College enrollments have fallen for seven years in a row and a growing number of schools are closing. While many blame demographics (a sharp decline in American fertility rates) or high college tuition fees, I think prospective students are reassessing the entire collegiate value proposition and, in growing numbers, concluding that going to college is a risky and sometimes losing investment, not at all the sure-fire ticket to financial success implied by some of the more exuberant propaganda from the College for All crowd.

For starters, about 40% of those entering four-year colleges do not receive a bachelor’s degree within six years (well under one-half receive degrees in the four years it allegedly is supposed to take). Some Federal Reserve data suggest that earnings of those who do graduate in the bottom quartile of their college class average not much more earnings than that of typical high school graduates. To be sure, the truth of that importantly depends on the quality of the school attended as well as the major subject studied, but it appears that fewer than half of entering college students end up having a good outcome from a financial perspective because they either fail to graduate or do not get good jobs.

Some other good data suggest the job picture is actually a bit worse than that. Federal Reserve Bank of New York data show that in December 2018, the underemployment rate for all college graduates was 34%. It was even higher, over 41%, for recent graduates. “Underemployed” workers are doing jobs traditionally mostly held by persons with lesser education: baristas, bartenders, home health care aides, cashiers in big box retail stores, custodians, Uber and taxi drivers, etc. That is in a tight labor market over nine years into an economic recovery. If 40% of those attending don’t graduate (at least within six years), and one-third of those who do graduate are “underemployed,” then only about 40% of those entering college full-time end up graduating and taking jobs requiring the skills normally expected of college graduates, generally well-paying jobs in the managerial, technical, or professional fields (sometimes after graduate school). That proportion varies enormously no doubt—most matriculating at, say, Harvard no doubt end up in well-paying jobs, while those attending open admissions state schools and majoring in subjects like gender studies are more likely to join the underemployed.

Why is this happening? I have talked to business leaders who claim, “American universities are not providing the skills we need.” It is probably true, as a recent post articulated, that the learning outcomes of college graduates are embarrassingly low, a continuation in part of an arguably even bigger scandal of non-learning at the K-12 level. But I think the underemployment problem mainly reflects something else: too many college graduates. We are over-invested in higher education. While the need for highly skilled persons with advanced collegiate training has grown considerably over time, the demand for such graduates has grown far more slowly than the supply, so graduates who in the past would have taken fairly high-paying beginning-level managerial-type jobs are often forced to take lower paid less-skilled jobs. Thus we have a large number of Americans with degrees today who mop floors and work as Uber drivers. In response to the flood of college graduates, there is credential inflation going on—employers asking applicants to have more education. Soon, you will need a master’s degree in janitorial science to become a janitor.

Moreover, governmental officials have encouraged this. They have urged students with indifferent academic records and limited intellectual curiosity to seek bachelor’s degrees, lured with government-subsidized student loans and Pell Grants. President Obama proclaimed at the beginning of his presidency that we would regain world leadership for having a high percentage of adults with four-year degrees. Politicians now are trying to outdo one another urging taxpayers to fund “free college.” Rather, we need to go in the opposite direction, recognizing that we are over-invested in higher education.