The problem isn\’t student loans–it\’s Higher Education



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

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
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

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
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