her derision for the “graduate student instructors” and junior faculty for their chumpish stupidity in accepting such terms of employment was sickening, and absolutely true to form and absolutely fits the facts. American hired education is a LIE FACTORY. The “administrators” see that it stays that way and pay themselves WONDERFULLY for corrupting American civilization.

  • Public School ‘A Conspiracy Against Ourselves’

    “Solve this problem and school will heal itself: children know that schooling is not fair, not honest, not driven by integrity. They know they are devalued in classes and grades,1 that the institution is indifferent to them as individuals. The rhetoric of caring contradicts what school procedure and content say, that many children have no tolerable future and most have a sharply proscribed one.

    This single chart demonstrates the ineffectiveness of federal education spending as measured by student test scores, and that chart is available here:

    A Prison By Any Other Name

    Not everything that is familiar and commonplace is good. What passes for “education” in much of the world has a very real, very negative aspect to it that most people never even think about.

    • diogenes

      “A Prison By Any Other Name” is excellent. Thanks. Josie rocks. So does her principal source, Gotti. The other video’s analysis of how the indoctrination serves the industrial system is apt but when it says that “a huge price had to be paid for business and government efficiency” it accepts the claims of business and government that organizational size — corporate or state — serves “efficiency” when it is well known and abundantly demonstrated that the opposite is the case. The larger the system the large the load of maintainence costs. This is true in biology from the cellular level up, and it’s true of human systems also. Centralization, hierarchy, authority, power — serve themselves; they are parasitical on human communities and feed at the expense of their hosts, victims, serfs, tenants, debtors, servants, slaves…. That’s why primal human societies living as tribes and clans where everybody can see each other’s hands and feel each other’s human needs and learn human respect and care (not obedience), relationships of bullying power over people are discouraged, not institutionalized. And why empire comes with cities.

      • Thank you for viewing and commenting diogenes!

  • Bob

    I believe this situation was in the planning a long time ago. Now it makes sense why the government agreed to disallow student loans from being discharged through normal bankruptcy proceedings. This happened in 2005 right before federal ownership of student debt exploded. This particular bubble was inevitable because it was probably engineered. All of that easy money has to go somewhere. The explosive rise of higher tuition and related costs is a direct result of the policy, not the cause. None of this would have happened if the ability to get loans had not been made so easy.

  • Mar 10, 2014 In this video Luke Rudkowski speaks with Department of Education whistleblower Charlette Iserbyt about the deliberate dumbing down of America.

    The former US Department of Education Senior Policy Advisor suggests that the our educational system is not based upon children learning. Is the Carnegie foundation instrumental in developing a socialist-collectivist style educational system that is detrimental to our youth? Are the elites impacting the development of the general population through our school systems?

    This single chart demonstrates the ineffectiveness of federal education spending as measured by student test scores; that chart is available here: