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The American system of higher education is increasingly becoming a fiscal disaster for ever-larger numbers of students who move through it. That disaster is being caused by a combination of terrible incentives, institutional greed — and the pervasive myth that more education is the cure for economic inequality.
The extent of this myth is highlighted by a new report from the Center for College Affordability and Productivity, which indicates that nearly half of all employed college graduates have jobs that require less than a four-year college education. Despite such sobering statistics, the higher-education complex remains remarkably successful at ensuring that American taxpayers fund the acquisition of educational credentials that, in many cases, leave the people who obtain them worse off than they were before they enrolled.
Far from being “priceless,” as the promoters of ever-more spending on higher education would have Americans believe, both undergraduate and post-graduate education is turning out to be a catastrophic investment for many young and not-so-young adults.
In recent years, law school has become the most striking example of this remarkably perverse system. Consider how American legal education is funded:
In effect, the system allows any 22-year-old American University chooses to admit to borrow a sum equal to the average home mortgage, but without a single one of the actuarial controls that are supposed to minimize the risk that homeowners will borrow too much money.
After all, even at the height of the housing bubble, homebuyers who got so-called liar loans that misstated their actual income still had to jump through certain hoops to do so. In addition, if they defaulted on their loans, there was a house the lender could foreclose on that in most cases still had some value. Of course, that system proved to be far too unregulated, and led to a financial disaster that would have wrecked the nation’s banking system if not for hundreds of billions of dollars of federal bailout money.
Still, even that system was a model of rationality in comparison to the federal government’s funding of higher education. As long as they are technically “nonprofit” institutions, schools can charge whatever they like, without having to provide a shred of proof that their graduates will be able to pay back the incredible debt loads they will be incurring. And, of course, when graduates default on these loans there’s no house to sell off to cover at least some of the deficiency.
Less than two out of every five American University law graduates are getting legal jobs of any kind – let alone the far rarer jobs that would allow graduates to actually service the debts they’re incurring by attending the school. And American is a fairly high-ranked law school.
But none of this should be taken as solely a criticism of American University in particular, or even law schools in general. American’s law school — and America’s law schools — are merely the canary in the coal mine of an educational system that, sooner or later, is going to cave in on itself.
Paul Campos is a professor of law at the University of Colorado at Boulder.More Paul Campos.