When students harm themselves economically by going to college

Unwinding distortions in higher education starts to bite into student lending, college funding

There is new evidence that some students hurt themselves economically by going to college — a fact Republicans are using to limit student loans.

The phenomena has one state, Indiana, passing a law to end some academic programs altogether.

Legislators in Utah, meanwhile, have called for aligning university programs with workforce requirements, setting off program consolidation at the flagship University of Utah.

Wisconsin has not embraced a legislative fix but has numerous programs and schools that are likely to be under increased scrutiny.

The Milwaukee Journal Sentinel recently identified bachelor’s degree programs in Wisconsin in which graduates’ median earnings fall below the statewide median earnings for high school graduates ($37,885).

A provision in “The One Big Beautiful Bill Act” now requires that programs across the country result in higher pay for their graduates than for high school graduates or lose eligibility for loans. In Wisconsin, such programs — displayed in the table below — are disproportionately concentrated in the humanities and fine arts.

Reactions to new legislation

Some studies suggest that graduates of liberal arts disciplines often take longer to realize financial returns, and reactions to the new standard, unsurprisingly, are wide-ranging.

Critics would see the Indiana measure as anything but logical and orderly, going beyond the federal accountability standard by actually cutting off programs instead of just reducing the flow of student loan money.

A faculty critic, Noor O’Neill of Purdue-Fort Wayne, says the standard amounts to “reducing the dreams that students have to enter different fields, judging those dreams and ambitions based on dollars and cents.” Senior fellow Beth Akers of the American Enterprise Institute counters, “Institutions should not offer programs that systematically leave students financially worse off than if they had never enrolled.”

The setting: an unbalanced growth binge

Student loan cutoffs are the latest splash of cold water amid the hangover that afflicts American higher education following its decades-long binge of unbalanced expansion.

From 1980 to 2010, more students attended college — enrollment grew 75 percent — and there was abundant money to go around. State and local higher education expenditures grew 168 percent.

Two factors contributed importantly to the growth of funding and enrollment: first, the increasing value of higher education in a workplace that rewarded college-related competencies, and, second, the surge in the volume of student loans.

In an ordinary market setting, higher prices make consumers think twice and cut back their purchases. But in the setting of higher education, it led to calls to make it more affordable, paradoxically leading to student loan expansion that may have worsened affordability.

In an ordinary market setting, low-return activities receive a smaller share of resources. In higher education, subsidies were welcomed as part of the mission. Business schools, for example, were known to be profitable while liberal arts and fine arts ran at a loss. Cross-subsidization of arts programs by money-making business programs was a natural outcome. This aspect of higher education has long been known, but it was pursued relentlessly during the boom years, resulting in unbalanced growth tilted toward programs that could not have survived on their own.

Federal accountability standards began to appear in 2006, when the Spellings Commission emphasized performance and transparency as national priorities. The Obama administration’s College Scorecard and follow-ups increased the pressure slightly. But the reaction found full embodiment in the “do no harm” standard, incorporated in 2025’s budget reconciliation, “The One Big Beautiful Bill Act.”

Policy reaction: orderly response or crude rule?

A logical and orderly response to identified imbalances would involve a cost-benefit test. Unprofitable programs in the humanities and arts may not produce highly paid majors, but they do ground college students in culture. The benefits are real and they stand to be greatly attenuated if they face reckless cutting. Students and faculty face adjustment costs when programs are curtailed or eliminated.

However, reallocations to programs with greater numbers of students and greater employment prospects have decided benefits. Clearly, better policy design and smarter growth in the boom years would have been preferable. After decades of colleges building around boom-year incentives, however, cutoffs are a natural political reaction.

What’s ahead

Observers of higher education can expect to see more initiatives like those that originated in Utah and Indiana.

A number of programs in Wisconsin would be at risk with such an initiative in the Badger state. These initiatives represent an imprecise effort to unwind decades of damage from ill-advised subsidies.

Better planning and greater precision during the boom would have been preferable, but program cuts are now a politically available possibility.

The costs of cuts will be real, and substantial benefits are possible — just don’t expect any hangover sufferer to find a splash of cold water on the face pleasant.

Scott Niederjohn is dean of the Batterman School of Business and the director of the Free Enterprise Center, both at Concordia University Wisconsin, and he is a visiting fellow of the Badger Institute.

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