“It’s a collateralized debt obligation [CDOs] made up out of, like, C-rated mortgages,” said Wesley Yang in a conversation with John Sailer in 2022. “These people, their job is—as the rating agency—to say that it’s all A plus.”

Yang and Sailer were not talking about the CDOs stuffed with subprime mortgages and fraudulently passed off as safe, which eventually led to the collapse of the housing market in 2008. Rather, they were talking about the medical literature on gender, how clearly fraudulent it is, and more broadly about what our universities have become. For many working outside of finance “collateralized debt obligation” might as well be synonymous with “college degree,” the collateral in this case being one’s financial future and freedom. And like the housing market bubble before it, the higher education bubble is ready to burst.

Beginning in the 1960s, American colleges and universities began accepting more students, and between 1965 and 1975, the number of students and professors hired to teach them doubled. “It was as if the United States took a century to build one system of higher education, and then, in a single decade, built a second one of the same size,” said Dr. Lyell Asher in the 2022 micro-documentary Why Colleges are Becoming Cults. The fact that many of these new students and professors viewed the academy as a base for activism rather than for education also hurt the preservation of the university’s true mission and societal function.

Worse, the doubling of the American higher education system brought in students who should never have been enrolled, much less graduated.

Recently, a meta-analysis of undergraduate students found that the average IQ of undergrads has declined precipitously over the years, and recent data indicate that the average undergrad now has an IQ equivalent to the average IQ of the general population. As the authors of the study explained: “[t]he decline in students’ IQ is a necessary consequence of increasing educational attainment over the last 80 years. Today, graduating from university is more common than completing high school in the 1940s.”

Many of these incapable but credentialed students end up as university administrators with nowhere else to go in the private sector. A 2021 study found that between 1976 and 2018, full-time faculty increased by 92 percent and students by 78 percent, while “full-time administrators and other professionals employed by those institutions increased by 164% and 452%, respectively.” Today, many of these administrators, with hollow and/or fraudulent academic credentials, lead our universities. The most notable example is Claudine Gay, Harvard’s former president, who was appointed with only 12 publications and who resigned after she was revealed to have plagiarized several times.

The decline of college students’ cognitive abilities has significantly diminished the signaling power of a college degree, but thanks to the rise in unnecessary administrators, the cost of obtaining a degree has increased dramatically. In fact, looking at historical data, the cost of attending college has far surpassed the rate of inflation. The average annual cost of tuition for a four-year public institution was $302 in 1966, which is $2,386 in 2019 dollars. But by 2019, the average cost of tuition was $9,349, about four times greater even when all data points are adjusted for inflation.

These increased costs have consequences for the many students who see college as a necessary convention for their careers. As Neetu Arnold explained in her 2021 NAS report, Priced Out: “Young Americans paying off student loans delay personal milestones such as buying a house, getting married, or having children… Young Americans devote their talents to paying off debt rather than to creating a future for themselves and for their country.” And young Americans have continued to accumulate that debt. As of 2023, Americans now owe 1.73 trillion dollars in student loan debt. The total amount of student loan debt nearly doubled between 2011 and 2022.

The government has not addressed the devaluation of a college degree, nor the administrative bloat, nor the rising costs and rampant borrowing that has led to the student debt crisis. Instead, the government has, in effect, sought to bail out the universities—just as it bailed out the banks. The Biden administration began 2024 with the announcement of 4.9 billion dollars in student debt relief, but that would barely put a dent in the 1.73 trillion dollar total. Cancelation of student debt will not resolve the underlying issues that caused the debt crisis, nor is it intended to. The intent is to pander to voters and deflect attention away from the universities that scammed them.

Serious reforms are needed, too few are being implemented, and so, just like the housing bubble, the higher education bubble will eventually burst. The question is not if but when and how suddenly it will occur. If it happens suddenly enough, those guilty of fraud will plead innocence, the authorities who should have known better will plead ignorance, and millions of indebted Americans will be left with unrealized dreams of jobs, future homes, and happy families—just like last the last time.

Photo by Jared Gould — Adobe — Text to Image