What is the most valuable material per gram or ounce? Gold, palladium or some other exotic rare metal? No. Arguably, it is a piece of paper called a college diploma, which millions of Americans spend typically somewhere between $100,000 and $300,000 and thousands of hours of labor to purchase. In a period of economic uncertainty and, for some, unusually limited resources, increasingly people are questioning the purchase of this extremely expensive paper document, creating a budgetary crisis at multitudes of colleges.

Why do people pay so much for the college experience? While university presidents babble about things like the joy of learning or how college improves the quality of civic life, overwhelmingly the most important thing to students is the prospect of good future earnings. College grads on average make more money than those without degrees—the diploma is potentially a good financial investment.

Yet the college/high school earnings differential in recent years has been relatively stagnant, sometimes even declining. For example, males over the age of 25 in 2015 with college degrees had 92.85% higher average earnings than high school grads, but just three years later in 2018 that had fallen to 80.89%. Yet the cost of the diploma had risen. Higher costs, reduced benefits. No wonder enrollments are falling in recent years. Financially, the rate of return on college investments has been falling. Markets work: resources are moving away from universities.

From 1975 to 2000, the college earnings premium grew sharply, justifying large tuition increases. As Bryan O’Keefe and I demonstrated more than a decade ago, this was partly due to a 1971 Supreme Court decision, Griggs v. Duke Power, and subsequent supporting legislation. The Court essentially outlawed employer testing of workers that had a “disparate impact” racially, but it did not outlaw employers requesting educational credentials from prospective workers. How do you identify potentially good workers? Employer testing is done in hours; colleges, by contrast, test their students continuously for at least four years, a much more costly way of evaluating competency.

College graduates are typically brighter, more literate, reliable and disciplined than those with only high school diplomas. Do they also learn skills in college making them more productive workers? Sometimes, yes. Civil engineers and accountants, for example, learn lots of vocationally useful things in college. But what about the vastly larger number of sociology, communication, psychology, marketing, gender studies, parks and recreation and many other majors? Their college learning does little to improve even basic critical reasoning skills (according to exhaustive research by Richard Arum and Josipa Roksa in Academically Adrift).

As Bryan Caplan (The Case Against Education) and others much earlier noted, college is primarily a screening device—a way to separate the productive from less productive members of society. But it is a damnably expensive way of doing so. There are a variety of alternatives, for example restoring extensive employer testing, administrating a national college equivalence exit exam, or promoting vocationally relevant short (six months to two year) trade schools teaching such high-paying skills as computer coding and welding.

Vast numbers of moderately affluent kids and their parents tacitly accept an altogether different function of college: as a socialization/maturation device. Residential colleges play an important role in the transition of adolescents into adults: kids learn to live with previously unknown roommates, how to manage time and money, and the consequences of bad behavior. They go to college to learn, yes, but also to have fun, make friends, network and mold themselves into mature adults. They sometimes get drunk, take illicit drugs and have ill-advised sexual dalliances, but they also learn and mature from those experiences. Some take a “gap year” after high school; college is a “gap” four years between high school and life.

Yet many cannot afford that luxury. Some people drive Rolls Royces while others drive Honda Civics or Ford Escorts. Such are life’s inequalities and inequities. To me, the issue is: Should the government heavily subsidize more than a utilitarian education beyond high school? Other than the egalitarian/social mobility argument, I can think of no compelling reason why it should, given the aging, deeply indebted low-growth society that we have lamentably become—and the high cost of collegiate screening.