Cynically and opportunistically, New York University has announced that it will offer two courses on Occupy Wall Street.  Given the current state of higher education, and especially of liberal arts education, NYU's announcement is not surprising, though it does highlight the education industry's excesses and deficiencies.

American higher education is unaffordable, oversold, and underserviced.  In many cases, the products colleges and universities deliver are substandard.  Many who purchase them at significant cost fail to receive fair value for their investments.  Government policy has encouraged negative, unsustainable institutional behavior.  The current system isn't self-regulating or self-correcting.  Accordingly, government policy must be changed to restore proportion and value to higher education.

Americans generally believe that any college degree will confer excellence and prosperity on graduates.  College-educated workers are more likely to be employed and enjoy higher average earnings, but success in today's job market requires relevant degree work and solid academic achievement.  There persists a culture of entitlement -- which didn't anticipate and disregards this reality -- among college applicants and undergraduates, parents, graduates, schools, and politicians.

America is facing a student loan bubble created and driven in much the same way as the housing bubble, which burst in 2009.  Students have accumulated $1 trillion in student loan debt to acquire degrees, many having little or no commercial value.

Only the schools lack financial risk, explaining why most have increased class sizes, marketed their products, and lowered admissions standards.  Schools charge tuition for remedial courses, and even the best inflate grades.  Schools offer non-challenging (and non-commercial) majors to attract and retain students while gutting or eliminating demanding core courses once required of liberal arts undergraduates.

Increasing numbers of institutions are charging more for tuition, room, and board than America's average annual gross family income.  Even public colleges and universities have annually increased fees at rates far greater than inflation.

The combination of a weak economy, unrealistic expectations, a sense of entitlement, slipping educational standards, increases in college costs, and the resulting accumulated debt has produced a cadre of credentialed but undereducated young graduates who are un- or under-employed, dissatisfied with their lives, and seeking rationalizations which don't involve introspection.

Disappointed graduates are well-represented at Occupy events.  It's ironically fitting that NYU would offer courses on a phenomenon the school helped create.

It's also ironic that disaffected graduates are attacking banks, the only blameless players in the education fiasco.  Banks issue student loans under federal guidelines to pay for a service -- an education.  Policy requires that loans for sought-after degree candidates in engineering, medicine, physics, and chemistry be considered the same as applicants majoring in performing arts or art history.

Earning interest may benefit banks and shareholders, but the loan principal is paid to the service providers -- the schools.  If the service proves defective, it's the schools' fault, not the banks.

Federal sponsorship of student grants and loans has encouraged and enabled schools to raise tuitions and fees at fantastic rates, creating debt which has helped to impoverish graduates, families, and government.  Subsidizing higher education has increased access, but at a far higher price for a lower-quality product.

Many graduates will not accept personal responsibility for their plights even though no one -- not the schools, the lenders, or the government -- forced undergraduates to declare majors in gender or leisure studies.  They weren't blackmailed into electing useless, although entertaining courses in puppetry.  Nor were students forced to take on more debt than their degrees will ever be worth.

Lowering standards to admit and keep marginal students only cheats serious students who belong in college, casts doubt on the value of all degrees, and drives up college costs.  Colleges are passing mediocre graduates into a workforce which demands demonstrated capabilities, not merely credentialed holders of meaningless degrees.

But, to progressive officials, another brick on the load of American taxpayers is an inconsequential byproduct of expensive educational policies, especially considering the good will still enjoyed by higher education, the numbers of young people seeking it, and the votes popular programs harvest.  As a bonus, aid to higher education increases a reliable liberal cadre of professors and administrators indoctrinating new voters.  In addition, generous public-service unions represent major segments of campus personnel, both academic and non-academic, especially in public colleges and universities.  Public funding of enterprises which support unions is mandatory for union-owned elected officials.

Paraphrasing Herb Stein, anything that can't go on won't.  The student loan bubble will burst, and, with it, the higher education bubble.

The conditions which, singly or in combination, could pop the bubbles include 1) student disinterest based on the realization that the value proposition is faulty, 2) government default, and 3) a change in bankruptcy policy.  Currently, the Bankruptcy Reform Act of 2007 prohibits discharging student loan debt in bankruptcy.  If that were to change, the risk of issuing loans would become prohibitive.

Changes are necessary.  Futures are at stake.  Recent college graduates carrying student loan debt and older graduates similarly indebted have paid or will be paying student loans into their forties.  If Social Security is not preserved, its benefits may not be available to anyone under fifty.  Because companies have stopped defined benefit pension plans and many have cut back contributions to employee 401-Ks, the requirement to repay student loans will make it virtually impossible for many college graduates to plan adequately for their retirements.  They're working at jobs for which their degrees didn't prepare them and paying payroll taxes for a benefit they will never receive.

Solutions require changing the mindset of students, parents, politicians, and the education establishment.  We must demand accountability from those who benefit from current policy by placing the risk where it belongs.  The banks are clean.  National politicians and the academy are not.  Kids -- though often naïve, lazy, misplaced, and gullible -- and parents are (often willing) victims, but they have taken on contractual responsibilities to repay student loans.  Why should taxpayers, especially those who have already satisfied student loans, be responsible for bailing out under-educated debtors with degrees?

We must stop political tinkering in markets and assign risk to the parties most responsible for the high costs and poor quality of education.  The educational institutions which recruit, accept, educate, graduate, and indebt students, yet cannot produce job-ready, loan-satisfying graduates, must be held responsible for their failures.

It will take some new metrics, but if we were to tie debt-service payments to income, place a time limit on servicing student loan debt, and change the law to allow student loans to be dischargeable in bankruptcy, institutional behavior could be changed.

The legal relationship between colleges and their students should be made contractual, defining the student's and the institution's risk in advance.  It must be understood that the institution of higher learning is responsible for all or part of the student loan debt in the case of default or the expiration of a graduate's obligation.

A contract will make applicants think more carefully -- first about matriculating, and then about selecting majors -- and the schools more judicious about whom they accept and the courses of study they offer.  Such an arrangement would likely mean fewer majors, and grading would be tougher.  As a byproduct, there could be a renewed interest in the sciences and engineering.

We can expect a smaller academy providing higher-quality education, populated by fewer irrelevant administrators and more real teachers of subjects that will provide value to individuals, society, and the nation.

Jerry Shenk may be reached at jshenk2010@gmail.com.