NEW YORK ( TheStreet) -- Universities charge too much, deliver too little and channel too many students into a lifetime of debt. Genuine reform must be brought to bear to curb those abuses.College graduates still earn more and are unemployed less often. However, with so many recent graduates serving cappuccino and treading water in unpaid internships, a four-year diploma is not quite the solid investment it once was, and should not be so-often viewed as such a necessity by society. Since 2007 to 2008, the average pay for recent four-year graduates has fallen nearly 5%, while the average earnings of a typical American worker, as tracked by the Bureau of Labor Statistics, is up 10%. Graduates in high-demand disciplines can still earn good starting salaries and expect rising earnings as experience grows, but in many majors they increasingly face market conditions that have bedeviled skilled manufacturing workers for decades -- too many folks chasing too few jobs. Academics see a university education idealistically -- cultivating critical thinking and facilitating a satisfying life -- but for most middle-class families, a diploma is a capital investment often purchased at extortive prices. Over several decades, Americans have become convinced too many jobs require college education that, when evaluated in terms of their objective skill requirements, shouldn't. Convenience restaurant managers and cell phone salespeople don't need an education in English, math and politics beyond what a decent high school education imparts. Yet, employers often press for several years of college or a degree, because college graduates are cheap and plentiful, but still end up training new hires in rudiments of hospitality management, operating systems and the like. Too many young people are pressured into a costly education they don't need, and universities, enjoying such a captive market, have over expanded, acceded to faculty demands for light teaching loads, layered on costly bureaucracies and unconscionably raised the cost of college to beyond what it frequently is worth to students and society as a whole. Outstanding student loans now exceed $1 trillion, but most significantly one in six is in default and that ratio will likely grow.
Unlike loans taken to capitalize a small business or buy a house, student loans are not dischargeable in bankruptcy, and stories abound of folks in their forties and fifties still saddled with onerous debt and the elderly with garnisheed Social Security benefits. Colleges and universities do not furnish families with the information necessary to make sound choices -- the probability a student will complete a degree in four years, the full cost of completing a degree, and the likely salaries and prospects for repaying loans, especially according to major and for those students that only attend a few years and do not complete a degree. University presidents are like the bankers who wrote the bad mortgages during the housing boom -- they admit students, facilitate lots of borrowing, and pay themselves well but don't have much skin in the game. For their students to qualify for both government-sponsored and private bank loans, universities should be compelled to provide audited information about the likely time required and the cost of obtaining degrees in various majors, salaries graduates earn the first years after graduation, and the resulting repayment burdens -- and similar data for those who attend less than four years. Like CEOs of corporations who must now attest to the accuracy of financial statements, university presidents should be required to do the same, and be subject to similar legal penalties for failure. Student loans should be dischargeable in bankruptcy when these investments don't work out -- otherwise, we will continue to create a Dickens-era debtors' life for many victims of the higher education system -- and universities should be on the hook for a significant share of defaulted loans -- perhaps, 25% to 50%. Well-run institutions would get their costs and tuition under control, seriously evaluate and become transparent about the prospects for a decent enough paying job after majoring in art history vs. mechanical engineering, and have little problem lining up private investors to insure their share of prospective default liabilities. Schools that take students money and deliver too little for it, would go the way of Circuit City and the St. Louis Browns, and stop blighting the futures of young people. Follow @PMorici1 This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.